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Business Movers
Saving Barnes and Noble | Industry Expert Jane Friedman Discusses The Resurgence Of Barnes & Noble And The Future Of Bookselling | 4
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- [00:00]
Lindsey Graham
Want to get more from business movers? Subscribe to Wondery for early access to new episodes, ad free listening and exclusive content you can't find anywhere else. Join Wondery in the Wondery app or on Apple Podcasts. It's June 2001 at the Waterstones flagship store on Piccadilly in the center of London. 47 year old Waterstones CEO James dawn kneels to inspect a new shelving unit being installed during a store remodel. James has just taken over at the helm of Waterstones and has been tasked with turning the struggling bookstore chain around. It's a monumental job with a monumental opponent, the online giant Amazon. But today, James is focused on smaller details. He's weighing in on the store's new layout and design and has brought along a friend to provide a second pair of eyes. Italian retail architect Miguel Sal. He has long gray hair and a thick white beard and eyes that dance with amusement. Miguel squints at James as he adjusts a shelf. No, four degrees. James. Definitely four degrees. The angle of the lowest shelf on the unit might seem like a minor issue for a CEO to consider, but. But this is the flagship store and James wants everything to be just right. Four degrees. You think so? It catches the light much better.
- [01:30]
Jane Friedman
2 degrees.
- [01:30]
Lindsey Graham
3 degrees. People aren't going to notice the books down there. But at 4, I don't know. I think it should be 3. No, no, no. 3. Why? Every degree we tilt these books, the more it damages the spines. The spines? This isn't a library, it's a bookstore. Yes, and we can't go about damaging our goods. Products go in and out, in and out. No, some titles stay on the shelves longer than you might think. Well, at three degrees. Yes, because no one can see them. James smiles because he loves how passionate his friend can be. Miguel, people are going to bend down or step back to see the bottom shelves. Protecting the books is the priority. Oh, James, you are a bookseller, not a designer. Listen to me. And you are a designer, not a bookseller. Listen to me. I tell you. It's four degrees. Three. Well, why bring me here just to insult me with insisting on three paltry degrees? I wanted a second opinion. And I gave you one. It's wrong, though. Unbelievable. You know, Miguel, anyone passing by might think we're having a real argument. Are we not? No, we're not. I'm going with three. Miguel shakes his head and clicks his tongue. You Englishmen are stubborn. But there's a rather nice bar up on the fifth floor. Why don't we have a debate about the best angle to hold a wine glass. Well, this we can agree on. Miguel claps James on the back, but I am picking the wine. Well Miguel, I wouldn't dream of arguing with you there. Later that same day, James Daunt sent out an executive recommendation to all Waterstone stores. The lower shelves on all new units should be angled at 3 degrees. James had opinions on every detail of running a bookstore, but he actually made few central decisions in this way. In fact, James strategy for turning Waterstones around relied more on empowering local managers to run their stores as they saw fit. The results spoke for themselves. Waterstones fought its way back from the brink of bankruptcy to profits and growth, and eight years later, James would be asked to perform the same trick again. Crossed the Atlantic. The bookstore Barnes and Noble was in trouble and it needed a savior. James Daunt was the man for the job Business Movers is sponsored by Grammarly. You only get one shot at a first impression. And if you're running a business that can mean all the difference between new client and no reply. Communicating exactly what you mean clearly, intelligently and with purpose can also stop a single bad email from turning into 20 and then a meeting on top. When every word your team writes is clear, concise and on brand, everything gets better. And teams that communicate better with Grammarly report 25% faster time to resolution for support tickets and 52% less time spent writing sales emails. All with enterprise grade privacy and security measures and seamless integration with the apps you use every day. Join over 70,000 teams and 30 million people who trust Grammarly to get results on the first try. Go to Grammarly.com enterprise to learn more. Grammarly Enterprise Ready AI Business Movers is sponsored by Attentive. Imagine for a moment if you got a message from your favorite brand and it's so specific and personalized it feels like it was created just for you. Well, chances are if you got such a message, they're using Attentive, the SMS and email marketing platform designed to help brands build and connect with their ideal audience. Attentive helps marketers create unique messages for every subscriber, transforming the consumer shopping experience and maximizing marketing performance. It works like this. Attentive's AI learns what subscribers actually want based on their real time interactions with your brand. And that means it customizes the content, tone and even timing of every message so they always resonate. If you're ready to take your customers on a journey created just for them, visit attentive.com businessmovers to learn more from Wondery I'm Lindsey Graham and this is Business Movers. Barnes and Noble was once the crown jewel of the American bookselling industry. When Leonard Riggio bought the company in 1971, it had just a single retail location in downtown Manhattan. But by the late 1990s, Leonard was the chairman of America's largest bookstore chain, with hundreds of locations across the country, making billions of dollars in annual sales. But the company's dominance didn't last. The rise of Amazon in the early 2000s changed everything. Online shopping appeared to offer readers convenience, competitive prices, and a selection of books that even the largest brick and mortar stores simply couldn't match. Barnes and Noble faltered in its response. New strategies and new CEOs came and went. But by the late 2010s, the company was losing millions of dollars every year, closing stores and laying off employees. Then came James Daunt. The British businessman had begun his career in bookselling with his own independent store in London before turning around the fortunes of the ailing national chain, Waterstones. Success there made him an obvious candidate to take over at Barnes and Noble. And when James became Barnes and Noble's new CEO in 2019, his aim was to give customers a reason to choose real books over ebooks and real book stores over online ones. To do that, James repeated the strategy that served him well at Waterstones. He began transforming a national chain of identical stores into hundreds of genuinely local bookshops, with layouts and inventories tailored to regional tastes. These changes paid off. Today, Barnes and Noble is growing once again, with new stores opening and customers returning to a chain that once seemed destined for collapse. For many traditional retailers, online shopping has been a grim reaper. But Barnes and Noble has survived, and an old brick and mortar stalwart has found its place in the Internet age. Here to talk about how James dawn transformed Barnes and Noble and what the future may hold for bookselling, is Jane Friedman, publishing consultant and author of the Business of Being a Writer. Our conversation is next. Jane Friedman, thank you so much for speaking with me today on Business Movers.
- [08:05]
Jane Friedman
It's great to be here.
- [08:06]
Lindsey Graham
So. So you've been working in the publishing industry for 25 odd years and it's changed considerably in that time. One obvious force for change is Amazon and the rise of Internet shopping. But were there other watershed moments for the industry that you could describe for us?
- [08:23]
Jane Friedman
I mean, those are certainly the top level changes, but it has so many trickle down effects. So how books get sold, how books get discovered, that's changed entirely. So when I entered the business, the New York Times traditional Book Review was kind of a gold standard for helping get marketing and promotion to get copies moving. Today the New York Times itself says a review on our pages doesn't necessarily sell any copies. It's now the Book Talk influencer who has the power to move copies. And you see booktok displays in the bookstore. When I entered the business, most books were sold through bricks and mortar. Now most books are sold online, whether that's through Amazon or some other online retailer that includes both print and ebook, digital audio. And when I entered the industry, bookstores were incredibly important. And now, as you mentioned, Amazon is incredibly important. And another thing that's changed because of all of these other factors is that self publishing used to be quite difficult, challenging, hard to get visibility. There was little to no distribution unless you already had a known name. And today I would say that in some genres, self publishing authors have a first mover advantage. They can dominate certain categories and lack of distribution, lack of a bookstore presence really does not affect their success. Now certainly they can become much bigger and become a New York Times bestselling author with bookstore presence, but it's not needed for them to make a very good living.
- [10:02]
Lindsey Graham
It's interesting you bring up Book Talk because at the time that we're recording this, we are facing yet another change only a week away from the probable removal of TikTok from the marketplace. It prompts me to ask you a question. Did you see any of these changes coming? Were some of the developments a complete surprise to you?
- [10:22]
Jane Friedman
I think the only thing I'm surprised by as of today is how much of the publishing business still remains in sales of print, physical objects. Print has surprising staying power. I think, I would say around 2010, especially as the Kindle started becoming very prominent as ebook sales picked up. I would have said we would have been 50 to 70% ebook sales at this point, if not more. But that has not come to pass. If you look at the book publishing industry like if you average it all out across all genres and categories, big and small publishers alike, print has remained about 70% of the business. Now of course, if you look at self publishing authors, that's still very much ebook driven. But I am surprised and I think everyone is grateful that print has had such staying power. Another thing that surprises me is just, I guess TikTok, maybe this speaks to my age, how much it has been a factor in pushing fiction sales over the last four to five years. Prior to TikTok, there was certainly some focus on social media as a way to market and promote. But the old Cliche has always been, well, social media doesn't necessarily sell books or we don't know how many books it in fact sells. And no one says that about TikTok. We know for sure that it plays an important role. So it will be a big challenge for book publishing if the app is in fact banned.
- [11:51]
Lindsey Graham
It's interesting that you are surprised by the prevalence or the longevity, the staying power of the physical artifact of a book. But it reminds me of another media industry, the music industry, in which vinyl records are showing a resurgence. 2024 was perhaps the highest year of sales for vinyl in a long, long time. Is it because that there's a physical artifact in the product that makes it somehow different from just the content of the book or the album?
- [12:20]
Jane Friedman
There's a lot of debate about this, a lot of arguments about why print has staying power. Some believe it's people trying to get off their devices. It's a way to escape from the digital onslaught of our work lives. People still like the tactile sensation of reading a book. Some feel like the ebook reading devices and some of the things like ebooks aren't necessarily all that desirable for certain types of reading, especially on the nonfiction side. But I still find personal preference really drives so much of this. And I would say this is a big stereotype. But book people tend to like print. They still like the object. If I were going to draw an analogy to the music industry, I would say the deluxe editions that have become very popular in the last couple years. That's what I would compare to buying vinyl. So deluxe editions are the really souped up, high priced editions that have like sprayed edges and like gold foil stamping. And it's a limited edition and when it's done, it's done. I differentiate that from print books generally because some print books, I mean, I'm not going to say they're nothing special, but paper's cheap, it's a paperback. There's some element of it that feels a little bit disposable in a way that vinyl doesn't. But you would probably never throw away a deluxe edition.
- [13:41]
Lindsey Graham
So let's turn our attention to Barnes and Noble then, and how they tried to navigate these changes with all its advantages as the dominant chain in the bookselling industry. Why do you think they struggled to respond to the rise of Internet shopping?
- [13:55]
Jane Friedman
As with so many things, there have to be multiple factors. I think part of it, you know, it wasn't unique in its struggle to respond, I'm sure. I mean, I focus on the book publishing industry I can't really speak to other types of retailers, but I have to assume there are other retailers that struggled with the entry of Amazon into the market. Like, I don't know, just random example, Toys R Us or something like that. But there were definitely leadership issues at the chain. It went through a revolving door of CEOs in the space of five to seven years. It had like five different CEOs, many of which had nothing to do with the book business. They operated the business like any big box store, like a Staples or Office Depot or something. The stores themselves remained static for a long time. Like there wasn't a lot of innovation in how the stores looked or in the merchandising and the cost of operating these stores. It's significant. In fact, the cost of bricks and mortar retail caused another Barnes and Noble's competitor, Borders, to go out of business. Around, I want to say that was 2010 or 2011. A lot of people chalked that up to a real estate problem, which I don't think it was entirely a real estate problem. But there are a lot of costs. And you know, you have Amazon coming in and they are selling based on price and discounting to a degree that bookstores, physical bookstore simply cannot discount in that way and stay in business. And in the book publishing industry, it's often said Amazon used books as a loss leader in order to build a customer database to sell other products. So this seems quite unfair if you're a bookstore operating. You can't compete when someone's taking a loss on the product. Another factor is Barnes and Noble never had a great online store in the early days. It was late to market with its own E reading device, the Nook. And I mean, we have to be honest here. But Barnes and Noble is not a technology company. So there are always going to be at a disadvantage, at least when you're thinking about them competing with Amazon. It wasn't as efficient as Amazon in getting people books. If you went into a Barnes and Noble and you wanted a particular book but it wasn't in stock, you might wait a week or more and it would be more expensive than Amazon. Whereas you could just get on your phone, order the book off Amazon and have it in a couple days. So that's tough, that's really tough to compete against. So while it had its weaknesses, I would say there was going to be some sort of downfall. And of course now a rebirth, which I'm sure we'll discuss.
- [16:24]
Lindsey Graham
You mentioned the parade of CEOs as Barnes and Noble almost gave its last GASPS and then James Daunt came along and he was able to succeed where most of the others failed. And this is on the backs of another resuscitation of a bookseller in the uk. What qualities did he possess that these others did not?
- [16:44]
Jane Friedman
He's certainly a brilliant bookseller, I don't want to take that away from him. But I do think he's benefited from timing. He took over Barnes and Noble, it went private in 2019, just prior to the pandemic, which is pretty important timing, because book sales skyrocketed during the pandemic, had some of its best years ever. We're talking about increase of sales by 20%, I believe, in 2020 or 2021. And this is an industry that's very mature. You know, flat is the new up in book publishing when you're looking at annual sales. So he had that benefit coming in. And also, like during the pandemic, there was this resurgence, I think, of support for local stores, independent stores, loyalty to certain brands or retailers. You wanted to see them survive and exist long beyond this troublesome period. So, you know, he had that benefit coming in. But in the uk, he started off as an independent bookseller running Daunt Books and then he got tapped to revive a chain in the UK called Waterstones, which is pretty much the equivalent of Barnes and Noble here in the us, but a smaller footprint. It is the uk, it's not as big as the us, and he really looked at Waterstones as something that could be revived if it stopped engaging in bad business practices, which were overstocking books that people didn't buy. High rates of return, for those who don't know, bookselling operates on a returns basis, so that any book that is in the store, it can be returned at any time for full credit to the publisher. But this, this obviously has costs associated with it. It's not very efficient to be returning 50% of your stock, which in some categories they were returning up to 80% of their stock because it didn't sell. So he really looked at that and said, this does not make good business sense. We need to start thinking more like an independent bookseller that is carefully curating what's in the store rather than trying to be everything to everybody.
