Moderator, Sarah Weinman; Michael Cader, Publishers Lunch; Marianne Wolk, Amazon Analyst, SIG Susquehanna Financial Group; Matt Fassler, B&N Analyst, Goldman Sachs

Wolk: Amazon seems to have little or no profits for their ebooks in order to get market share. Amazon has the luxury of the very profitable cloud computing business that can subsidize the ebook business. Don’t see them letting up price pressure any time soon. Amazon tends to provide tidbits of data that have very little context. They don’t provide info to analysts and don’t meet with analysts. Most analysts assume that Amazon and Google will end up with 40-50% of ebook sales. Independent bookseller understating how well they have done. Google in invested in building a local business and want to see local business succeed so that can get leverage for a local advertising market. Amazon probably won’t buy a publisher, but are getting into that business themselves. Expect them to expand their media distribution more broadly. If anyone buys a publisher for its content will be Apple or Google because they have the most cash.

Fasler: at the moment booksellers are something to avoid as an investment. Across the board, even for B&N, losses have exceeded expectations. Economics of digital business for B&N look worse than they should. Historically the big box retail books business wasn’t a great business for the shareholders. Return on capital, even in best days, was lower that other types of big box stores. Repurposing square footage very hard to do. Over time digital book business will be a better business than Wall Street gives it credit for. For B&N going private wouldn’t solve any of their major issues. In most industries there is a vibrant network of local independents even where there are competing big box stores. Backlist book seller doesn’t compete with big boxes and they can also understand local issues. When big box store sells a Nook they often get a piece of the ebook sales related to it. Expect to see a downsizing of the number of stores and store sizes as the continued growth of ebooks continues. A painful downsizing over the next few years but the industry will continue to exist.

Cader: investors and analysts bearish on B&N. The nature of the superstore is behind us. There are great opportunities for consumers, but also great confusion among consumers so anyone who can execute well has a possibility of success. As bookstores change it effects title mix primarily and that may be the biggest effect on the publisher.


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