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Who Gets Hurt Most By Borders’ Bankruptcy?

Thousands of out-of-work booksellers, indebted publishers, smaller mid-list print-runs, fewer book reviews . . . the long-term repercussions of Borders’ bankruptcy are unpleasant to contemplate.

By Edward Nawotka

In today’s story, Philip Downer, former CEO of Borders UK examines why Borders went bankrupt.

As someone who grew up outside Ann Arbor, Michigan, I was always a little proud to point out that Borders was a Michigan company, if only to say to New Yorkers — “Hey, look, people in the flyover are smart, are intellectual, and do read! Of course, that is a little silly considering just how many New Yorkers end up going to the University of Michigan and other schools in the Midwest . . . but I digress.

bankrupt

Borders, to me at least, often offered a more appealing shopping experience than B&N. (This may have something with my personal history with B&N.) As someone who spent so much of my twenties overseas, I was also surprised and delighted to find Borders stores in some far-and-away locales; the Borders store on Orchard Road in Singapore served as a kind of oasis for me while working in Asia.

When in 2008 I was invited to tour the new Borders “concept” store in Ann Arbor, I thought the company was positioning itself adequately for the future. There were lots of digital work stations to help you find your ancestors, download music, work with Lulu.com (if you wanted to self-publish) and even book a vacation. There was a dedicated area for the store to host virtual book signings — in fact, I still have a copy of a Margaret Atwood novel she signed for me that day using her virtual Long Pen. Yes, there were plans afoot to put a Long Pen into every new Borders store post-2008.

But in the wake of the plummeting economy . . . nothing happened. And now this.

So, aside from my wounded Midwestern pride, who else is going to get hurt in this bankruptcy?

BORDERS EMPLOYEES: Borders is closing 200 stores, out of 642. Prior to the bankruptcy they had 6,100 full-time employees, and some 11,400 part-time employees (thanks to PW for the stats). If you take a number proportional, that means you’re going to get some 1,900 full-timers losing their jobs, as well as another 3,800 part timers. That’s a lot of unemployed booksellers.

PUBLISHERS: Yep, publishers are owed tens of millions millions of dollars in back payments, which they may or may not see: Penguin Group (USA) is out $41.1 million, Hachette is owed $36.9 million, Simon & Schuster is not far behind at $33.8 million, Random House will get hit for $33.5 million, and HarperCollins at $25.8 million. And they’re about to get tens of millions of dollars more in returned merchandise flooding into their warehouses, shortly. The remainder dealers must be salivating — though there is a provision in the bankruptcy preventing the liquidator from selling all remaining stock to one vendor who can then return it in bulk to the publishers. Still, expect to see a lot of high quality stuff on Barnes & Noble’s bargain tables — and, ironically, Borders’ own — throughout the rest of this year.

MID-LIST AUTHORS: Without Borders’ previous buying power, publishers are going to lose hundreds, if not thousands, of pre-orders per title. This is likely to eventually lead to smaller print runs and smaller advances, particularly for mid-list authors who would depend on Borders taking stock of one or two copies of their titles. If Borders was good at anything, it was serving the mid-list — they always were somewhat more “literary,” if only in reputation, than their big rival — but that role is going to be significantly diminished, particularly as they are likely to become even more conventional and conservative in their buying strategies to compete with other big box retailers.

READERS: Yes, you dear reader . . . in the short term, vulturing the going-out-of-business sale at your local Borders might make for some interesting bargain-hunting, but you’re going to have one less place to browse books.

OTHER BOOKSELLERS: Any bookseller going out of business is, well, bad for business. It’s going to make it all the more difficult for books to take cultural precedence over television, video games, and the Internet.

BOOK REVIEWS: Yep, you might not give it much thought, but Borders still bought some advertising — often supported by co-op — in local newspapers to promote events. Those ads likely gave the culture editor an excuse to run one or two book reviews per week.

Who wins?

DIGITAL PUBLISHING: The bankruptcy only means that more and more people are going to be pouring their time and money into digital publishing. The emphasis in the book world has shifted from thinking about books bound between covers to “containers” — as in “a book is only one form of container for information.”

