Fri 22 November 2019
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BN.com selling more ebooks than print, but at what cost
Here is a quote from Barnes & Noble's chief executive William Lynch about the group's third-quarter results. "In the digital area, our econtent business continues to scale quickly such that we now sell twice as many ebooks as we do physical books at BN.com."

What! "Twice" as many.

I'm wondering if this will get picked up to the same extent as Amazon's announcements about Kindle sales always seem to. Amazon has previously said that it is selling more Kindle books than hardbacks, and that since Christmas 2010 it has been selling more Kindle books than paperbacks. But presumably when you add all the physical formats together, they still outsell Kindle on Amazon.

But Barnes & Noble tells us that that its e-business is twice as big already as its print business (online). And that is sales too. So not free ebooks. And it appears to be sales of units, so not based on value. And its not devices. Actual ebooks.

So good news? Apparently not. The company's share price is taking a hammering because it has suspended its dividend payment and its net income fell by 25%. The Street is already running a poll:

Barnes & Noble: Will It Follow the Borders Plot?

But Barnes & Noble says: "This will provide the company the financial flexibility to continue investing into its high growth digital strategies, while simultaneously allowing the company to take advantage of any other market opportunities that may present themselves."

According to it SEC filing sales at BN.com were up 53% to $319.4m for this quarter, but that business made a loss of $50.5m. According to its investors' call, Lynch said it now has a 25% share of overall US e-books market.

So Barnes & Noble has a clear digital strategy and though it appears to be working, it is not coming without cost. It is taking a breather so that it can continue to invest aggressively and take on Amazon. Borders fell precisely because it had no e-strategy and didn't have the cash to make one happen.

The words Scylla and Charybdis spring to mind.

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