March 25, 2013

B&N and S&S still locked in “despicable” dispute over new terms


Barnes & Noble and Simon & Schuster are still negotiating.

It has been almost two months since a special January 30th Publishers Weekly alert went out to subscribers announcing “Simon & Schuster, Barnes & Noble in Dispute Over Terms.” While some speculation as to why Barnes & Noble decided to drastically cut their orders from Simon & Schuster was posted on this blog in comment sections, the details in the matter have remained a mystery. Until now.

Over the weekend, both the Wall Street Journal and the New York Times reported on nature of the dispute, which seems to be a result of the mounting pressure for publishers and physical booksellers to compete with Amazon. Because Barnes and Noble is the last bookseller chain, the company is in both a powerful and precarious position to negotiate with publishers like Simon & Schuster. Both reports indicate a growing sense in the publishing community that the standoff is hurting authors and has the potential to damage overall industry-wide book sales as well.

In the WSJ, Jeffrey Trachtenberg reported that “The dispute, which one publishing executive likened to a blackout of TV channels by a cable operator, reflects tensions created by the shift to digital reading and the impact of online discounting, which are shaking up publishing.”

Trachtenberg’s piece offered details about ebook terms, apparently one aspect of the dispute. Since the Department of Justice settlement, ebook terms are back on the table, and the publisher and retailer must decide who will bear the financial burden of ebook discounting. Another major issue in the the dispute concerns marketing costs that the publisher pays to Barnes and Noble in return for  promotion and in-store placement.

In The New York Times, Leslie Kaufmann gave more details on those marketing and “showrooming” terms, obtained from anonymous sources:

The dispute centers on the financial arrangement between Barnes & Noble and Simon & Schuster. While neither side will specify exactly what new terms Barnes & Noble is seeking, a senior executive familiar with the negotiations said that the bookseller wanted to pay less for books and receive more money for giving titles prominent display in its stores. Such display spots are coveted because they are thought to be critical in helping customers discover new books.

Those familiar with the disagreement—who spoke on condition of anonymity because the negotiations are confidential—say Barnes & Noble believes that because its physical display space is so important to publishers, and because it is the last major retail chain remaining, publishers should be doing more to support it. Barnes & Noble has told Simon & Schuster, a senior executive said, that at least one other publisher has accepted these new terms.

The reason that Barnes & Noble started cutting orders from Simon & Schuster in January 2013 (which prompted the PW email) is that B&N had asked for new terms with S&S in August 2012 without any agreement, and reducing stock of the publisher’s titles was a negotiating tactic to encourage them to comply.

Simon & Schuster CEO Carolyn Reidy was quoted in both articles, while a B&N spokesperson only indicated that it was against policy to discuss terms with individual publishers. At this point, it seems as though S&S has the most to lose — especially for smaller authors.

The New York Times article quoted Simon Lipskar, the president of literary agency Writers House, as saying, “Without pointing fingers, authors are being hurt by this, and I think it is despicable.”



Claire Kelley is the Director of Library and Academic Marketing at Melville House.