July 21, 2011

Getting over Borders


As the dust settles on the Borders bankruptcy case and the liquidators begin to get rid of thousands of employees and even more thousands of books, what are we to make of this saga?

— Borders was “done away by dot-com,” says a dentist cited in this Wall Street Journal report.

— It was because “the demand for physical books continues to decline,” another Wall Street analyst says in this Associated Press wire story.

— It was a tale of “handing over the keys to the competition,” say a bunch of Wall Street guys in this NPR story (no retailers or publishers are cited, as in the overwhelming majority of stories on the subject). They’re talking about when Borders outsourced its internet retail biz to Amazon in the mid-nineties.

— Stand With Main Street.com says it was because Amazon had an advantage over brick-and-mortar Borders in that it doesn’t have to pay sales taxes. “It is simply not fair that one business is able to operate with a government-sanctioned advantage that allows it to undercut its competitors forcing lost jobs and business closures,” it says in a statement.

— “It’s a big sign of the larger transition we’re all making to digital books and digital reading devices. So we’ll probably going to see a further decline of the bricks and mortar stores, and further movement away from people reading print or paper books and more people adopting digital reading devices,” says a professor of “electronic media” in a story from NPR’s Morning Edition.

Is it true? Was this whole thing basically a fifteen-year-long advertisement for Amazon?

In a word, no. The story of Borders failure is, first and foremost, a real estate story. Simply, Borders gobbled up a lot of expensive square footage in the real estate boom of the nineties, as did Barnes and Noble, with a seemingly insatiable lust that curdled into craven predatoriness. Unlike Barnes and Noble, however, Borders compounded that mistake by following up with a series of incredibly bone-headed managerial moves — such as, yes, getting rid of their online business, because they needed the cash to buy more real estate. And remember when they brought in a whole new cadre of upper-echelon executives from the grocery store business, who promptly tried to get publishers to sponsor aisles the way Kellogg’s sponsors the cereal aisle? Then there was the company’s whopping investment in devoting vast amounts of floor space to music CDs … a technology that was visibly on the way out even at the time …

And so when the economy imploded in 2008, it was locked into severely over-priced space, out of dough, and with a bunch of dunderheads running the show.

It’s that simple. And that tragic — with Borders vaporized only after they put hundreds of independent bookstores out of business, we realize anew why there are laws against monopolies and predatory practices, and how little our government cares about enforcing them. Meanwhile Borders also contributed greatly to the fact that the culture is now mired in a devalued concept of the book, which is that it’s a thing that only matters if it sells hundreds of thousands of units

The tragedy is compounded by the depiction of Borders’ demise as being due essentially to the fact that people don’t want to buy print books in bookstores anymore. Giant chains like Barnes and Noble in the US, and Chapters Indigo in Canada, are using that canard like a smokescreen to sell fewer and fewer print books — yes, partly to get rid of some of that way over-priced real estate they bought during the nineties, and partly because margins are much better on Godiva chocolates, stationary goods, stuffed animals and ebook devices. Indigo has announced it will devote less than 50% of its floor space to books. B&N is headed in the same direction. (Why the major publishers don’t tell them that this makes them no longer a bookstore, eligible for a bookseller’s discounts, and that accordingly they must now buy things non-returnable, like other specialty shops, is beyond me.)

This in turn, of course, is going to hurt publishers in their ability to support all their books — including ebooks. And on to writers, and so to readers.

It’s a shame this story isn’t being covered more accurately, and that everyone is instead going for the sexier trend story — note that the Morning Edition story I cite above does mention that someone mentioned to the reporter that they thought this was about real estate, but she shrugs it off and offers no details, favoring instead the blather of the “electronic media” prof about the “larger transition” of book culture. That “someone” so breezily dismissed meanwhile was me — I was interviewed at length, but you’ll note my remarks were cut out. I’m not upset to have been edited out, but I am upset that 1. no publisher or retailer (i.e. someone with direct standing and a knowledgeable perspective) was quoted in the piece and 2. that the reporter was so clearly eager to follow the herd and make this a trend — instead of a business — story. (Although there is the occasional reporter who accidentally hints at the truth while getting the gist of things wrong — such as this New York Times report that says online sales killed Borders, while also noting, late in the story, widespread reports that independent bookstores located near former Borders locations were seeing a dramatic rise in sales. If people stopped going to Borders because they wanted to buy books online, why did business go up at neighborhood bookstores after Borders left?)

All of which is to say that this is a story that has become about some desired trend, and not the more complex reality — which is that what’s happened is not good for either print or digital books.

If there’s anything to take away from the Borders story, it’s this: It doesn’t at all represent that fewer people want to buy print books. It represents that fewer big corporations want to sell them.


Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives