Barnes & Noble and the Publishing Free for All

THE advent of blogging during the late 1990s significantly lowered the barriers to entry in the publishing industry. Any person with a computer, a blogger account and a half baked idea could get into the industry, and they did. To shake things up further, the advent of blogging reduced the cost of distribution and the price of consuming content to zero. In 2010, eBook sales almost doubled and now make up more than 9% of total consumer book sales.

Despite these significant changes to the industry and a decade of warnings from visionaries like Seth Godin, the publishing industry has been far too slow to respond. The cost structure for physical book publishing is under big pressure, and the following cost breakdown shows where the cracks have appeared:

Cost of Physical Book Publishing:
Author gets 15%
Publisher gets 35%
Distributor gets 10%
Retailers get 40%

Earlier this year a number of major brick and mortar book stores closed their doors. In the US, Borders Group filed for Chapter 11 bankruptcy protection in New York. In Australia, REDGroup Retail, the owner of the Australian book chains Borders and Angus & Robertson, was forced into voluntary administration.

And this is not the end of the story. US based Barnes & Noble and Australian based Dymocks have their heads on the chopping block and are likely to suffer a similar fate, unless significant changes can be made to their respective business models (hint: get out of the bricks and mortar book business while you still can).

If you have any thoughts on how this train wreck waiting to happen will play out, please comment below.