Barnes & Noble’s eBook strategy

I posted yesterday that Barnes and Noble announced their new eBook reader, the Nook. Today I had the opportunity to join a conference call with William Lynch, President of BarnesandNoble.com, to hear more about the Nook and Barnes and Noble’s plans for the digital media market. In addition to learning about the Nook, the question and answer portion highlighted the confusion around ebooks and where they fit into the future of bookselling.

First and foremost, the Nook. Mr. Lynch began by running through the highlights of the device: the dual screens, the LCD’s versatility, the depth of content, and the hands-on experience that will be available at every Barnes and Noble in the country. He emphasized that each bookseller will be trained on the Nook, and that displays with working units will be in every store. This is key, since the Nook’s biggest competitor (in mindshare and marketshare) is the Kindle, which most consumers are forced to purchase sight unseen.

And then the questions began to roll in, and that’s where the call got interesting. Essentially the queries fell into two broad categories: questions about the Nook, the Nook experience, Nook content, etc., versus questions about eBook strategy, eBooks in general, and where Barnes and Noble was heading with the Nook. What I found very interesting was that the latter questions seemed to heavily come from “traditional” journalists, while the Nook-specific questions came from the technology/blog world. More on that in a bit.

Onto the good stuff: the gory details about the Nook. The name apparently was chosen because it is reminiscent of the word book, because nooks are associated with bookstores and because “the URL was available”. While it runs on Android, there is no web browser and there are no plans at this time to bring out an SDK. Bad news for those overseas: even though the Nook has WiFi, you won’t be able to purchase books outside the USA.

More important than the specs of the Nook itself were the hints of what B&N has planned for the future. Currently they are offering 45 magazines and newspapers for the Nook, but they are hoping for a much larger list in the future. The “LendMe” feature, which allows you to loan a book to a friend for up to 14 days, is only available for some books right now, but they are hoping to expand that list and get more publishers on board. Refreshingly, Mr. Lynch was extremely honest and up front about the restrictions they were facing from publishing houses, though he seemed confident that some of those would ease with time and further eBook success. The biggest message that came through was that Barnes and Noble wants to do two things: drive eBook content through their online on-device storefront, and bring people into their brick and mortar stores through special features only available via the Nook and B&N wifi (like the ability to browse a whole book in-store, and they are looking at other exclusive content as well.) I did ask if the Nook would have backwards compatibility with legacy eReader/fictionwise/peanut press libraries, and while Mr. Lynch did not know the answer they will be getting back to me soon.

So then we come to the questions that, in my view, really highlighted where there was some confusion about the Nook and eBook strategies in general. There were questions about whether Barnes and Noble was becoming a technology company, the formats supported, and even someone asking the price (clearly they didn’t read the press release!) My personal favorite was: “Will you be offering other stores on the Nook”, to which Mr. Lynch replied “Why would we want to do that?”

I think that last question, about whether other stores’ content would be available on a Barnes and Noble device, really highlights where eBooks are throwing the thinking about digital media for a loop. Everyone is looking for the “iPod of books”, but that’s not where the money is; what will really determine who wins this is who has the iTunes of books. This isn’t digital music, where the iPod is an evolution from the CD player, which was in turn an evolution from the walkman. In the case of music, the content needs a compatible piece of hardware. Subtract a CD player, and your stack of CDs is worthless. So the most important piece in that relationship becomes the hardware that brings you the media. In contrast, paper books do not need a hardware component. The hundreds of paper books scattered through my house work just fine without anything having to act as interpreter in bringing me their content. So when books make the jump to eBooks, the hardware becomes secondary; I’m using a convenient tool to access my book, but the book is the key part. There was never a “walkman of eBooks” to blaze a path, and linking your content exclusively to expensive hardware is backwards. Books don’t need hardware, so pushing the hardware over the content misses the point. Provide your content across multiple devices, provide a way to keep them all in sync, and now you’re giving the consumer a compelling reason to buy into the hardware. But unlike with the iPod/CD player/Walkman paradigm, the content is king.

And Barnes and Noble is pushing their content, not their hardware. They are happy to be “content partners” with Plastic Logic and iRex, because that’s another audience that will buy books. Not everyone is going to spend $259 to have a tool to read books, but if they can get the software for free on their computer and smartphone, then the books become more attractive. Getting consumers to buy a Nook is a nice bonus, and ties them closer to B&N, but in the end, this is all about books with whatever tool you use to read. Barnes and Noble made it clear in today’s conference call they want to be the iTunes of books; it should be interesting to see if they succeed.

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Tags: Books and eBooks