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Monday, February 21, 2011

The Demise (sort of) of Borders

So for a few months now I've been joking that my biggest fear was that my MLIS would land me a job as a manager at Borders. It then occurred to me: Borders is pretty much no more.

Yes, yes, I know, the company still exists. They are just "restructuring," whatever that might mean. In a practical sense, it means Borders is going away. They don't have all that many stores around this area, and they're closing their three biggest.

The worst part about all this is that Borders brought it upon themselves. There's a hard truth they were unable or unwilling to face: society moves forward, and as much as we would love to wail and gnash our teeth about it, e-readers are HERE. TO. STAY. Period. I don't care if you like them or not. They are now a fact of life. Does this mean that book stores are all going to die?

Nope. Because physical books aren't going anywhere, either. However, you need to embrace the new paradigm if you're going to survive it, and Borders did not.

Don't get me wrong--I'm wildly upset about what happened with Borders. I preferred it to Barnes & Noble. The decor and atmosphere at Borders was far preferable to B&N. It was warmer, somehow felt less corporate and more welcoming. And their religion and gaming sections far outstripped B&N's. But they failed to adapt and evolve with the new paradigm of media sales, and it cost them bankruptcy.

Let's look in the tiniest of nutshells at the e-reader "revolution." Amazon, while certainly far from the first, led the way and really blazed the path to follow with the Kindle. It took off like hotcakes. Then the iPad embraced the open ePub format, which created a whole new world of e-book vendors. Somewhere among all this, Barnes & Noble created the Nook. The Nook used the same e-ink Technology as the Kindle, but combined it with a nifty touch-screen shelf-organization feature which people dug. It still wasn't a perfect competitor, but it was the first real challenger to Amazon. And it kept them going.

People at some point began to cry for a color e-reader. This is where Amazon screwed up. They were too obsessed with "you can read e-ink outside," and refuse to create a color e-reader until they crack the color e-ink code. B&N took the cue and created the NookColor, which runs on the open-source Android OS and uses a touch screen similar to the iPad. The screen is backlit LED as opposed to e-ink, but contrary to Amazon's best efforts to lie about it, you CAN, in fact, read the NookColor outside in sunlight. You're advised to pick up a $15 piece of anti-glare film, but I'm not sure even that is necessary.

Anyway, here's the real rub--not only did they produce a very slick color e-reader that supports just about every format under the sun (save Kindle's proprietary one) AND is easily crackable to turn it into a Droid tablet, they added incentives to bring the e-reader into a Barnes & Noble store. When I bring my Nook to the store, I can read any e-book I like for up to an hour a day (maybe two; I forget) at no charge. As one might expect, this is a far better way to sample a book than the 16-page samples you can download for many. In addition, just by walking in, I can access coupons for the store and/or their cafe which I redeem just by showing my Nook to the clerk. While I'm in store I may just impulse buy a book, game, DVD, or CD. The NookColor is, to my mind, the sharpest e-reader out there.

So while all this was going on, what was Borders doing?

Business as usual.

On some level they realized that e-business was coming, but they didn't take it seriously. They put up a half-assed online store and then said, "Hm. We don't want to be bothered with creating our own e-reader. Let's just pick one at random. Kobo. That looks good. Hey, Kobo, you want to partner with us?"

Don't worry--nobody else ever heard of Kobo, either. It's a fairly bare-bones, no-frills e-reader that offers nothing at all over the Nook or Kindle.

And what did this partnering with Kobo mean? It meant that Kobo got to say "We're partnered with Borders!"

That's...about it. Kobo wasn't even exclusively sold by Borders--you could also buy the equally crappy Sony e-readers there if you prefer.

Add to this the fact that while Best Buy, Barnes and Noble, and other stores were lowering DVD, Blu Ray, and CD prices, Borders' were still exorbitant. They focused on their Borders Rewards program, which was nice, but just didn't make up for all the other ways Barnes and Noble was pulling ahead of them by embracing a sales model that one cannot escape these days. Heck, the three stores closing around here are having a going out of business sale. They are advertising 20-40% off everything. I went in yesterday. Everything was 20% off, not 20-40%, and not a single item could really boast a sale price even at 20% off. I had no incentive to stand in the 2-hour line at the register to buy anything.

So let's examine what maybe COULD have been. Borders was already loosely affiliated with Amazon. They used Amazon's fulfillment house to fill online orders. There was a rumor a few years ago that Amazon might actually buy Borders. Given all that, if Borders did not want to develop their own e-reader like B&N did, what were they thinking by not approaching Amazon to partner with the Kindle, making that their proprietary e-reader? Had they done so, they might have given B&N a bath. They easily could've adopted an in-store incentive through their Borders Rewards program. Send out a coupon--bring your Kindle into the store and get a free latte at the cafe or 50% off any one item. Something like that.

In the face of what the NookColor offers, it may not have been equivalent but it may at least have kept Borders competitive. Lower prices on their media would've helped as well. I see a similarity with the way music piracy threatened (so they said) the RIAA back in the 90's--and it was all because the RIAA was tied to an outmoded, outdated style of business and refused to evolve and adapt.

There's no reason that brick and mortar book stores cannot survive in the new millennium, but they're going to need to adapt in much the same way that libraries are. It's about media, now, not wood pulp and ink. If you adopt the right business model, you can thrive. Borders is a case study in how to fail.


  1. I dont have an e-reader perse, but I did receive a Dell Inspiron Duo which is a dual mode table/netbook. It has e-book capabilities and I use it to read PDF's, both color and black/white.

    My wife has a Kindle. We dont use them very much, but as time goes on, we are looking at new book purchases as online documents instead of physical books.

  2. My e-reader supplements my library; it hasn't replaced it. Most of the e-books I have on the reader I also have in paper version on the shelf.


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