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Amazon and Barnes & Noble: The Tale of Two Online Booksellers

Being the resident intern around here, I sometimes get stuck with, well, intern-y jobs. A few weeks back, I was assigned to clean up a bookshelf that had been gathering dust, old industry reports and book festival guides. As I flipped through the old files, I laughed at subtitles like, “The CD ROM Gold Rush: Too Many Prospectors, Not Enough Gold.”

But it wasn’t all outdated technology jokes. An Open Book Publishing 1997 report entitled “Subtext: Perspective on Book Publishing: Numbers, Issues & Trends” broke the news that “A number of booksellers have set up shop on-line, the most successful being Amazon.com.”  In tones of mild surprise, the authors describe Amazon as an unexpected success. The report goes on to mention the 1997 launch of the Barnes & Noble online store, which was seen as a direct response to the success Amazon was enjoying.

I was intrigued by the “internet histories” of the two biggest players in modern bookselling. I knew of their competition in the present day, but for myself and others not involved in  publishing business in the late ‘90s, the picture is really only half-painted.

Let’s examine the cast of this drama of online bookselling:

 Amazon.com: Founded in 1995 by Jeff Bezos, Amazon began as an online bookseller. Amazon.com made it through the dot com bubble burst, and eventually expanded its products to include everything from baby clothes to windshield wipers. Amazon also pioneered the ebook revolution with the 2007 release of the Kindle, which it once claimed held 70-80% of the ereader market. Amazon is the online native–the one who has always known how to get to the top digitally, as the  digital environment is the one it was born and raised in.

Barnes & Noble: First set up as a bricks-and-mortar bookseller in 1917, Barnes & Noble launched a website in 1997 after selling books on CompuServe through the mid-1990’s. Barnes & Noble has weathered the demise of many other bricks-and-mortar bookselling companies, and now is considered the largest primary bookseller. It accounts for 27% of the ebook market with its ereader, the Nook, released in 2009. Barnes & Noble is the online immigrant, but well-established in the industry, and a survivor of a rocky transition from physical bookstores to online peddling.

Over the past decade, many other players have been pushed out of the book selling industry, such as B. Dalton, Waldenbooks, and Borders. When two heavyweights dominate a business, there are bound to be struggles for each–and even the occasional clash.

It was the best of times, it was the worst of times…

May 12, 1997

Barnes & Noble files a lawsuit against Amazon after Amazon began advertising with the tagline ‘Earth’s Biggest Bookstore’. Barnes & Noble claimed that Amazon was not a ‘bookstore’ at all, but rather a ‘book broker’, and that Amazon only had access to a few hundred titles, as opposed to B & N’s in-store 170,000+ title stock. So how’d it all turn out? Amazon turned around and countersued. A Wired article explains, “The case was settled that fall with the slogans intact, but it reinforced the view of Barnes & Noble as an old, tired, unhip giant – exactly the wrong image to project to the burgeoning Web audience.”

Blast from the Past: Both companies’ brand-new websites projected they would eventually offer 1.5 million books that were in print, and 1 million out-of-print titles. Compare that with the 14 million+ titles Amazon now has today, and 1 million titles Barnes & Noble can deliver instantly along with the 30 million listings they offer from affiliated out-of-print and rare book dealers.

October 1999

Amazon files a patent infringement lawsuit against Barnesandnoble.com. The violation in question? Amazon’s ‘one-click’ purchasing option, which stored returning customers’ important billing information in a cookie. Barnesandnoble.com had apparently mimicked this technology by introducing ‘The Express Lane’, an option that also stored customer information in a cookie. In December 1999, courts granted a preliminary injunction against Barnes & Noble to remove the Express Lane option. The case was officially settled out of court in 2002. Now almost all online markets have a returning customer memory device of some sort.

Side note: Amazon’s defense of their patent sparked outcry amongst many in the field of technology. Paul Barton-Davis, one of Amazon’s first programmers, called it “a cynical and ungrateful use of an extremely obvious form of technology”, while Richard Stallman, a web developer and programmer, lashed out by claiming the suit was “an attack against the world wide web, and against e-commerce in general.”

November 2009

This one isn’t explicitly Amazon vs. B&N, but it is indicative of what lengths the companies would go to to keep up with each other. Spring Design claimed that Barnes & Noble had violated a non-disclosure agreement by producing a dual-screen Nook reader, a feature Spring Design claimed was defining about the e-reader they had been working on since 2006. Barnes & Noble was anxious to penetrate the e-reader market that was so obviously monopolized by Amazon‘s Kindle. The Spring Design reader, branded the ‘Alex’, had several release delays and eventually failed in an oversaturated market.

How it ends: After a year and a half legal struggle, Barnes & Noble agreed to non-exclusively license and pay Spring Design for technology used in the Nook.

 

April 2012

In this instance, we present a case that doesn’t implicitly involve Barnes & Noble or Amazon, but is nevertheless one where each made themselves heard. Of course, we’re talking about The United States Department of Justice filing an antitrust suit against Apple, Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster over the price of ebooks. You can read all about the full drama here.

Though Barnes & Noble was not officially involved in the scandal, it took a strong role in championing the Agency model’s cause. Barnes & Noble and the American Booksellers Association sought permission to intervene in the case. Legal commentary from Barnes & Noble read, “Giving customers the widest choices at the fairest prices is at the heart of the agency model, and we believe this model should remain intact.” Of course, the main party who wanted to do away with Agency (who was also not involved directly in the court case) was Amazon. By doing away with Agency, Amazon’s heavily discounted prices would gain the attention—as well as the checkbooks of—consumers, who are obviously trying to get the best dealBarnes & Noble and the ABA took the side of traditional publishers, who maintain prices in the $16-$20 range, and claim they need to maintain those in order to turn a profit.

Stay tuned: Though Hachette, HarperCollins, and Simon & Schuster have settled, the rest of the companies involved in the suit will have it out in the courtroom in the summer of 2013.

 


One Trackback

  1. By Internviews: The End of the Road for Liz Janetschek on December 17, 2012 at 11:31 am

    [...] publishing-geared reading, not tech or industry-driven pieces. The articles I worked on, such as a legal history of booksellers and technological advances at the Frankfurt Book Fair, allowed me to see another side of publishing [...]

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