- [18:52]
Lindsey Graham
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- [18:58]
Jane Friedman
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- [19:27]
Lindsey Graham
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- [20:54]
Jane Friedman
I think probably both. But again, certainly timing is playing a role here. It's just right. As of today we are not in a world where a superstore bookselling chain I think can survive. And I think we're seeing that also in Canada with the Indigo Bookstore, which has had to pivot and think again about instead of being a lifestyle destination, it was selling lots of like bedding and, and like home goods. Think like repositioning itself as your local bookstore where if you go in you are going to get a highly personalized, curated, as you say, experience. It's like the right guy at the right time coming in and saying look, if we're going to compete against something like Amazon, which is trying to be everything to everyone, we can't act like the Office Depot or Staples where all the stores are offering exactly the same thing regardless of where they're located in the country. And so when he came into Barnes and Noble, it operated exactly like that. It was a corporate top down structure, the corporate offices in New York City, the corporate buyers who had overwhelming power to determine what was going to be put in every single store right down to, you know, this table many feet from the front door with These specific titles. And a lot of that was those table spaces like at the front of the store that was pay to play. Publishers paid big money to have that placement. And the stores had to put those books there whether they thought they were going to sell or not, in their particular store, in their particular location. So, you know, it was a huge paradigm shift for both publishers as well as the people working at Barnes and Noble for him to come in and say, look, we're not going to tell you what to stock anymore. You're going to make those decisions. There are no more corporate buyers. I think he shed maybe half of the staff in the corporate office. You no longer saw the New York Times writing an article about the power of the fiction buyer in New York to determine what every store was going to carry in its fiction section, which let's. I mean, for me, someone who is not in New York, I think that's actually a pretty good move. Why should someone in New York dictate what every novel is going to be in every Barnes and Noble in the country?
- [23:08]
Lindsey Graham
Well, that's an interesting point because I can imagine the opposite, especially with the rise of social media and Internet commerce, because there could be a homogenization of culture that would make it much more appropriate for Barnes and Noble to have a very regimented, top down method of picking what they sell. But this is not the case. And James Dauntless kind of leaned into localization. I guess my question is how really different are different regional markets?
- [23:37]
Jane Friedman
Let's be clear. There are definitely still certain titles that are going to be stocked probably in every Barnes and Noble store. So, like when there's a new big presidential memoir, you're going to find that in every Barnes and Noble store there's probably still going to be like the book talk, display or table in every store. However, the booksellers themselves at the local level get to decide what else is going to be accompanying those titles, deciding what sort of displays to have for their particular city or region. In a country as big as the United States, there are in fact huge differences between what you might stock in a store that's in Louisiana versus something that's on Union Square in New York City, there are decisions that get made not just for fiction and nonfiction, but also in local authors, regional authors, titles of regional interest.
- [24:34]
Lindsey Graham
So one of the other differences that dawn faced as he moved from his independent store to larger chains across the Atlantic Waterstones and his own independent store are UK based businesses. Barnes and Noble is a different beast in a different country. How are the two Industries different between the UK and America?
- [24:55]
Jane Friedman
Well, the first difference is that of course the UK is smaller. And if you were to compare the Barnes and Noble footprint to the Waterstones footprint, you know, Barnes and Noble is much bigger. I mean, I sit in the US market, so it's a little hard for me to say exactly what makes the UK market unique. But in the US there's so much more territory and there are so many differences from the east coast to the west, to the south to the mountain areas. So in the UK you also have just cultural differences in where people go to shop for books. There was a culture of really, even Amazon aside of really heavy discounting. So for example, in the grocery stores there, they. Which is not so unlike some of the supermarkets in the us, but they would sell lots of books at deep, deep, deep discounts. And so when James dawn initially took over Waterstones in the uk, he actually ended up doing some similar promotions. I don't know if he was intending to compete against the supermarkets and some of those other deep discounters, but he realized this was not the way to go. They were losing money on these promotions and he realized that. I think this, probably what he should be credited for, is understanding that the reason people shopped at Waterstones, and I think this is now true of Barnes and Noble, is that these were book people. And so that's one commonality that's shared, that people who walk into a Waterstones or a Barnes and Noble, they're not shopping based on price. They want an experience. They feel like getting that book from the bookstore is in fact more valuable to them, more enriching to them because they bought it in a bookstore than Amazon. So I guess in some ways it's easier to talk about that commonality and why he succeeded in both places. But there are certainly differences too, in just what the different cultures respond in terms of COVID design, in terms of displays and so on. But booktok definitely is another commonality too. Those books are selling the same on both sides of the Atlantic.
