Antitrust Settlement Batters Barnes & Noble

Barnes & Noble

Speaking of Barnes & Noble, the venerable retailer has evidently been hit rather hard by the news of the Department of Justice’s far-reaching e-book pricing litigation. Jeffrey A. Trachtenberg reports for The Wall Street Journal:

Barnes & Noble Inc. bore the brunt of Wednesday’s antitrust settlement between the U.S. government and three major book publishers, losing 6.4% of its market value on Thursday alone and tumbling 17% this month.

Those market worries reflected the broad sentiment in the publishing world that Amazon.com Inc. is likely to emerge a far stronger competitor in the fast-growing e-book business now that it once again will be able to discount digital books by such best-selling authors as Mary Higgins Clark and Christopher Moore.

Despite Barnes & Noble’s impressive inclination toward innovation and modernization, the market seems to be irrevocably slipping from its already loosened grasp. With low e-reader sales, the antitrust settlement, and the looming shadow of Amazon, Barnes & Noble’s business seems doomed to eventual collapse.

Without significant restructuring of the company’s digital framework, the Nook line is utterly under-supported by its own parent ecosystem. Regardless of positive and optimistic intentions, Barnes & Noble is, at the end of the day, well out of its depth and comfort zone. Although, in a romantic sense, I would wholeheartedly like to see a resurgent Barnes & Noble, the prospect is becoming increasingly unlikely with each passing day.

In fact, I tend to think their e-readers are measurably better than their Amazonian competitors in many respects. But, unfortunately, Amazon has an extensive media ecosystem that unquestionably trumps good intentions and well-measured hopes.

Simply put, Amazon is able to endure low margins and cut-cost sales due to its broader sales initiatives. Barnes & Noble, on the other hand, is definitively wedged into a singular segment of the market.

I do hope Barnes & Noble can weather this storm but, with flagging investor and consumer confidence, the prospect is — disappointingly — shifting into the realm of unadulterated idealism.