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Bankruptcy may be a tragedy, but Borders had it coming.

February 17, 2011

Am I the only one catching a whiff of good old fashioned karma in the news Borders will close 30 percent of its stores? Sure, it’s a tragedy for towns and neighborhoods left without a bookstore, but I say the chain retailer earned its fate.

Barnes & Noble deserves to die, too, but let’s pray it doesn’t. We need bookstores, no matter how dirty their hands, more than we need justice.

Lynn Neary at NPR and Michael Rosenwald at the Washington Post both mention that the rise of Borders “helped crush scores of independent booksellers,” but this makes it sound like a natural, almost evolutionary, development, like an old business model being replaced by a new, more efficient one.

What actually happened is much worse. Borders, along with its equally predatory competitor Barnes & Noble, colluded with major publishers to drive independent stores out of business. They did this by using their size — by 1998 the two chains combined had over 2,000 stores — to force publishers to give them secret, illegal discounts.

We know about these sharp practices because the American Booksellers Association, the trade group for independent bookstores, filed two landmark law suits in the 1990s. In 1994 the ABA forced consent decrees from six major publishers, who admitted they cut special deals with the chain stores.

Independent stores couldn’t match the chain store discounts and more than 1,000 went out of business — ABA membership dropped from 5,100 in 1993 to 3,500 in 1998. The publishers paid the ABA a settlement of $25 million, plus $2 million for legal costs.

In 1998 the ABA sued Borders and Barnes & Noble, charging the chains with “saturating markets” and “soliciting, inducing and receiving secret, discriminatory, and illegal terms from publishers and distributors” in order to drive indie competitors out of business.

For you Objectivists and other free market triumphalists, this is the way unregulated capitalism actually works. Instead of competing fairly, generating profits by selling better products at better prices, companies like Borders and Barnes & Noble (and Starbucks and Wal-Mart and Amazon) cheat and collude and use size to demolish competition.

Who can doubt that Amazon and Wal-Mart, by pricing e-books and some bestsellers at below cost, mean to force bookstores and even publishers out of business? The first time I read about the Kindle, I recognized it as a brilliant device intended to eventually eliminate all of Amazon’s competition.

Let me repeat that: All of Amazon’s competition.

But in pursuing such strategies, Amazon is merely updating a page out of Borders’ play book. It may or may not work. Borders helped its enemies by astoundingly inept business practices — among them outsourcing its online sales to, amazingly, Amazon. It also outsourced its e-business.

Barnes & Noble, though suffering, is in a much better position to respond to the changing market. It developed its own online site, bn.com, and it built its own e-reader, the Nook, which, as anyone who’s been to Barnes & Noble lately knows, it is marketing aggressively.

Independent booksellers are cautiously optimistic, too. A statement at the ABA website says “the indie bookstore model is well positioned for the future.” In what may be a very smart move, independents have partnered with another Goliath, Google, to sell e-books, and they still offer what the chains never could: Knowledgeable, personalized service.

“[O]ur members’ customers are telling us that, now more than ever, they appreciate the care independent stores take in choosing the titles to stock, and that the curated selection in our stores can’t be found elsewhere…In addition, more and more consumers appreciate the fact that our members are locally owned and have long-standing and close ties to their communities.”

Still, bookstores are in trouble, not only here but around the world. Angus & Robertson, Australia’s biggest chain, just declared the equivalent of bankruptcy, according to the Guardian, while in the U.K. the venerable chain British Bookshops went brankrupt, with 51 of 73 stores likely to close. Waterstone’s, Britain’s biggest chain, isn’t in serious trouble, but it will close 20 stores this year.

True story: While waiting to have the oil changed in my car the other day, I sat with two other customers. We were all reading. I had a magazine made of dead trees. One of my companions, an older gentleman, had a Kindle. The other, a youngish middle-aged woman, had a Samsung Galaxy tablet device thingy.

A lot of people, including my former Sun-Sentinel colleague Jim Davis, argue that delivery system does not matter, only content. I believe this is disastrously wrongheaded. Can you imagine a world without bookstores? Neither can I. Such a cultural castrophe is too awful to contemplate.

If you don’t want to live in that more sterile world, then go to a bookstore this weekend — and buy a book! Preferably an independent store, but Barnes & Noble will do, too. And there are still more than 400 Borders stores open for business. If you don’t want to see them all go away, then support them, for Pete’s sake.

Oh, and courtesy of The Wall Street Journal, here’s a list of the Borders stores set to close. Broward loses the Plantation andFort Lauderdale stores. I don’t see any closings for Palm Beach or Miami-Dade counties.