- [27:00]
Lindsey Graham
So we've discussed some of the reasons why don't may have been successful timing his focus on regionalization or localization. What were perhaps his mistakes? Were there things that he got wrong and how did he correct them?
- [27:14]
Jane Friedman
Well, I mentioned the discount piece. So he rather than run those deals and return huge numbers of books, he cut that out and stopped the practice of co op where publishers pay for placement. He's also had some troubles with, let's say, labor at Waterstones as well as at Barnes and Noble. There have been Layoffs and reduction in staff. And I don't think he's trying to cut to the bone necessarily. But in bookselling in particular, the profit margins are very thin and there is not a lot of room for error. And so because he is such a forthright, honest, frank communicator, like, you don't feel like you're being sold a bill of goods when he speaks at an event, he doesn't speak like a corporate suit, let's say he speaks like a bookseller. I get the sense that whatever labor changes he's had to make are for the long term health of the business. But he has received a lot of criticism over the years. Barnes and Noble in particular, there have been strikes and demands for increased wages. But I should say it's not unique to Barnes and Noble, really. Across the board at just about any bookstore like the Strand. There was a strike at the Strand over the holidays. There have been strikes at Powell's in Portland, Oregon. So I think this is just part of a larger sociopolitical issue that is happening on his watch.
- [28:35]
Lindsey Graham
When I asked the question of mistakes, you started by referencing back to these co op deals with publishers that he exited. I'd like to ask you to expand on that. Was that a mistake to leave that money on the table? And how have partnerships with publishers evolved since.
- [28:51]
Jane Friedman
Yes. So it seems pretty obvious from the results at Waterstones as well as the results at Barnes and Noble, that cutting out this co op has been the right move. And I can say this as someone who worked at a traditional publisher. There were certain books we published specifically because salespeople said, well, as long as we get that 10,000 copy display in Barnes and Noble across the country, we can publish this book. And if Barnes and Noble agreed and we paid our money for the display, it would sell a large number of copies. But you would always have to budget in an exceptionally high return rate because you send out far more books for those displays than will ever move through the register. And so essentially what's happening with this is you are letting publishers determine what you sell or what you're merchandising, what you stock. And that isn't necessarily the books that people want to buy. So it's a far better experience for the customer when you stop that and you let the booksellers determine what's worth putting in front of people. It reduces returns, which have their own cost on both sides for both publisher and bookseller, and it increases overall sales. Under Daunt's watch, Waterstones reduced its return rate to 3%. From 20. And he expressed at one point that his goal for Barnes and Noble was to get the returns rate down to about 15%. I wouldn't be surprised if it's lower than that now. And to give people a sense, on average in the United States, the average returns rate for many years was around 30%. But that has started to decline with time because of these policy changes as well as the increase of online sales, because you don't have as much of an issue with returns with online ordering.
- [30:40]
Lindsey Graham
So you would characterize this general industry move as productive for both the booksellers and the publishers?
- [30:47]
Jane Friedman
I think so. But that's not to say it isn't very painful, especially for authors and publishers who, you know, a lot of authors in particular, they want to see their book in the biggest chain in the United States. And they feel like maybe Barnes and Noble isn't taking enough risks in stocking books that might be, let's say, a children's hardcover is the area that you'll often hear reference that they're not investing in new authors of children's hardcovers, that children's books, it's a very price sensitive market. So, you know, when Daunt and his booksellers look at, okay, what's selling, what's going to reduce our returns rate, they're not going to be very encouraged looking at all of these children's hardcovers that aren't moving because they're by authors that people don't know. And also, the children's market is very backlist driven, which means books that were published prior to the current year, books that we all know and love, parents love to buy books that they enjoyed as kids. And so that's why it's a very kind of backlist oriented industry. In any event, you do find these disagreements and people who say if you're not stocking more titles, a broader range of titles, more unique titles, then you're not helping people discover. But I think he pushes back pretty firmly on that, I think effectively saying, look, we have to curate the stores. We can't just take anything and everything. Of course, that can be offensive to authors who feel like they have works of value, works of literature. But he's right. Barnes and Noble, even though it has expanded the number of stores in the last couple years, it's a much smaller footprint. So they have to be pretty ruthless in terms of what they're carrying and ensuring that it has a chance of selling through.
