It really is remarkable how quickly B&N is becoming a digital company or if not a wholly digital company, a company where digital is clearly the future. In the same way that large publishers have embraced ebooks in the last few years, so too has B&N.
The paragraph below from PW’s story (read the whole piece) really bangs home the importance of digital content and devices to B&N in 2011 and just how rapidly that segment of its business has grown since 2009:
Much of the profit improvement will be due to better results at BN.com. The fastest-growing segment of its business, the online division’s sales rose 36.8%, to $198 million in the quarter, and its operating margin jumped to 21.0%, from 3.7% a year ago. B&N CEO William Lynch said in the quarterly conference call that the margin improvement shows that BN.com’s business is scalable and should continue to improve its profitability as sales grow. The margin improvement in the quarter was due to a combination of higher sales of more profitable digital content and better margins from the sale of Nook hardware products. Sales of digital content through BN.com quadrupled in the quarter, and B&N estimated it has a 26%–27% market share of e-book sales and a 30% share of the digital magazine market. The majority of e-book sales are made through the agency model and B&N’s self-publishing platform, PubIt! By the end of fiscal 2012, B&N projected that digital/Nook sales will represent about 24% of total revenue compared to 12% in fiscal 2011 and 2% in fiscal 2010.