It’s Only Rock-N-Roll (But You’ll Like It!) – Maybe Not So Much The Second Half.

Go Global In 2014

As the Amazon-affiliate blogs dance on Nook’s grave this week, Nook UK just gets better and better.

While pretty much all the other retailers simply clone their US ebook sites abroad and throw in some local window dressing to keep the natives happy, Nook shows it understands glocalization.

Unlike the Nook US site, Nook UK is a joy to behold. Completely different from the dinosaur of a site that is Barnes & Noble.

Not just a dedicated ebook site with crisp, clean and uncluttered product pages, that doesn’t trying to sell you dog food, diapers or dead-in-the-water phones, and, all-importantly, prices often much cheaper than Amazon’s. But also some great discoverability tools.

Take Nook Channels, for instance.

Pretty much all retailers have the same key categories. Boring old same-as-everywhere-else options like detective, romance and horror.

Amazon take that a step further with some great sub-categories that are far more useful than the standard BISAC options. Unfortunately they also go to the opposite extreme with mind-numbingly irrelevant micro-categories so you can shift one book to your Great Aunt Dot in Cumbria and become a “best-seller” in Detective Fiction > Women Sleuths > Vegetarian Women Sleuths That Dye Their Hair Blonde And Wear Stilettos > And Have A Pet Siamese Cat With A Wooden Leg > And Scabies.

Nook UK? Nook UK has introduced Nook Channels.

Here’s some examples (brackets are theirs):

It’s Only Rock N Roll (and I like it). Romance Through the Ages, International Intrigue , This Is A Man’s World (books for blokes), Sophisticated Journeys, That Way Madness Lies, Simpler Times (Midwives, nurses and other women of strength from days gone by), Continental Escapes, Hemingway & Sons, Digging Into Murder (If you like forensic mysteries and true crime cases, too.), Cool Critters, Girl Power, and a ton of others.

At this stage it appears (from a casual survey) only trad-pubbed titles are included in the recommendations, but no reason to suppose Nook UK will not be open to including indie titles. In the future, if not already.

Of course those who have been reading the Amazon-Infatuation-Syndrome blogs will be convinced Nook is the walking dead, after the latest reported losses and the drop in revenue.

But don’t give up on Nook just yet.

No question Nook is struggling right now, but let’s keep things in context.

Nook is up for sale. B&N have conceded they don’t have the resources to sustain the Nook project, and sometime early next year it will be under new ownership.

We’ve speculated a while now that the key bidders may be Wal-Mart, Tesco or Alibaba, any of whom have pockets deep enough to easily turn the ship around and make Nook a global force to be reckoned with.

Over at Forbes Jeremy Greenfield also raises the possibility of a Wal-Mart buy-out.

Yes, Nook is losing money right now, but, Apple aside, which ebook retailer isn’t?

Amazon? You won’t read much about this on the Amazon-affiliate blogs, but the mighty Zon is actually losing money hand over first, and is recording deficits right now that make Nook’s problems look pretty tame by comparison.

Hugh Howey, in a post entitled Barnes & Noble On the Brink, lays out the imminent demise of both B&N and Nook.

Howey delights in reminding us B&N is reporting a loss of only (Howey’s srcastic italics) $30 million. And as further evidence of the abysmal failure of B&N tells us that the latest Nook tablet is actually nothing more than “a modified Samsung device”.

Er, actually, Hugh, it’s a partnership between Nook and Samsung. If you want to find a company riding on the back of another, look no further than Amazon. Rather than develop their own operating system all the Amazon tablets, and the Fire phone, are piggy-backing on Google’s Android. And then they fork the system to prevent users accessing Google!

Sticking with Samsung, it’s also worth noting that, while Samsung devices continue to sell well, Amazon’s KindleFire shipments fell off a cliff in Q1 this year, dropping 80%, causing Amazon to go cap in hand to Samsung to get the Kindle app installed on Samsung devices.

As for the thirty million dollar loss B&N are reporting… Well, that’s pretty conclusive. A big FAIL.

But nowhere can we see Howey referencing the $126 million loss that Amazon reported last quarter. That’s only (our italics) a loss of almost $100 million MORE than B&N.

To drive home just how pointless B&N is in the scheme of things Howey tells us B&N are “flatlining.” If that’s flatlining, then Amazon are deep-sea diving.

But not only does Howey omit to reference the current Amazon losses, he also declines to mention the Q3 losses due to be reported next month. On Amazon’s own guidance, Q3 losses are expected to be over HALF A BILLION dollars.

Deep sea diving? Amazon is exploring the Marianas Trench!

