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Posted at 12:03 PM ET, 03/ 1/2011

Borders is bankrupt -- can Barnes & Noble be saved?

By Ezra Klein

4197995951_f939d6ef3c.jpg

I happened to be driving around Northern Virginia last weekend and noticed a few Borders with darkened windows and giant "STORE CLOSING" banners wrapped around the front. It is, for me, a sad sight. I spent much of my time at U.C. Santa Cruz at the Borders on Pacific. Bookshop Santa Cruz was by far the better bookstore, but the Borders had space to sit, sip coffee and work. When I headed to Burlington, Vt., for a summer, I lived in a flophouse with no air conditioning, a half-dozen roommates and a well-fed colony of fearless mosquitoes. But there was a Borders a few blocks away, on Cherry Street, and so that's where I spent my evenings.

I don't live in a dorm or a flophouse anymore, but I've spent more than a few lunch hours in the quiet of the Borders at 18th and K streets NW. Still, I know my attendance has dropped off, and so has my purchasing. This is partly my fault. Sorry, guys.

Borders probably can't be saved. But what about Barnes and Noble? Over at GigaOm, Michael Wolf argues that they're going to need a radically different model if they're to survive:

In the collapsing world of books, it’s every man for himself, and its time for B&N to accelerate its push into becoming a digital publisher. Longtime agent and e-book pioneer Richard Curtis suggested that maybe it’d be a good idea for one of the big publishers to pick up Barnes & Noble. Maybe, but I think things might make more sense the other way around, with B&N either acquiring a publisher or, perhaps more likely (and more wisely), investing more in an organic effort to become a leading publisher of e-books without the legacy cost-burden of New York-based publishing.

Will the publishers complain? Of course, but there’s nothing they can do about it. In the end, publishers have to work with B&N and, as Amazon has shown, not being liked has nothing to do with how successful you will eventually be.

Photo credit: The Ewan

By Ezra Klein  | March 1, 2011; 12:03 PM ET
 
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Comments

My hometown is in the process of building a huge new library and "meeting center" right next door to the smaller old library believe it or not. This notwithstanding the dozens of schools that go empty each evening, and the fact that they could have bought every household in the county a digital reader with subscription for a fraction of the cost.

When we talk about state and municipal spending woes, we should remember that it's not just salaries that are the problem, but the needless construction which no doubt benefits companies who are kicking back money to the politicians.

Oh BTW, no, neither Border nor B%N ultimately can be saved.

Posted by: johnmarshall5446 | March 1, 2011 12:13 PM | Report abuse

Borders is a truly horrible company.

Posted by: AZProgressive | March 1, 2011 12:19 PM | Report abuse

"My hometown is in the process of building a huge new library and "meeting center" right next door to the smaller old library believe it or not. This notwithstanding the dozens of schools that go empty each evening, and the fact that they could have bought every household in the county a digital reader with subscription for a fraction of the cost."

Or for that matter, they could have let people keep their own money and buy things of value to them.

I'd be furious if my town took my tax money and bought me a digital reader.

Posted by: justin84 | March 1, 2011 12:25 PM | Report abuse

Border's demise — and that of thousands of small bookstores over the last twenty years — is another reason why, in this age of Walmart and Amazon, the best value isn't always the lowest price.

Posted by: tomcammarata | March 1, 2011 1:00 PM | Report abuse

I remember watching 15 years ago while Borders and B&N pushed all my favorite independent bookstores to the edge of oblivion, forcing many to close and others to hold on by a string. So it's with a certain vindictive giddiness that I watch both these chains close and struggle now. I would add only that independent booksellers have adapted pretty heroically to the changing environment, with sites like Advanced Book Exchange
(www.abebooks.com). I just bought my first e-reading device, and it's awesome. But one of the better, unintended features of having it has been to really make me appreciate the value of a printed book.

Posted by: andrewbaron78 | March 1, 2011 1:08 PM | Report abuse

justin:

But I think you could blog about your fury on it, depending on which model they chose! LOL

Posted by: johnmarshall5446 | March 1, 2011 1:09 PM | Report abuse

"But I think you could blog about your fury on it, depending on which model they chose! LOL"

Primarily, I'd be upset because I just bought a new digital reader. No desire for two.

Posted by: justin84 | March 1, 2011 1:22 PM | Report abuse

It's the same movie we already saw with Tower Records... wipe out the small independents, and then a few years later go under.

Well, it turns out I like iTunes and Amazon mp3 so I suppose it will turn out okay.

Posted by: Hopeful9 | March 1, 2011 1:22 PM | Report abuse

"When we talk about state and municipal spending woes, we should remember that it's not just salaries that are the problem, but the needless construction which no doubt benefits companies who are kicking back money to the politicians."

Construction projects are funded by bonds; on-going expenditures are funded by property tax and other revenues. It's easier to convince voters of bonds for shiny new projects than to get adequate funding for city employees and services -- so you can have awesome facilities at the same time the city is falling apart.

