Bye, Bye Borders :(

So, while I've been out of commission, it seems that the news that Borders was being bought is sadly outdated.

Borders has officially announced that they are closing their doors. Stores are having "Everything must go" sales and Borders bucks are drying up.

It's upsetting to most of us for sure. But it also leaves a very controversial question unanswered: What happens next?

The Atlantic posted an interesting piece about the matter this morning:

Manhattan's West Side might have more book readers than anywhere else in the United States. Until recently, the thriving cultural stretch of Broadway that includes the theater district, Lincoln Center, and some of the city's best venues for quality movies was also choc-a-block with enormous bookstores. The high-rise Barnes & Noble emporium opposite Lincoln Center closed several months ago because of soaring rents, and now the expansive and elegant Borders superstore in the Time-Warner Center on Columbus Circle is on the way out, as the chain goes into liquidation.

So, in this flourishing area of the city -- a span of more than three miles -- there is no longer a general interest bookstore. There are still many good places to browse the aisles for books elsewhere on the island -- The Strand, Posman's in Grand Central Station, and Book Culture in the Columbia University neighborhood, among others. Barnes & Noble is still going strong -- its superstores in strategic locations are bustling, B&N.com has been gaining traction, and the Nook is clearly the runner-up to Amazon's Kindle as an e-reader favorite. Nonetheless, the demise of Borders signifies a major change in the marketplace for books. The unraveling of the country's second largest book chain means a tremendous boost for digital retailers such as Amazon and the potential for a self-confident Barnes & Noble and the stronger independent stores to benefit by adding customers.

But there is no doubt -- as I have written many times in recent months -- that the book business is in a period of change so dynamic that any outcome is possible, from an era of exciting expansion to a precipitous decline in sales at brick-and-mortar stores that undermines the revenue base of publishing. A year ago it would have seemed inconceivable that Broadway's biggest bookstores would be shuttered.

In fact, until last weekend, I couldn't really fathom that Borders, for all of its mismanagement and losses, would not find a way to continue, in the jargon of bankruptcy, as a "going concern." But once the last stores are closed in September, all that will remain of this once proud and sophisticated bookseller will be remnants: the brand name (for sale), the memberships in its customer loyalty program, a struggling website, and a minority interest in the Kobo reading device. Books-A-Million, a regional chain in the south and midwest, offered to take over the leases and contents of up to thirty-five venues across the country, from among Borders remaining 399 stores (at its peak Borders had almost 1,200 stores). But that deal fell through.

It would be wrong to assume that the demise of Borders is symbolic of publishing Armageddon. And yet, the disappearance of Borders and the uncertainties that Barnes & Noble doubtless faces as it is accommodates the pace of change to digital reading are extraordinary developments. In the first five months of 2011, e-readers sales are up by 160 percent over the previous year, but there has been a sharp drop in revenue from printed books, attributable in large part to the Borders collapse.

For the moment, even some of Borders' competitors are delivering eulogies. Rachel Weaver and Jason Smith at the Book Table in Oak Park, Illinois, told Publishers Weekly:

It's a sad day for reading when there are fewer communities with bookstores, a place where someone might stumble upon a book to read who otherwise might have gone home to their television or their Internet connection for entertainment and companionship. Frankly, speaking as two people who have each worked in the industry for close to two decades, it is just plain devastating.

PaidContent.org, one of the best media business blogs, took an especially gloomy view of Borders' downfall. In a FAQ feature, Laura Hazard Owen concluded that liquidation is "unequivocally bad news for publishers and authors. Bottom line: The closure of Borders means fewer places to sell books (and promote books and book discovery). Publishers will have to reduce their print runs and shipments." By contrast, Oren Teicher, the CEO of the independents trade group, the American Booksellers Association, commiserated with the thousands of Borders employees losing their jobs but added, "We do not believe that the Borders closing is a bellwether for the future of brick-and-mortar bookstores nationwide. Rather, it is, in part an unfortunate right-sizing of bookstore landscape that has suffered from expansion in certain markets . . . we see opportunities for our current members to expand and for new stores to open."

Who is right? The answer is that no one really knows. But I especially liked the observation of Neil Strandberg, manager of operations at Denver's great independent, Tattered Cover. On PBS's Art Beat, he commented:

The work of Tattered Cover has been, then, to re-shape the business out of acknowledgment that printed book sales will continue to decline for the foreseeable future. We are smaller, retail-space wise than we were a few years ago and we will be smaller, I wager, a few years hence. Meanwhile we experiment with new product, inclusive of ebooks via our partnership with Google, food, gifts and services to local authors. I have every reason to believe that in ten years' time, there will be a retail setting that everyone recognizes as the logical descendent of today's retail bookstores. The trick for all of us is to juggle declining printed book sales with new products and new services and the appropriate amount of real estate in the right location. . . . Taking a cue from some of the technologies that have been so disruptive, collectively, the indie community is crowd-sourcing the sustainable bookstore-like thing of tomorrow. One of us is going to figure this out.