Just last week Amazon went cap in hand to Bank of America to BORROW two billion dollars, an announcement that was snuck out after business hours on a Friday to lessen the impact. Curiously Howey’s post, dedicated to showing that an ebook retailer reporting a loss must be on life-support, didn’t mention this either.

One reason for Amazon taking on new debt will be the utter disaster that is the Fire phone. Amazon’s much hyped venture into the mobile phone business, with a pioneering 3D device that was supposed to sell gazillions and knock Apple and Samsung for six, sold just 35,000 units in its first month, despite having the brand name and full marketing power of the Amazon machine behind it.

To put that in context, the Chinese phone manufacturer Xiaomi held a flash-sale in India last month and sold more than that in just 4.2 seconds. No, that’s not a typo. Forty-thousand cell phones sold in fewer than five seconds.

The mighty Zon failed to shift that many in a month, despite throwing in a $100 dollar bribe in the form of a year’s free Prime membership.

Oh, and remember that $126 million loss for Q2 and the half a billion plus loss for Q3? That doesn’t begin to take into account the losses on the Fire phone, which was expected to bring in a ton of revenue.

This week Apple launched their latest phone. No-one is in any doubt it will sell in the millions.

Amazon’s response? They dropped the price of their $200 phone that nobody wants to just NINETY-NINE CENTS, still with a year’s free Prime membership worth a hundred bucks.

When you see Nook charging a buck for their devices just to get the junk out of the warehouse, then is the time to start worrying about Nook’s future.


Meanwhile, spare a thought for Jeff Bezos.

Any hope he might have had that the much-vaunted Alibaba IPO would flop and investors would not touch a ropey old Chinese interloper daring to spread its wings on Amazon’s home territory have been well and truly dashed.

Just two days into the Alibaba IPO campaign the entire IPO is over-subscribed, despite the road-show having only covered two cities –

What has Alibaba to do with us indies? More than you might think, not least because of the very real threat it poses to Amazon.

We’ll be looking more closely at Alibaba, and at the cruel reality that is Amazon’s precarious financial predicament, in forthcoming posts.

No, you won’t read much about that on the Amazon-affiliate blogs. Just like you won’t read much about the lawsuit the FTC has against Amazon for fleecing millions from customers, the investigation into Amazon in India by financial authorities, the EU investigation into Amazon’s Luxembourg affairs, or the H&S investigations into two deaths of workers in Amazon’s American warehouses in the past year, or the two billion they just had to borrow..

Which is why we took the decision at the outset to have no affiliation with any retailer. We call it as we see it.

But be assured it’s not just us looking on nervously as Amazon struggles to make a cent of profit. Again and again and again.

Try looking outside the cozy world of our indiesphere and reading the money market blogs.

Yes, it’s easy to keep our heads down an stay hidden in our indie-author box and assume everything is rosy and it’s all the other retailers that are struggling, while Amazon is invincible.

But everything isn’t rosy. And Amazon is far from invincible.

You think the Hachette dispute is about getting better prices for customers? Be serious.

It’s about trying to force down front-list prices for ebooks to make the print versions less appealing. Why? Because it costs Amazon nothing to deliver hundreds of thousands of $9.99 ebook. It costs Amazon far more than they can comfortably afford to ship hundreds of thousands of heavy hardbacks for “free” to Prime members. Shipping costs are one of the biggest problems Amazon is facing right now. Which is why they are offering to PAY Prime members a dollar to accept standard shipping instead of the expedited Prime service.

Amazon famously relies on wafer-thin margins to give customers the best prices. But the prices often aren’t the best, as anyone who takes the trouble to shop around will know, and there’s a fine line between wafer-thin margins and no margins at all, or a loss.

Many authors rely heavily on Amazon for their livelihoods. What happens in the Amazon Boardroom matters.

Yes, we know we’re going to get hammered for being “anti-Amazon” (curiously we are never hammered for being anti-Smashwords, or anti-Kobo when we report their downsides), but if its anti-Amazon to report the fact that Amazon is in its worst financial crisis since its inception, that growth is slowing, market share is falling, profits are zero and investors are very, very nervous, then so be it.

Go read the Amazon-affiliate blogs instead.

They’ll tell you what you want to hear.

It may not be what you need to know.

Ebook Bargains UK

Far more than just another ebook promo newsletter.

Far more than just the UK.


4 responses to “It’s Only Rock-N-Roll (But You’ll Like It!) – Maybe Not So Much The Second Half.

  1. Nook UK News Update –

    Nook UK have just renewed their partnership with ESI Media (London Evening Standard and London Live TV) to promote the Get London Reading campaign.

    In addition Nook UK will be sponsoring the Best Play accolade at the London Evening Standard Theatre Awards.