$1.99 STORES: What do you think is going to move into that large vacated space where Borders used to be? A Books-a-Million? Maybe, if you’re lucky. The southern chain is talking about taking over several abandoned Borders locations. How about a Container Store . . . okay, bad joke. My guess, a $1.99 shop. And you know what? Wait another six to 12 months and you’ll eventually be able to pick up some of the remaindered Borders stock there too.

Let us know what you think in the comments.

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5 Comments

  1. Posted February 21, 2011 at 3:56 am | Permalink

    First of all, I doubt that anyone at the corporate level of Borders or soon, perhaps, Barnes & Noble, cares much what happens to these employees but it is not just the booksellers who are going to lose their jobs. More people working for the major 6 publishers that are owed tens of millions of dollars are also going to lose their jobs. In fact, there will be many ripples along the entire chain that will affect communities, both large and small, from one end of this country to the other.

    We laughingly have been referring to Borders in Queens as a toy store because it had more toys for sale than books. In a huge space that took up loads of electricity to heat and cool as well as light, this huge box offered nothing of any substance for anyone to buy for a very long time. Yet it ate away at the electric grid like some monster as it consumed way more than its share. All fueled by coal generating plants.

    We tend to forget that there is a very long chain involved in keeping these huge stores fed. The people who have been working there weren’t particularly interested in books anymore either. They were mostly young people who needed a job and they could get one there.

    The writers who need to find a place for their books to hang out while waiting for an interested reader are also big losers. There are just fewer and fewer places in this strange borough called Queens for new books to be found. Our libraries are on a one-year moratorium and won’t be buying one new book unless people donate money to them and we had three bookstores and now we seem to have two.

    It is hard to interest children in books if there is no place to find them. With fewer and fewer places that offer what is coming out of the publishing machine, this has to be a very bad time to publish, to write and to read unless and until we all invest in new ways to do those things. That is what will change the ways in which we all access the book.

  2. Posted February 21, 2011 at 4:47 am | Permalink

    That is not the only set of problems. Thanks to Wikileaks, Amazon is no longer the most reliable online sales platform for us small publishers and self-published authors, as its selfishly put together boycott resulted in thousands of book buyers closing their accounts, and in doing so left us writers high and dry. Borders wrongly refused offers from us and now they are burning down the house. If it’s true that young people are not reading anymore, then the next generation will be ignorant of all the wonders the world and the imagination have to offer, and that alone is a good incentive to stop writing. Then we will be plunged int a dark age that it will take another few centuries to overcome. Sound depressing? You betcha. So I think it’s time for Borders to go down. I can’t shed a tear for a badly managed corporation which keeos its sights on its brand instead of its reputation as an honest dealer.

  3. Posted February 21, 2011 at 7:03 am | Permalink

    One always hates to see a company go out of business no matter how poorly managed it was, though mostly because of the impact on its employees. While digital books are now the up-and-coming thing and impressive in their usefulness (a confession: I love my E-reader), the question is the future of the bookstore. Perhaps they will hold a small number of book copies for those potential buyers who wish to scan while making a purchasing decision, the book then being bought in digital form or printed onsite. And the coffee shop, which seems busy in most large bookstores, might be contracted out to Starbucks or another such company. But the book will persist and, contrary to the above prediction, I do see youngsters reading more, with some teens even reading adult books. Having E-readers being able to read aloud childrens books, which very young children love, is great as a way of introducing them to reading independently, though having a child being read to by their parent or reading aloud together is the best educational tool.

  4. Posted February 21, 2011 at 1:10 pm | Permalink

    I’m sure the major publishers are losing much with Borders’ bankruptcy, but what about the small presses? The amount my company loses is in the hundreds rather than the thousands and millions, but we can’t absorb it any better. In fact, we can’t at all. The major creditors will probably receive something, but the small ones will simply suffer and go out of business or barely hold on.

    What gets me is Borders ordered books from my company when they had to know they were going under. Yet, they continued to “feed” off other companies. They took my company’s books and kept giving excuses as to why they hadn’t paid.

    That’s not right, but then few “big” companies play fair.

  5. Posted February 22, 2011 at 3:36 pm | Permalink

    It’s sad but digital publishing has already had a huge effect on the industry and it will no doubt continue to grow. It’s a changed world that we live in.

    Borders has probably been planning their bankruptcy strategy for a while. It’s a shame that it has to affect others.

    ep

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