Nook May Be Barnes & Noble’s Salvation

Barnes & Noble released its first-quarter earnings report on Tuesday, revealing that sales of its Nook e-reader and e-books have been helping to offset the company’s sinking physical book sales.

Barnes & Noble Nook Color

The Barnes & Noble Nook Color

Total revenue was up 2 percent to US$1.42 billion. Store revenue was down 3 percent to $1 billion. Online revenue was up a whopping 37 percent to $198 million. The retailer posted a loss of $56.6 million, or 99 cents a share, for the quarter.

Barnes & Noble predicts a bump of between $150 and $200 million in the next year, with an expected influx of shoppers coming from the failed Borders chain. Barnes & Noble is expecting its highest holiday numbers in five years. It also forecasts sales of the Nook and e-books will more than double this fiscal year to $1.8 billion. The news sent the company’s shares up 8 percent.

Barnes & Noble has bet its future on the success of the Nook. Sales of Nook devices rose 140 percent to $277 million for the quarter. Nook is the No. 2 dedicated e-reader after Amazon’s Kindle. If the Nook lives up to the company’s projections, it will account for a fourth of the chain’s sales and all of its growth.

Nook Draws Big Investors

The Nook may be key to Barnes & Noble’s credibility with investors. It has helped the company distance itself from the troubles that doomed its competitor Borders.

“First of all, the Nook is Barnes & Noble’s only viable business, and it’s the reason both [investors] Ron Burkle and John Malone have taken such an interest in the company,” said Porter Bibb, managing partner, corporate finance, at MediaTech Capital Partners.

“Barnes & Noble will, inevitably, have to downsize its bricks and mortar empire,” Bibb told the E-Commerce Times.

While Barnes & Noble continues to run a powerful retail chain of stores, those stores may be a burden rather than an asset in a publishing world that has very successfully taken the plunge into digital products.

“Print books will not disappear completely, but in June, for the first time in history, Amazon announced it sold more e-books than print books, said Bibb. “That trend is irreversible as more and more readers and tablets hit the market.”

The Nook may end up the leading dedicated e-book reader once Amazon commits deeply to a tablet.

“The Nook is a super way to read and store books. Its features and functions make it far superior to the Kindle, unless price is the only criterion,” said Bibb. “Amazon’s tablet will obsolete the Kindle anyway, and Barnes & Noble should have the e-book market to itself in a year or two.”

Barnes & Noble and its investors are betting that Amazon’s tablet will take the company’s eye off the Kindle. That could leave Barnes & Noble as the go-to company for consumers who want a device for books only.

“Sure, you can read books on an iPad or any other tablet, but enough people will want a dedicated e-book reader to give Barnes & Noble a viable future,” said Bibb. He pointed to the continued popularity of the iPod as an example of consumer preference for a dedicated device.

“You can get songs on an iPhone or a tablet too, but millions of people still like their music on an iPod,” he said.

B&N’s Future Depends on Nook

The Nook platform is a valuable asset because it gives Barnes & Noble a way to directly distribute e-books to its readers. The Nook Color is also important because it integrates popular Android and tablet features.

“In many ways, Nook sales are a great predictor of future Barnes & Noble book sales, because the Barnes & Noble e-commerce site will supply most of the content that a Nook owner buys,” said Carl Howe, director of anywhere consumer research at the Yankee Group.

“The Nook Color also broke new ground in attracting e-readers by using an Android color tablet as the base platform,” he told the E-Commerce Times.

An Amazon tablet could shake things up a bit for the Nook.

“Nook sales may take a hit when Amazon introduces its own tablet, but I think there’s plenty of room for multiple e-book and e-reader vendors in such a young market,” said Howe. “E-books are where the growth in publishing is, so the Nook is the means by which Barnes & Noble is shaping its future business.”

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License Change May Spark New Pricing Trend for Open-Source Projects

software license

Cloud-native microservices platform Lightbend wants open-source licensing to better meet developers’ needs and is doing something to make that happen. However, the replacement fix is not a traditional open-source license. Rather, it transitions there in time.

The company, whose user base includes some of the world’s largest brands, on Wednesday announced significant changes to the licensing model for its Akka technology. The platform is used extensively by industry leaders in financial services, e-commerce, automotive, web services, cloud infrastructure, and gaming.

Akka offers devs the ability to deliver concurrent, distributed, and resilient event-driven applications for Java and Scala. Lightbend is changing the license on all Akka modules from Apache 2.0 to Business Source License (BSL) v1.1, starting with Akka v2.7 which will be delivered in October.

That change will bring hefty licensing costs to high-end users. But Lightbend expects it to bring no major problems on open-source projects.

“The goal is to have as little impact on the open-source community and projects as possible. Open-source projects using Akka can contact Lightbend and apply for a license to use Akka within the realms of the open-source project. We have already called about the Play Framework in the Additional Usage Grant in the license itself,” Jonas Bonér, Lightbend’s founder and CEO and the creator of Akka, told LinuxInsider.

The new license will ensure a healthy balance between all parties, shared responsibility, and by extension, contribute to Akka’s future development, he explained.

Addresses Broken Business Model

The “open core” business model on which Akka is based has shown its limitations for Lightbend and many other organizations in similar circumstances, he offered. The toolkit’s licensing changes will ensure its future development.

Once an OSS project becomes so critical to an organization’s daily operation, many larger enterprises turn to self-supporting this software, without contributing anything more to its development or the community at large, Bonér observed. In many instances, these organizations are generating significant profits leveraging this “free” technology.

Under Akka’s new licensing model, any organization with less than $25 million in annual revenue will not require license fees for production usage of the software. However, Lightbend must still grant those users a $0 commercial license.

Larger businesses with more than $25 million annual revenue must now acquire a paid license plus a subscription for production usage. The BSL is available with several options. The new license does not permit back-porting of any software released.

“I think it is a viable path toward sustainable open source. I expect more companies that are building a business around open source to go down this path,” Bonér noted about the impact the BSL license switch will have on open-source projects.

How It Works

MariaDB Corporation crafted the BSL v1.1 now used by Cockroach Labs and other organizations. The BSL is not an open-source license.

In short, the difference is slight between the BSL 1.0 and BSL 1.1, explained Bonér. Version 1.1 fixed the loophole where a company could opt to never convert to a “change license” by now making it explicit that it could not be more than four years. A full discussion of the version change is available at MariaDB.

Akka’s new license works in two stages. First it has commercial overtones. Then it becomes “customizable.”

Under the commercial stage, users can view the source code of the software they obtain for the $0 license. They can download and use it in non-production environments. However, production usage requires users to obtain an upgraded software license from Lightbend.

The second stage kicks in under an open-source license after three years. That version then is released under the current Apache 2.0 license. It offers a customizable “Additional Use Grant” that will be used to grant usage for other OSS projects such as the Play Framework.

Pricing and Versioning Matters

Each new minor version of the software will have its own change date. A “minor version” is defined as a release that changes the second digit of the version number.

For example, a change from Akka 2.7.19 to 2.8.0 would reset the change date. A patch build change from 2.7.19 to 2.7.20 would not, according to Bonér.

Based on this license revision, here is Lightbend’s revised pricing and packaging for the Akka software:

Lightbend's Akka platform, packaging and pricing options

Organizations seeking more information about the implementation of BSL licensing can explore Bonér’s blog.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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