- [32:38]
Lindsey Graham
We know you want to delve into more stories of legendary leaders and the pivotal moments that define their careers. So now Wondery gives you exclusive episodes of Business Movers. Explore the triumphs of the retail revolution with a season about Sam Walton building a Walmart world or what it takes to be named the King of kicks in the season becoming Nike or how the golden arches have made it to almost every corner of the world in the McDonald's Invasion season. With Wondery plus, you get early access to all new episodes, ad free listening, and exclusive access to more true stories of business leaders who risked it all. Wondery members also get exclusive ad free access to hundreds of other chart topping podcasts like American Scandal, History Daily and Business Wars. Elevate your business movers experience with Wondery. Sign up by clicking the link in the episode description or head over to wondery.com/ hi, I'm Lindsey Graham, the host of Wondry show American Scandal. We bring to life some of the biggest controversies in US History. Presidential lies, environmental disasters, corporate fraud. In our latest series, NASA embarks on an ambitious program to reinvent space exploration with the launch of its first reusable vehicle, the Space shuttle. And in 1985, they announced they're sending teacher Christa McAuliffe into space aboard the space shuttle Challenger along with six other astronauts. But less than two minutes after liftoff, the Challenger explodes and in the tragedy's aftermath, investigators uncover a series of preventable failures by NASA and its contractors that led to the disaster. Follow American Scandal on the Wondery app or wherever you get your podcasts. Experience all episodes ad free and be the first to binge the newest season only on Wondery. You can join Wondery in the Wondry app, Apple Podcasts or Spotify. Start your free trial today. Well, let's turn our attention to the state of Barnes and Noble now. It's in a far stronger position and opening new stores and increasing revenue. But how would you describe the wider state of retail bookselling across the nation? Is the industry as a whole growing?
- [34:49]
Jane Friedman
As far as the bricks and mortar retail for books, I have not seen any indicators it's growing, aside from maybe the fact Barnes and Noble is opening some more locations. That said, it's in a far stronger position than it was, let's say in 2018 or 2019. So like throughout the 2010s, what you would see, and this is based on figures from the American Booksellers association, which you know, they have bookseller members, independent bookstores. You saw a decline in the membership. Lots of reasons for that. Amazon, not least of them. And of course, independent booksellers also had to compete against Barnes and Noble. And so you saw this decline in membership, but it started to come back up. And during the pandemic, there were lots of what I would call more flexible, agile independent bookstores opening bookstores that would come in pop up form or had a hybrid model of online and offline bookstores that were more focused on doing a very particular thing well, like selling romance or selling horror or serving the black community or serving a niche. The book selling community is, I would argue, stronger today in the bricks and mortar space because they've become more niche and they're looking more at that localization and personalization. So Barnes and Noble is. If James Daunt says that Barnes and Noble operates like an independent bookstore, I believe him. They're the size now of an independent bookstore. I feel like when you walk in, it's that experience. And, you know, recently they just bought Tattered Cover in Denver, which is a really well known respected independent bookstore. And having them operate as they've always operated. So that, to me indicates that there is a good, healthy market. But it's, I do feel like it's much more niche than it was prior.
- [36:38]
Lindsey Graham
Barnes and noble in the 90s was widely regarded as a retail predator of independent booksellers. And though we have a change in ethos, a change in the methods that they use, they are still the biggest bookseller in the country. Is this a wolf in sheep's clothing claiming to be running themselves like independents?
- [36:58]
Jane Friedman
I don't think so. And James Dauntless did a recent interview, I believe it was on PBS, maybe the NewsHour, where he talked about how he would not open a new location of Barnes and Noble around the corner from an independent bookstore. He's like, what's the point of that? Who is that really helping? He's like, we want to open in places that need us. And again, I think he's being genuine. I don't think he's not blowing smoke or trying to pretend to be virtuous when he's not. And there are many places in the country that are underserved, that don't have bookstores. I haven't analyzed the map of where they're planning to open, but in many cases, they're coming back to communities where they had to close stores. That's exactly what happened. Where I live in Cincinnati, there were maybe five Barnes and Noble locations in the aughts. Almost every single one of them closed but one. And then in recent years, they opened up one store in the center of the city, good location. And you can see that it's helping to rebuild and bring books back where they used to be. There is no independent bookstore within, I don't know, 20 miles. So in other words, the little indie stores are in the little communities of Cincinnati, but they are not anywhere near where the Barnes and Noble was opened.
