Microsoft Mulling Nook Media LLC Purchase For $1 Billion
Microsoft is offering to pay $1 billion to buy the digital assets of Nook Media LLC, the digital book and college book joint venture with Barnes & Noble and other investors, according to internal documents we've obtained.
Context & Ripple Effects
Microsoft's reported $1 billion offer for Nook Media's digital assets is an escalation of a relationship it built deliberately: in April 2012 it put $300 million into a new Barnes & Noble subsidiary explicitly framed as a counterweight to Amazon and Apple in e-books, and by October 2012 the two had finalized and named the joint venture Nook Media LLC.
If the internal documents TechCrunch obtained are accurate, Microsoft would move from minority investor to outright owner of the digital book and college-textbook business, while Barnes & Noble would shed the cash-hungry e-reader operation and keep its retail core. The pickup across Reuters, DealBook, Quartz and Forbes within a day shows how much weight markets give any sign of Microsoft buying its way into content.
First-order effects
- Barnes & Noble would receive up to $1 billion and exit direct ownership of the loss-making Nook hardware and digital business, relieving pressure on its brick-and-mortar balance sheet.
- Microsoft would take full control of the Nook e-book catalog and the college textbook operation, folding them into its own content ecosystem alongside Windows 8 and Xbox.
Second-order effects
- Amazon and Apple face a third well-funded competitor in e-books with integrated distribution through Windows devices, forcing both to defend pricing and exclusivity deals with major publishers.
- College publishers and campus bookstore channels gain a buyer willing to pay for digital textbook scale, accelerating the shift of the higher-education rental market toward platform-owned libraries.
Third-order effects
- The deal pattern echoes Microsoft's earlier billion-dollar-scale content-and-platform bets, such as the more than $1 billion Nokia accord of 2011: buy strategic position outright rather than build it, concentrating e-book ownership among a few OS-level platforms.
- If dedicated e-reader makers keep losing money while their catalogs appreciate, expect further separation of content assets from hardware shells — with retailers like Barnes & Noble becoming storefronts for platforms they no longer own.
The trend: E-books are consolidating from device-led businesses into platform-owned content libraries, with Microsoft attempting to buy its seat at the table alongside Amazon and Apple.