Nook Spin-Off Spells Trouble for Barnes & Noble?

Posted on Sep 08, 2012 By Bond & Botes, PC

A recent announcement from the national bookseller Barnes & Noble stated that they are considering spinning off their Nook business into its own separate company. Many financial analysts are wondering if this is a prediction of potential future bankruptcy filings for Barnes & Noble, and if the recent plummet in the profits of book retailers was inevitable.

Since the initial release of the Amazon Kindle, and its widespread public acceptance, retailers experienced a dramatic decrease in printed books. Coupled with the market’s overall downtrend lately, it’s no surprise that many bookstores have experienced difficulties. One of the nation’s largest booksellers, Border’s, was forced to file for bankruptcy and liquidate, closing just short of 400 stores, and firing over 10,000 employees.

Further exacerbating the problem, once Barnes & Noble published financial troubles, many publishers refused to ship books to Borders on normal terms, and requested payment up front for all stock.

For the book market, this is a form of downward spiral. When stores close, and people are unable to find print books as easily, they are more likely to turn to electronic books. According to Michael Norris, an analyst for MarketResearch.com claims this will also hurt new authors and publishers. He says “Thousands of people whose job consisted of talking up and selling books will eventually begin doing something else, and that’s bad for authors, agents, and everyone associated with the value chain in books.”

When Border’s closed, customers could almost always immediately turn to Barnes & Noble as a replacement, but if Barnes & Noble files for bankruptcy, many customers will be left without a large chain bookstore to go to.

It remains to be seen if the spin-off of the Nook business will spell the doom of Barnes & Noble as analysts predict, but with the recent trend of music and movies getting away from physical media and towards digital content, it doesn’t seem too far off.