- [38:20]
Lindsey Graham
We've discussed how independent bookstores and this localization or catering to smaller, more niche markets serves these markets and the ultimate consumer. How might they also serve the authors?
- [38:34]
Jane Friedman
Well, Daunt himself has talked about how stores should be engaging with the community, running author events, or doing other things that bring authors into the store. And that level of engagement, of course, is going to vary from location to location. It's hard to make generalizations, but I, I think as a philosophy, he would like to see that happen. And in New York City, they did a very successful event, this was maybe two years ago, where they had a TikTok author festival at, I think it was the Union Square location, or it was in New York City in any event. And they sold out. They had hundreds of people come in and they had a range of authors. So that's one example of their outreach. I think that the other thing that one hopes is happening, but it's hard to say because it's all anecdotal, is that Barnes and Noble is paying attention to the local and regional authors who come in and make inquiries or ask about getting their books on display or getting them ordered for that particular location because they are from the community. But I would say this is, again, anecdotal. What I hear happening is more partnerships with publishers more so than with authors, which is quite natural, especially from the corporate level, that, that it needs to be coordinated at the corporate level, whereas when it's with authors, it's really going to be on a store by store basis.
- [39:57]
Lindsey Graham
So with the rise of the Internet, Amazon reading devices, many people were understandably pessimistic about the state of the publishing industry. In our conversation, we're describing a different portrait and you seem optimistic. What gives you hope for the industry?
- [40:14]
Jane Friedman
If you just look at the sales alone, they're strong. I mean, the book publishing just experienced four or five years of some of its best sales. So there's certainly not a decreased interest in reading fiction. Sales have never been better. And I think there are reasons for concern. One of them has to do with the decline of children's pleasure reading. So reading outside of the school. Another area has to do with softness in nonfiction sales. You can speculate about why that is, but part of it might just be a lot of competing Media that fulfill a similar need, whether that's podcasts or newsletters. But despite those areas of concern, books are still making their way into people's hands throughout so many different channels, and there are so many more ways to read than there was when I entered the industry. There's tremendous growth in the digital audiobook space. This was one of the surprises I could have talked about early on is that we saw this tremendous growth for audiobooks in the early aughts and I thought, well, this has to slow down at some point. But it's been growing now for, gosh, 15 years. And there are more and more ways for that to reach more people. For example, the Spotify announcement last year that they were going to start doing audiobook subscriptions. And they have increased, you know, the pie there. Rather than cannibalizing sales, it seems to have brought more people in. And you have places like Wattpad that have serialized fiction and with a kind of a pipeline into traditional book publishing, into the bookstores, and also into TV and movies, to speak of TV and movies. Many of the most popular TV shows and movies are in fact based on books. So I think there is no lack of creative imagination potential and IP in the book publishing industry.
- [42:09]
Lindsey Graham
One thing I was reading just recently was a predicted peak in college age students, I guess Americans in 2025. And it'll be followed by a 15 year decline in this critical demographic. Obviously for higher ed this is meaningful, and probably for textbook publishers this is meaningful. But what might it mean for book publishing?
- [42:32]
Jane Friedman
Well, it has the potential to affect a very specific sector of book publishing, the educational, scholarly or professional areas of book publishing, which I just want to make it clear. This is very different from like the Barnes and Noble market, the consumer market that's called trade publishing, although certainly there are trade publishers who do books that get used in classrooms. But the specific textbook market, in fact, it has been transitioning away from what I would call traditional book publishing for at least a decade. Like, they saw the writing on the wall with digital learning solutions from the very start. I hesitate to call it a pivot, but they don't really call themselves publishers anymore. They're providing learning solutions and so they're helping students learn not just through books, but through apps and I assume now AI chatbots, videos and other interactive materials. They have a different set of concerns at play, but I think the actual unit sales of books is probably low on their list of concerns.
- [43:36]
Lindsey Graham
So then I guess I need to ask you, what else do we need to watch out for? Or rather, what else does the publishing industry need to watch out for? Is there another big shakeup on the horizon?