Ultimately, I believe Borders' downfall had more to do with its own strategic mistakes than what is happening in the broader landscape of publishing. But I do share the sense of those who will miss Borders, not the flailing failure it was at its end but the great contribution it made to the availability of books of all kinds to so many people when it was at its best.

Borders RIP.

See the original post HERE

Borders Announces Next Move

Nearly everyone in the publishing industry has been waiting to find out what's going to happen to Borders since it declared bankruptcy months ago. And now, they've announced their next step.

According to GalleyCat, Borders and the company Direct Brands will be making an "asset purchase agreement":

Borders Group announced last night that it has entered into an asset purchase agreement with Direct Brands, a portfolio company of Najafi Companies.

Under the terms of the agreement, Direct Brands would purchase substantially all of Borders’ assets for $215.1 million, as well as assume $220 million of liabilities, subject to the auction and Bankruptcy Court approval.

If the deal goes through, Borders would operate as a wholly owned subsidiary of Direct Brands, which also owns the Book-of-the-Month Club as well as Columbia House. Hilco and Gordon Brothers have agreed to acquire any store locations that are ultimately not included in the sale and will close those stores in an orderly manner.

The deal is expected to go through by late July.

See the original post HERE

I'm still bummed about the whole Borders situation and how it's impacted the industry, but I must say I'm somehow glad to hear they'll at least be operating in some capacity. I don't like the idea of them closing all the store not involved in the deal, but I guess it could be worse. We'll just have to wait and see what happens, as per usual!

UPDATE: Borders Stores Closing Due to Bankruptcy

We've heard that 30% of Borders stores will be closed after they declared bankruptcy this morning. Now, we have a listing of the exact locations.

Check HERE to see if your local store is getting a final farewell.

Borders Declares Bankruptcy

Industry insiders have been biting their nails this week waiting for Borders to declare bankruptcy. And this morning, it happened. And just like the death of a sick relative or the inevitability of a dreaded presentation, no matter how prepared for it we are, it still hits us hard.

Publishers Lunch sent out a special email this morning with the details:

Borders formally filed for Chapter 11 bankruptcy protection in a Manhattan Federal Court, listing total debt of $1.29 billion and supposed assets of $1.275 billion. Among the top 30 unsecured creditors listed in the filing, book publishers and distributors are owed roughly $230 million (see below for the full list).

The bookseller says in an announcement that it "has received commitments for $505 million in Debtor-in-Possession (DIP) financing led by GE Capital, Restructuring Finance. This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience." For customers, they expect to honor the Borders Rewards program, gift cards and other customer programs and they expect "to make employee payroll and continue its benefits programs for its employees."

The company says they had 642 stores open as of January 29. In their press release, they say they expect to close "approximately 30 percent" of those stores, or roughly 200 locations, "in the next several weeks."

Ken Hiltz has been named senior vice president - restructuring of the company. Named advisory firms include Jefferies & Company for financial and restructuring services; DJM Property Management for lease and real estate advisory services; and consultants AP Services for interim management and restructuring services. The company intends to "finalize and implement a store closure, store liquidation and lease modification plan" as already discussed and approved by their board.

President Mike Edwards addresses the obvious in the release, "It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company's lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term." Elsewhere, the announcement perpetuates the company's illusion that they are but one more step away from a turnaround into "a stronger and more vibrant book seller."

The publisher creditor list comprises:

Penguin $41.1 million

Hachette Book Group $36.9 million

Simon & Schuster $33.75 million

Random House $33.5 million

HarperCollins $25.8 million

Macmillan $11.4 million

Wiley $11.2 million

Perseus $7.8 million

F+W Media $4.6 million

Houghton Mifflin Harcourt $4.4 million

Workman $4 million

McGraw-Hill $3.1 million

Pearson Education $2.8 million

NBN $2 million

Norton $2 million

Zondervan $1.9 million

Hay House $1.7 million

Elsevier Science $1.6 million

Publications Intl. $1.1 million

Readers will recall that we recently tried to frame the coming Borders bankruptcy in the context of the AMS bankruptcy from late 2006. In that filing, the 40 largest publisher creditors were owed $220 million, topped by Random House, which was owed $43.3 million.

