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2009 will stand as a major turning point in the history of bookselling. Rivaled
only by events such as the invention of the printing press itself and the advent of
the mass market paperback, the digitization of book content promises to open up
and expand the marketplace for books and other written works to unprecedented
levels.
In 2009, Barnes & Noble transformed its business by extending our bookselling
leadership through best-in-class technology. It was the year of NOOK™, the
most full-featured dedicated eBook Reader on the market, which quickly gained
acclaim and awards. We also opened the doors to our virtual BN eBookstore, a
vast digital offering of more than one million titles, and we created free, easy to
use NOOK eReader software, which enables customers to enjoy their Barnes &
Noble eBooks on a variety of the most popular mobile and computing devices.
In less than a year, the Company achieved a 20 percent share of the eBook
marketplace, larger even than its current 17 percent share of the physical book
marketplace. This is an amazing accomplishment in such a short period of time,
and we believe our share will only increase in the years ahead and provide an
income stream far in excess of our traditional bookstore operations.
Although, to some extent, eBook sales do replace bookstore sales, a survey of our
Members – Barnes & Noble’s very best customers – shows they have increased
their combined physical and digital spend with us by 17 percent since purchasing
a NOOK and by a phenomenal 70 percent in total units. In addition, we’ve already
begun to see the halo effect of NOOK both online at BN.COM and in our stores.
For example, a quarter of NOOK owners are new to BN.COM, which means
we’ve been able to attract a significant number of new online customers to the
Company through our strategic marketing efforts.
As a result of our strong, long-term relationships with our publishing partners,
we’ve been able to offer the unprecedented benefit of digital eBook lending to
our customers, as well as a rich and unique in-store eReading experience for
NOOK customers. NOOK owners have told us they enjoy coming into our stores,
sitting in our cafés, sipping a beverage, connecting to our free Wi-Fi,® shopping
our eBookstore, browsing the complete contents of eBooks at no cost, and down-
loading free exclusive content from bestselling authors and special promotions.
We have also been encouraged by the fact that our bookstores have emerged as
the very best places to sell eBook Reading devices and the benefits of eBooks.
This past year, we installed special NOOK counters at the front entrance of each
of our stores, complete with an experienced sales staff to demonstrate our eBook
Readers. There is no question that much of the success of NOOK sales goes to our
BARNES & NOBLE 2010 LETTER TO SHAREHOLDERS
2 Barnes & Noble, Inc.