- [43:47]
Jane Friedman
Well, one thing that publishing has always been very queasy about is the rise of subscription services. For all this time, ever since the subscription market has been growing, whether that's Netflix, Spotify, the rest of them, publishing has managed to still keep its unit sales going. And even when it has participated in subscription services, it's still largely earning the same amount as a unit sale. Some publishers, in particular Penguin Random House, which is the biggest US Publisher, it pulled all of its books out of these subscription services around 2020. This includes ebook and audiobook because it felt like it could be the financial downfall of publishing. But I just mentioned Spotify a little bit ago for digital audiobooks and this has been kind of a. It's not right to call it a chink in the armor, but the publish Spotify must have made them an offer they could not refuse because not just Penguin Random House, but every major publisher has put their books into the Spotify system, into this subscription service. And so I've just been sitting and waiting, holding my breath to see what happens next, if there's going to be another shoe that drops. Another important element here is Amazon's Kindle Unlimited, which is probably the biggest, at least in the United States, the biggest ebook subscription service for readers. And large publishers, by and large stay out of that because they don't want to give Amazon any more power than they already have. So there isn't a really big ebook subscription service that competes aside from maybe everand, but it's also trying to change its model, maybe in response partly to Spotify. It's hard to say, but that's where I think everyone's concerned that the dollars will turn into pennies depending on if these platforms have so much power, they get to dictate the terms, as seems to happen with every relationship between big tech and arts and entertainment companies.
- [45:52]
Lindsey Graham
Finally, this is a business show and I'm wondering what business lessons you think our listeners can learn from James Dunt's rescue of Barnes and Noble that they might be apply to their own businesses?
- [46:03]
Jane Friedman
Well, I think it's a very simple one which is serve the customer and I guess bookstores kind of. It depends on who you consider the customer for the bookstore. I think for a long time they were serving the publishers and not the readers who walked into their store. And that's because they were obviously getting money from the publishers to do certain things. And it was a lot of money that was hard to say no to Barnes and Noble when I first entered the business was a very bland store. It didn't matter where you walked in to a Barnes and Noble, it was going to be exactly the same experience. And maybe for some portion of time that was a strength. But as of 2020, that is not a strength. At least in the book selling market. You want to step into a bookstore and feel like it's different from loading up Amazon. When Amazon tried to open bookstores, it felt like engaging with Amazon, the website, the people staffing Amazon stores didn't know anything about the books that were on the tables. So James Daunt took what is the best about any bookselling experience and introduced an element of delight and care and attention. Something where but you know that if you walk into one of his stores, whether it's in the UK or the US that you're going to discover something that you would not have otherwise found. And that's why it helps book publishing and book selling. That moment of delight and enrichment.
- [47:36]
Lindsey Graham
Jane Freeman, thank you so much for speaking with me today on Business Movers.
- [47:39]
Jane Friedman
Thank you very much, Lindsay. It's been a pleasure.
- [47:42]
Lindsey Graham
That was my conversation with Jane Friedman. Her book the Business of Being a Writer is available now, including at Barnes and Noble from Wonder 8. This is the final episode of our series on Barnes and Noble on the next season of business movers. Two black women in early 20th century America defy the racism and sexism of their day to become hair care millionaires. If you like Business Movers, you can unlock exclusive episodes found nowhere else on Wondry and access new episodes early and ad free. Join Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. And before you go, tell us about yourself by filling out a survey@wondery.com survey. If you'd like to learn more about Barnes & Noble's history, we recommend the Noble Legacy by Betty Noble Turner and the Late Age of Print by Ted Streifus. A quick note about our dramatization. In most cases we can't know everything that happened, but all our reenactments are based on historical research. Business Movers is hosted, edited and executive produced by me, Lindsey Graham for Airship Sound design by Molly Bach music by Lindsey Graham. This episode is written and researched by Cody Hoffmuckle coordinating producer, Jake Samson. Executive producers are William Simpson for airship and Aaron O'Flaherty, Jenny Lauer Beckman and Marshall Louie for one. Hello ladies and Gerbs, boys and girls. The Grinch is back again to ruin your Christmas season with Tis the Grinch Holiday Podcast. After last year, he's learned a thing or two about hosting, and he's ready to rant against Christmas cheer and roast his celebrity guests like chestnuts on an open fire. You can listen with the whole family as guest stars like Jon Hamm, Brittney Broski, and Danny DeVito try to persuade the mean old Grinch that there's a lot to love about the insufferable holiday season. But that's not all. Somebody stole all the children of Whoville's letters to Santa, and everybody thinks the Grinch is responsible. It's a real Whoville whodunnit. Can Cindy Lou and Max help clear the Grinch's name? Grab your hot cocoa and cozy slippers to find out. Follow Tis the Grinch Holiday Podcast on the Wondery App or wherever you get your podcasts. Unlock weekly Christmas mystery bonus content and and listen to every episode ad free by joining Wondery plus in the Wondery App, Spotify or Apple Podcasts.