Nook + Microsoft = Big Six Love

The New York Times is reporting on a deal between Microsoft and Barnes & Noble: the former is buying 17.6% of the Nook unit of B&N for $300 million. Though the Nook part of B&N’s business has been growing fast, apparently the tech investment it requires has been a financial drain on the company, which has been looking for just this kind of partnership.

What interested me about the Times‘s report was the bit at the end:

Publishers appeared to be cheered by the news. [B&N CEO William] Lynch said that he had received encouraging e-mails Monday morning from chief executives from five of the six major publishers in the business.

“These publishers are completely aligned with Barnes & Noble,” Mr. Lynch said. “Publishers are going to like this deal a lot.” (accessed 4/30/12)

I can see why. A decade ago, Borders and B&N came along and wiped out most of the country’s small, independent sellers of new books. Now ebooks and internet retailing of paper books are putting the pressure on the mega-stores. The publishers’ eggs are mostly in two baskets, now, for paper sales: Amazon and B&N. The last thing publishers need is B&N going the way of Borders.

Here’s an example. I’m living right now in a town of 70,000 people. It had a Borders. Now it doesn’t have any dedicated outlets for new books. You can buy a best-seller at Wal-Mart or a supermarket, but that’s about it. There are certainly people here who might browse in a book store and find some paper books they like, but now their options for that are mighty limited. So instead they’ll go to Amazon. And what’s a really, really good deal on Amazon, compared to those paper books at Wal-Mart? You got it: ebooks.

So anything that keeps B&N healthier is going to make the big publishers feel a bit better about things, eh?