 

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15 Comments leave one →
  1. John Karwacki permalink
    February 17, 2011 2:43 pm

    The nook thingy may have saved B&N for now. I have spoken with people who believe paper is doomed. I remain cautiously optimistic but that sort of thinking has left me bankrupt, sued and abused in the past. I read King’s “Dark Tower” series and according to Steve, paper will be scarce when the world moves on.

    • Chauncey Mabe permalink*
      February 17, 2011 2:50 pm

      When the world moves on, paper, I fear, will be the least of our problems.

  2. Marla permalink
    February 17, 2011 3:19 pm

    The list missed a few locations, particularly the Borders in Boca Raton, FL (Palm Beach County). Excellent piece!!! Thank you for writing it!! I always find interesting literary developments happen while getting an oil change. Particularly the time when a woman accused me of being an evil witch because she informed me that anyone who reads Harry Potter books must be evil, a witch and going you nowhere in a hand basket. Too much information?

    • Chauncey Mabe permalink*
      February 17, 2011 4:49 pm

      That happened to you, too??? We witches and warlocks and other pagans must band together, I suppose. Although in general we don’t seem to be all that bandy, do we?

      • Marla permalink
        February 19, 2011 9:56 pm

        Yes, it really did happen. I don’t mind being called a witch – but evil? Yes, we must all band together – thank you. I’m going to need another oil change soon and after this experience — I’m just not sure what book to bring with me for the occasion. Any suggestions?

  3. Candice Simmons permalink
    February 17, 2011 3:20 pm

    My last girlfriends-night-out featured a trip to Barnes & Noble. We were all surprised how much it had changed in so little time. Still plenty of books, but lots and lots and lots of toys and puzzles and stuff like that. Truth be told, now that I think about it, I often wind up spending money more in the cd section than the books.

    • Chauncey Mabe permalink*
      February 17, 2011 4:50 pm

      Don’t feel bad about that — where else you going to buy CDs? Tower, Virgin, Peaches and every other record store I can think of are long kaput, aren’t they? Better to buy music at B&N than Amazon or iTunes, say I. But then, I’m a fogie.

  4. February 17, 2011 10:04 pm

    Bye bye, Borders (well, sort of). Wish I could say bye bye to Amazon, Barnes & Noble and all of the other cut throats out there. You know, I don’t even have an independent bookseller in this literary desert called So-Cal, specifically Menifee. Our only independent, “The Little Professor,” went bankrupt when Barnes & Noble moved in practically next door. Long live Books & Books and Powell’s.

    • Chauncey Mabe permalink*
      February 18, 2011 1:25 am

      That’s the “saturation” strategy, and it’s used by Starbucks to put the local coffee shop out of business and Whole Foods uses it to run the local health food store out of town. And of course Wal-Mart uses it to close down entire towns. It’s despicable.

  5. February 17, 2011 11:28 pm

    Long live the local library!

    • Chauncey Mabe permalink*
      February 18, 2011 1:23 am

      Alas, libraries are endangered, too. Our library here in Fort Lauderdale has curtailed hours, and the county tried to close the one in Victoria Park, but there was such an outcry it was saved. It’s only a matter of time before closures begin. Plus, as great as libraries are, they can only complement bookstores (and vice versa), not replace them. But I do love libraries.

  6. PJ Parrish permalink
    February 18, 2011 12:23 pm

    I mourn the death of any bookstore (well, maybe not Books A Million), but I’m with you on this one Chauncey. Borders brought on their own misery with their head-in-the-sand managment (You hire the head of Saks to run a book company? Come on!). But this is going hurt a lot of people — and not just the thousands of Borders employees who might lose their jobs.

    Authors are gonna feel this really hard. And not just in loss of shelf space. I just got off the phone with my agent about sales for my upcoming book. (author’s press runs are based on projected sales mainly to the big box stores). I’m surviving but things are grim. Really grim, even for writers with good track records. Everyone is running scared.

    Borders is $1.29 billion in debt (with $1.27 billion in assets. Do the math). They owe $272 million to creditors — including $41.1 million to the Penguin Group USA alone. What we are going to see is less money to pay authors, fewer books being bought, fewer risks being taken on idiosyncratic books and even more reliance on mega-authors like James Patterson.

    Welcome to the new normal.

  7. PJ Parrish permalink
    February 18, 2011 12:42 pm

    Postscript:
    I just found out a fellow author had a huge order for her book from Borders (enuf to get her on the NYT list maybe). But now her books won’t even be shipped becuz of Borders money problems.

  8. Eileen permalink
    February 18, 2011 12:54 pm

    All good points. When I paid my library fine the other day (I’m a slow reader), the librarian thanked me warmly. As if my $5 could make a difference, and maybe it does.

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