B&N and DC: Exclusivity Rears Its Ugly Head Once Again

Yesterday morning, the comics news website Bleeding Cool reported that Barnes & Noble -- the only remaining national retailer primarily devoted to books, with around 800 superstores and hundreds more college stores -- had decided to remove a hundred physical graphic novels published by DC Entertainment, in response to DC signing a deal earlier in the week making the digital versions of those books available, for the first time in that format, solely on Amazon's new Kindle Fire color device.

I wanted to know if this was really the case -- Bleeding Cool often reports on rumors as well as news, so sometimes stories there see some modification as they roll out through other news sources -- so I tweeted this morning:

1/2 Now Locus has the B&N-dropping-DC-graphic-novels story: http://1.81.iz.sl.pt. But is there any independent verification?

2/2 Or does it all lead back to that one, unsourced story from Bleeding Cool, which has been unreliable on similar stories in the past?

I got a couple of replies -- mostly along the lines of "Neil Gaiman believes it's true" and "there are pictures of B&N employees moving stacks of those books," which are interesting but not what an unbiased observer would consider actual proof -- but, later, I got a chance to do some searching myself, and the story has been pretty conclusively proven, with stories datelined yesterday in the Wall Street Journal and The Hollywood Reporter both quoting B&N CMO Jaime Carey. (There are lots of other stories on blogs, but many seem to just be picking up Bleeding Cool's reporting without verifying it with either party.)

Hollywood Reporter had what seemed to be a press release signed by Carey, and quoted:

Regardless of the publisher, we will not stock physical books in our stores if we are not offered the available digital format. To sell and promote the physical book in our store showrooms and not have the ebook available for sale would undermine our promise to Barnes & Noble customers to make available any book, anywhere, anytime.

 And WSJ's Jeffery A. Trachtenberg seemed to have spoken directly to Carey, who said:

Our policy is that we won't stock physical books in our stores unless we're offered the content in all formats. We want to maintain a premiere customer experience. 

DC's press-release response hinted at what everyone in publishing expected -- that B&N had threatened this, but DC didn't expect the threat to be real:

We are disappointed that Barnes & Noble has made the decision to remove these books off their shelves and make them unavailable to their customers. DC Entertainment will continue to make our content available to our fans and new readers through multiple distribution channels including independent bookstores, locally owned comic book retailers and other widespread means such as online through Amazon and through our apps on iOS and select Android-powered devices as well as new and exciting devices going forward.

(Whether this implies that DC is too used to being a massively dominant player in its usual sales channel -- the comics direct market -- and thus doesn't think any threats made against it could possibly be carried out, I'll leave to those closer to that particular Kremlin than I am.)

Anyone in the book business knows that B&N and Amazon are particularly fierce competitors right now, and that B&N has specifically said, both in public and to its vendors in private, that it adamantly insists on being allowed to sell books in all available formats -- they have specifically warned publishers that they would not stand for being the place where only the physical edition of a book is available. (And, given the explosive growth in ebook sales over the past two years, I don't see how anyone can blame them.)

Furthermore, they've reduced the space in their stores devoted to books substantially over the past year -- a time during which their major physical competitor, Borders, went bankrupt and then out of business, which also vastly reduced the amount of shelf-space available for physical books in this country. So space for physical books is already crunched, and retailers like B&N are looking for reasons not to carry particular product lines on those shelves.

In that environment, it's remarkably short-sighted to go digitally exclusive -- particularly on a large list of strong-selling products -- with one retailer, and hope that the other major player won't retaliate. It would be equally short-sighted to pursue an exclusive on B&N's Nook platform, for precisely the same reasons -- Amazon is just as likely to remove a book from sale, and has done so in the past for entire publishers at less provocation.

DC Comics is finding that it's easy to talk about making their titles available through all channels, but actually doing so is much harder: those channels often don't want each other to have products (as we've also seen in the comics direct market's reactions to both digital comics and to the rise of bookstore graphic novel sections over the past fifteen years), and they will react strongly when they perceive favoritism from a publisher to another channel or account. B&N is willing to drop a line of books that collectively sells tens of thousands of copies annually -- I can't get into my B&N-specific sales tracking tool at the moment, but plain vanilla Bookscan shows Watchmen alone selling nearly 30,000 copies in 2010 and Sandman: Preludes & Nocturnes putting up nearly 10,000 units that year; B&N has over a third of that universe (being quite conservative), so extrapolate those numbers out across 100 steady-selling titles -- to make a point, and because digital is that important to them right now.

This is a very dangerous time in book publishing to go exclusive -- you have to assume that exclusivity will net you as much as the whole rest of the world would, combined, because that exclusive just might replace the whole rest of the world.

DC, I'm sure, is now looking very carefully at their contract with Amazon, to see exactly how much guaranteed promotion they've just bought with the loss of all B&N store sales -- and for how long they've bought it.

And B&N is looking carefully at all of its other vendors, hoping that they all get the message loudly and clearly: Amazon will be looking for other Kindle digital exclusives, and B&N wants to nip them in the bud as quickly as possible.