  2. I really like this blog, and it’s not that I’m anti-Amazon. It gives good information on both sides of the coin. FYI, my indie book (new release), Dead Man Ohio, IS on sale at Nook UK:

    • Great to see a Nook UK link being touted!

      We try to be even-handed here – it’s just that Amazon, as the 800lb gorilla, tends to dominate the news. Although over the next month it’s going to be the 850lb giant panda that is Alibaba that will be making the headlines.

      It’s a sad fact of life right now that simply reporting facts gets us labelled as anti-Amazon, and even that we are shilling for Hachette!

      We somehow doubt Hugh Howey was being called “anti-B&N” or a “Nook-basher” for his negative report on Amazon’s rival.

      But as several people have picked up on and re-tweeted from our post, what happens in the Amazon Boardroom matters.

      Amazon is far too big to fail, but no-one should assume things can carry on as they are. You’ve only got to look at the way Amazon is playing hardball with the likes of Hachette and Disney to understand the Zon margins are hurting badly.

  3. The entire post is one of the most incomprehensible series of contradictions and misstatements I’ve seen in a long time. And that’s saying something, considering that Hugh Howey has gone off the rails recently in praise of Amazon.

    The first point is that it is the introduction of digital delivery which has destroyed Borders and put B&N under the gun. Printing and print books are a doomed technology. B&N is going the way of the the record and CD shops and unless it can figure out a way to compete with Amazon in the digital world, it is a dead company. It has about ten years of life in it. Maybe.

    The reason those chairs went away is that the company must cut expenses to the bone as its core business withers. B&N can still make money in print until the final collapse, which will hit in about five or six years, but if it wants to make money selling books in dead tree format, margins and overhead must be managed rigorously.

    Anyone who thinks that bringing back comfy chairs to B&N will stop what is happening is living in an alternate universe.

    Howey also thinks that discounting is the answer. I’m not sure what he’s talking about because I’ve been in lots of B&Ns and they seem to have specials and discounts all the time, but never mind. But here’s his advice:

    +++ Regular discounts on all books (even if only 10% on paper and 20% on hardback) would have moved much more product than a loyalty card. The indie store I worked in did frequent promotions like this, and the results were obvious. +++

    I would like to know if that indie store is still in business? And the name of the store so we can check on that claim. Because I don’t think that store is around anymore. Despite all those discounts. I don’t think it was able to compete against Amazon when it came to discounting.

    And it wasn’t just B&N and Borders that put it out of business. It was Amazon as well, as I’ve noted. Amazon has been in business since 1995 and has contributed just as much as the big box stores to shrinking the number of independents. Primarily, via its low price discounting.

    And this just makes no sense:

    +++ If B&N offered a free audiobook and ebook with the sale of every hardback, and a free ebook with the sale of every paperback, they could get people through their doors. More importantly, the perceived value of the purchase would go up without impacting the actual cost of the transaction. Buy a book, get some electrons for free.+++

    +++ What could have saved B&N (and what might work right now if launched immediately and with gusto) is a plan to embrace digital, not just in product, but in customer connection. +++

    Didn’t B&N try this? And failed miserably? And it wasn’t because the Nook was a bad device. In fact, it was generally rated higher than the Kindle’s against which it competed.

    But selling hardware is expensive. Amazon probably lost more money on Kindles that B&N did, but because it was selling digital products in massive quantities, was able to ride it out. B&N never had those type of resources.

    So whose electrons are they supposed to give away? With books, I think everyone would want to have mobi (Kindle) files. It’s the defacto E-book standard. That’s like telling Schick they should give away Gillete razor blades as a promo when you no longer offer a razor.

    And last time I checked, the people who create audiobooks want to be paid for their work. B&N can’t afford to add that type of margin to their sales by giving away MP3s when they have no way to monetize this via tie ins to hardware or related content.

    If B&N actually took his advice, upper management and the board would face immediate shareholder lawsuits. And the shareholders would win.

    And this just takes the cake:

    +++or the fact that indie bookstores have been on an amazing comeback over the past six or seven years +++

    He links here:

    It’s an interesting article, though it mixes up digital with print speculation. Bu here is the article’s conclusion about this “amazing comeback”:

    +++ The independent stores will never be more than a niche business of modest sales and very modest profitability. +++

    I’m sorry, that’s not amazing. And does anyone really think small stores selling PAPER books is the future?

    That’s the future as much as the small comic and collectible stores who sell old and some new vinyl records. That’s a tiny niche and collectibles market.

    None of it made sense nor was it well thought through.

    If you’re interested in a more dispassionate analysis of Amazon vs. the Publishers with no AMZ fanboy nonsense, you might find the series running on the topic here interesting:

    Rick Chapman
    Author: “In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters”
    Author “Rule-Set: A Novel of a Quantum Future.”

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