See the post on Publishers Marketplace HERE

Now, that's A LOT of dough.

It's intriguing (and a little funny in a sad way) to me how no one outside of the book biz knew this was going on. Inside, we've all been watching Borders steadily decline for years, their debt piling up exponentially, but they've still been a significant part of our business. Somehow they were able to cover it up for the public, a big secret that I wouldn't have expected to be kept so quiet for so long. But under wraps it is no longer.

Borders put out some extra details today too, claiming that "business operations continue as normal." But while their rewards program remains in effect, stores are staying open, online orders are still being processed, etc., nothing is really "normal" about this occurrence. And I can't help but think that this will go one of two ways: either shocked consumers will be motivated by their upset and rush to Borders, trying to help pick up the slack and get the company out of the red zone, or they will be outraged that Borders let it all get so out of control and pull their loyalty completely.

I'm hoping for the former, but I guess my cynical nature is expecting more of the latter...

What effects do YOU think this big news will have on the industry?
RBtL wants to know!

E-books, E-books, Everywhere

E-books are everywhere this week.

Borders opened their first eBook Store yesterday with a flourish. They not only offer more than one million titles but also discounted their stock of Sony E-Readers, provided $20 gift cards with the purchase of a Kobo E-Reader, and accepted (and continue to accept) pre-orders for the upcoming low-priced Aluratek Libre eBook Reader Pro (on sale 7/20). In honor of the new online store and e-book application, store locations also handed out free coffee with the presentation of your downloaded Borders app.

It's incentive-tastic.

The Borders eBook Store hook--in addition to all the free goodies and discounts--is the "any device" angle. According to the online store:

With Borders eBooks, you're not tied to reading on a particular device. Our eBook store offers more than one million titles (including lots of free ones!) that you can read on your computer, iPad, and many popular smartphones, as well as on eReaders — devices dedicated to eBook reading.

[...]

Borders offers several free eReader apps so you can browse, buy, and read Borders eBooks on multiple devices.

Our desktop app works with both Macs and PCs. We also have free apps for the iPad, iPhone, and iPod Touch as well as the BlackBerry and Android devices. Each mobile app is specifically designed to work with the unique features of the device on which it is used.

It's surprising to me that it took Borders quite so long to hop on the e-book bandwagon. Barnes and Noble came out with the Nook, and thus launching an e-book store, in late October 2009. Amazon's Kindle and the Sony E-Reader were, of course, already established at that point, but one would think that B&N's swan dive into the e-book biz would've made Borders kick it into high gear, especially with the hits their stores have been taking lately (they closed 200 locations in January, if you recall).

But now that Borders finally has caught up, it'll be interesting to see what happens in the e-book rat race. With two of the major chain stores on board, it's only a matter of time before smaller, indies and specialty stores start creeping into the lead.

The Idea Logical company projects that these specialty stores are truly the future of e-books, not the superstores B&N and Borders have launched. Mike Shatzkin, a blogger for The Idea Logical, wrote an interesting piece on the subject earlier this week:

[...]

It has been a long-established “fact” (although I question if it is still true, as we’ll explain later) that the larger is the selection of books available in a single location, the more powerful is the magnet to attract customers. My father found this out when he was in charge of the Brentano’s chain in the 1960s. Their Short Hills, New Jersey store was the worse-performing store in the chain until they doubled its title selection. And then, like magic, it became the best-performing store in the chain.

[...]

So to that point — one could say to this point — the largest possible selection in one place has been as important to the success of an ebook retailer (obviously: online) as it was historically to a print book retailer with a physical store.

[...]

But there’s another thread of bookselling history on- and offline that I believe will soon become the dominant paradigm for ebook retailing. And, of course (just so you are reminded what blog you’re reading), it fits into the concept of “verticality”.

Publishers have known for a long time that good deals can be made and large sales can be registered through what we call “specialty retailers”. (The label for these sales in a publishing house, and others such as sales to catalogers or premium sales, is “Special Sales.”) The store that sells the tools and materials to refinish your floors can sell you a book to explain how to do it. The store that sells computers and paper and ink can also effectively sell resume or how-to computer books. The garden supply store can sell books on how to make your roses bloom.

[...] [T]he guess from here is that this is about to change and that the change we’ll see in the next few years will obliterate the notion that “all subjects in one place” is a significant marketing advantage, online or in a store. Many book sales, and particularly ebook sales, will move to “contextual” resellers. Your accountant’s web site will sell you the book(s) that help you understand a new tax law or how to ready your business for sale. Your favorite sports web site will sell you the new biography of Alex Rodriguez. And your favorite “Literary Review” newsletter and website will take care of your needs to acquire fiction directly and without your having to shop the vaster stacks of an online superstore.

