Nook’s Smart International Move

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

If you’re an author in Germany, France, Spain and several other European countries and want to self-publish an ebook to the Nook ebook store, now you can. Nook Press, the company’s self-publishing platform, has been launched in the UK, France, Germany, Spain, Italy, Netherlands and Belgium.

It’s a smart move for Barnes & Noble and I’ll explain why.

With mounting losses and declining revenues, things look bleak for B&N’s Nook digital media unit, but that doesn’t mean the executives and employees there have stopped trying to build the business. Publishing observers have long lamented the precipitous decline of Nook. While still a going concern, Nook has been losing money since its inception and has gotten smaller on a revenue basis quarter-to-quarter for over a year.

In its most recent fiscal quarter, for instance, Nook saw its revenue decline to $157 million during the all-important holiday period, down 50% from the previous year. (That said, losses narrowed, to $62 million, down from $191 million; the new management of the company has been focused on cost-cutting.)

I think that these losses can be tied almost directly to the death of agency pricing in the U.S. among the largest publishers. Why? When publishers were on agency pricing, Barnes & Noble was guaranteed a profit every time it sold a book published by Penguin or HaperCollins, for instance. Further, the ebooks cost the same at all retailers.

With the current pricing schemes, Nook isn’t guaranteed to have the lowest prices and when it does discount ebooks, to match Amazon, Apple, Google or to offer its own deal, it can lose money on each sale.

While Barnes & Noble hasn’t come out and said it, I believe this is the reason its ebook sales have suffered in the past year or so. Kobo has publicly said as much — that it abandoned the U.S. market because it could no longer compete under the new pricing rules.

So, launching Nook Press as part of the spearhead for its international expansion is an absolutely crucial move for Nook to have any level of success in these countries. The reason is because self-published content is profitable content. It’s basically agency pricing all over again. The author sets the price and the retailer takes a cut of the sale.

Since its inception, Nook has been given a long leash in terms of making investments in order to turn into a viable business in the future. Before he left, CEO William Lynch talked about how Nook was going to turn a corner as digital content sales took off. Well, that hasn’t happened. My guess is that in the next year or so, Nook management will be watched closely and there will be less of an appetite to make investments that don’t look like they’re going to pay off in the short term.

Because of a variety of factors, likely the Nook losses and failures to grow, Nook and Microsoft changed their relationship. Nook will be abandoning further development on Windows platform apps and will instead power Microsoft reading apps (perhaps a precursor to Microsoft acquiring all of Nook and folding it into a larger e-reading play?).

 

2 thoughts on “Nook’s Smart International Move

  1. Jeremy Greenfield

    I’m saying that it’s smart to lead as much as possible with self-publishing. I don’t dispute that Nook has been very slow to expand internationally and has made many missteps.

    Reply

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