Posted by: Chris_ | March 1, 2011 1:52 PM | Report abuse

Books are too expensive, so is the coffee and pastries in the book cafes

The publishers need to stop paying millions to people who cant write and to instead give book contracts to real writers instead of personalities who then hire ghosts to sell all this formulaish (ok, I cant write) crap.

If they cut prices of books/etc maybe people will start buying them again.

Posted by: lauren2010 | March 1, 2011 1:55 PM | Report abuse

I think the future is no editors or publishers, but instead letting a few lucky fans read your book early, in exchange for giving feedback on mistakes.

Posted by: yoyoy | March 1, 2011 1:59 PM | Report abuse

Chris:

Yes, of course, that's how they're financed but that's not why they're built.

We're actually a very wealthy county, but there was no reason to build another library other than somebody got paid.

Posted by: johnmarshall5446 | March 1, 2011 2:19 PM | Report abuse

Two things:

While the building it's in has a K Street address, Borders is at 18th and L.

And while e-publishing presents challenges to the world of books, that world is not collapsing. It's the bricks-and-mortar retail trade in books that has collapsed, taking Borders down and probably taking Barnes & Noble within a few months.

Posted by: thehersch | March 1, 2011 4:17 PM | Report abuse

"The publishers need to stop paying millions to people who cant write"

Even accounting for six-figure advances, the sales from bestsellers subsidize first novels and niche non-fiction.

One big problem the US publishing business faces is that it never made the move to quality paperbacks that happened decades ago in the rest of the English-speaking world. They've been selling $25 hardcover first-runs, discounted by the big stores to paperback prices, with a six month gap before the more affordable paperback appears. In that market, the arrival of $10 digital editions is a game changer.

Posted by: pseudonymousinnc | March 1, 2011 4:27 PM | Report abuse

When I was a kid in the seventies, there were no two-story bookstores with escalators in Akron, Ohio, just a modest Waldenbooks at the mall. And there were more readers then. Also, those bookstores had no chairs and no coffee... just books, magazines and a prominent cash register. Maybe we no longer need big box bookstores where people read all day and buy nothing, as much as I personally enjoy that myself. I own a Nook, by the way.

Posted by: MWorrell | March 1, 2011 5:15 PM | Report abuse

I won't miss any of the big corporate chain bookstores (never liked the antiseptic ambiance), and I for one would welcome their hasty demise as a potential boost for the surviving independent retailers.

I think the publishing industry for print may enjoy a second coming, though its biggest era is behind it.

Someone mentioned Tower Records above. It is my hope that printed books are not going to become entirely extinct, but will instead experience the same kind of revival that vinyl recordings have, as a growing niche market with an emphasis on quality. Most industry analysts once assumed lp's were dead forever, but sales are now growing at an impressive rate, just as compact disc sales are withering away for most music genres.

Posted by: Patrick_M | March 1, 2011 5:27 PM | Report abuse

Anyone have numbers on the collapse in book sales relative the general decline in the economy, or on the trade in e-books in general? The one paper I saw indicated that having e-readers didn't impact someone's consumption of paper books - it just elevated the number of books they read.

To be clear, I'm not arguing that e-books won't eventually be the dominant way we read. They will! But to me, this isn't convincing: "E-book readers arrive, capture small but growing marketshare. Traditional books collapse."

It's more convincing, perhaps, to say, "Major book dealer caught with shedloads of debt, too much inventory, and no demand in a crap economy." Barnes and Noble might well be killed by the e-book, but I'd argue Border's is much more a victim of current events.

Posted by: strawman | March 1, 2011 7:18 PM | Report abuse

strawman:

I believe this is what you're looking for:


Company 2009 FY North American Sales (Books, Media plus cofee, etc:-)
Barnes&Noble / B. Dalton1 - (to Q1 2010) $4.30 billion (Not including $836 million from the newly acquired college book store division)
Borders / Waldenbooks - (to Q1 2010) $2.65 billion (Down 15% from 2009, excludes international)
Amazon Media (excludes electronics, services - books, includes books, music, DVDs) - 2009 calendar year $5.96 billion (Amazon International stores sold $6.81 billion in 2009, and growing much more rapidly than North America) for the first time.
BN.com - 2009 $573 million (Up from $466 million in 2008)
Total - 2009 $13.483 billion


Amazon is now the largest retailer of books in the world.

Posted by: johnmarshall5446 | March 1, 2011 7:48 PM | Report abuse

B&N Stockholders voted to keep Reggio at the helm, so they'll have nobody but themselves to blame when their stock is worthless. They were warned!

Posted by: thomasmc1957 | March 1, 2011 8:32 PM | Report abuse

Do you just write whatever pops into your head or do you ever do research for an article? B&N owns several publishing houses, plus has launched its own independent E-publishing site, PubIt. Maybe the question should be "Can Newspapers be saved if they continue to allow non-reporting reporting."

Posted by: JGBelAir | March 5, 2011 9:24 AM | Report abuse

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