That is: curated ebook offerings (a click away from the ability to buy lots more content beyond the curated selection) will be featured on every web site with any significant traffic. Delivering purchaseable content — books right now, but ulimately magazines, shorter articles, and relevant audio- and video-content as well — will become a standard expectation of any site (or web community) that aspires to a true mutual embrace with its site visitors. “What I’ve read lately and liked, and why” is a legitimate offering to anticipate from every blogger or commentator with a following.

Read the full article HERE

Shatzkin makes some very compelling arguments here, and his knowledge of publishing history is pretty impressive, I must say. It's certainly a possibility that his prediction turn into a reality.

As always, only time will tell.

In other e-book news...

Amazon was just granted a dual-screen e-reader patent. This new e-book development could cause trouble for B&N's nook, as well as other e-readers on the market. Engadget.com reports:

Looks like the battle for e-reader dominance between Amazon and Barnes & Noble could soon expand beyond the recent spate of price drops and into the courtroom as well: the USPTO just granted a 2006 Amazon patent on e-readers with secondary LCD displays (like the original Kindle's scroller-navigation panel), and several of the claims are potentially broad enough to cover the Nook and many other devices with both electronic paper and LCD displays. What's more, Amazon agreed not to file for any corresponding foreign patents during the four-year approval process and thus wasn't required to publish the patent application -- meaning this is likely a complete surprise to the entire industry. Yeah, it's juicy. Here's one of the claims that could cause problems for Barnes & Noble -- in plain English, it potentially covers any device with both an electronic paper display and a second smaller LCD display next to it.

Learn more HERE

Borders Wisely Brings in Book Clubbers

Anyone who's met me knows that I love book clubs.

I run a mostly-YA book club and am a member of a classics book club, and have been part of a smattering of other BCs since I moved to NYC four years ago. So, when I heard that Borders has opened its doors to my fellow book clubbers, I was pretty darn happy.

I first heard about the new trend from none other than my mother (yes, Mom, I'm mentioning you again). Living in a fairly suburban area, it's tough for the momma to meet people and make friends so she poked around her neighborhood Borders and found a book club that meets there on a monthly basis. I was pleasantly surprised to hear that news.

Then, last week, the Chicago Tribune posted an article online about the new Borders book club fad, to use the term loosely:

In the increasingly brutal book wars, Borders Group Inc. is learning what coffeehouses long have known: Encourage shoppers to think of you as a home away from home and they'll spend more, maybe even become regulars.

To spur that feeling, Borders quietly unveiled a program late last month that invites book club groups to convene at its cafe spaces instead of in club members' homes. The step is geared toward helping the money-losing bookstore chain drum up sales and reshape itself into a local gathering place instead of a faceless superstore.

Signs and posters telling shoppers to bring their book group to the store have gone out from corporate headquarters in Ann Arbor, Mich., to Borders' 507 outposts, including 18 stores in the Chicago area, said Mary Davis, spokesman for the chain. Borders' Chicago flagship on North Michigan Avenue, which is slated to close next year, already has hosted a few private book clubs in its third-floor event space.

"We're encouraging stores to reach out to the public to say, ‘We're here,'" Davis said. "It's a way to drive traffic to the stores."

Last year, the company began book club nights hosted by store employees based on books that Borders selected, starting with Kate Jacobs' "The Friday Night Knitting Club" in April. At that time, the retailer also introduced display tables stacked with Borders' recommendations for book club discussions.

The latest effort focuses on bringing in readers interested in selecting their own books and leading their own discussions.

Read the rest of the article HERE

Personally, I think this is a brilliant idea. Not only will it succeed in building store traffic, but as a direct result, it will hopefully help to fend off the recent series of store closures. According to the Trib, Borders/Walden cut 10 percent of its workforce this past January, in addition to the 200+ store closures that occurred that very same month (Publishers Weekly). The book biz is fading at a quicker rate than many of us in the industry--myself included--expected or wanted to admit. So anything booksellers can do to help slow down the process--whether a big conglomorate like Borders or an independent--is a positive thing.

Plus, book clubs can be incredibly difficult to organize, especially when membership reaches more than, say, eight people. While hosting at members' homes is always a fun time, it's hard to find a place to house that many people comfortably, where everyone can be looking at one another for an engaging discussion. And when you try to meet in a public place--a coffeeshop or restaurant--let me tell you, it is anything but easy!