Borders Inches Closer to Liquidation. What Happens Next?

The deadline to save Borders passed yesterday, meaning that they will now proceed to a bankruptcy-court auction tomorrow.

It’s not quite over for America’s second-largest bookstore chain, and a bidder could still emerge in the next day-and-a-half to save the company – which employs nearly 11,000 people – from being liquidated.

In fact, the Wall Street Journal reported today that Books-A-Million were in talks late last night about a deal. However, it seems clear that even if this move comes off, which is doubtful, it will only rescue part of the company, and a large amount of (further) store closures and layoffs is unavoidable.

It seems likely now that the bones of Borders will be picked apart, and the remaining investors will only seek to purchase unencumbered assets such as the brand name, the website, and the customer lists, leaving the stores themselves facing oblivion.

There is a certain grim inevitability about this news, which will hit publishers and their authors, as well as the Borders staff and their families, particularly hard.

Even if a last-minute investor is able to prevent liquidation, Borders will never be the book buying force it once was.

Since I started this blog, I have argued that print is doomed, and its collapse will take most bookstores with it, but I take no pleasure in being proved right.

What we are seeing now are the “negative feedback loops” that LibraryThing’s Tim Spalding predicted nine months ago.

Each drop in print sales causes bookstore closures, which means less stores to sell books, which means lower print runs, which means higher printing costs, which means higher prices, which means another drop in print sales.

Each bookstore closure is another town forced to go online to buy books, which leads to an increase in Amazon’s market share, which means more readers exposed to their wall-to-wall urgings to switch to the Kindle and e-books, which means a further drop in print sales, and more bookstore closures.

Each publisher reducing print runs must increase the retail price of their books, which makes the price difference between print and digital versions even more dramatic, which encourages more people to switch to e-books, which reduces print runs and increases costs.

As printing costs become more expensive, more publishers will release more titles as digital-only or digital-first editions which will encourage even more to switch to e-books, causing further bookstore closures.

This is a series of vicious circles, all feeding into each other.

Most of the argument surrounding how much market share e-books will capture seems to center on the advantages and disadvantages of e-books, e-readers, and e-bookstores in their current form. This ignores how the format, devices, and book buying experiences will evolve.

More importantly, it ignores all the readers who will be forced to switch to e-books for one reason or another, whether that’s down to the restricted selection of print titles or the increased cost.

Joe Konrath wrote an excellent post yesterday, focusing on what this Borders news means for midlisters. He argues, persuasively, that burden to shift print books will pass to the boxstores who only stock bestsellers:

This will mean fewer books printed, fewer books sold, and fewer choices for readers until they’re forced to buy an ereading device if they want to read anything other than Stephen King and James Patterson.

The obvious corollary is that if you are not of the same ilk of King and Patterson, that most of your future sales will be digital. And if this is the case, why go with a publisher at all? After all, as Joe points out, a 70% royalty is a lot more than a 17.5% royalty.

A new writer, deciding whether to self-publish or to submit to agents, needs to consider not just what the market is like now. They need to look at where its going to be in two years.

That’s the absolute quickest any new writer could get through the query system, snag an agent, go on submission, receive an offer, go through the lengthy publication process, and finally hit the bookstore shelves.

For most, of course, it will take significantly longer than that (if they are one of the tiny percentage that is successful at all). So a new writer, being a little more realistic, needs to look at where the market is going to be in three years, or even five years.

Will there even be agents accepting queries from unpublished writers in five years? Will there even be agents in five years? I don’t think anyone can answer in the affirmative with any confidence.

This might seem like heresy to defenders of the status quo, but as Joe points out:

This message needs to be repeated, over and over and over, because there are still thousands of authors who spend their hard-earned $$$ on conventions that supposedly teach them how to write killer query letters.

Of course, it goes without saying that this is money that could be spent on hiring a professional editor, a professional cover designer, and publishing yourself.

And all that time spent researching agents, learning how to write query letters, personalizing each submission, sending off each partial, and waiting for responses that will never come could be spent building an audience or, you know, writing.

Writing stuff you can publish yourself.

Writers have more choices than ever before. And I firmly believe that this is a great time to be a writer. But only if writers seize the opportunity that is staring them in the face.

The choice is yours.

About David Gaughran

David Gaughran is Irish, living in Prague, and the author of Mercenary, A Storm Hits Valparaiso, Let's Get Digital, Let's Get Visible, and this here blog.
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40 Responses to Borders Inches Closer to Liquidation. What Happens Next?

  1. Werner says:

    “Writers have more choices than ever before. And I firmly believe that this is a great time to be a writer. But only if writers seize the opportunity that is staring them in the face.”

    Once again, truer words haven’t been spoken.

    As for the the whole Border’s Group issue – they’re only prolonging the inevitable.
    Now, back to reviewing an excellent ebook I received yesterday…

    Like

  2. The business is definitely changing more now than it ever has and that change is only going to accelerate, but I still don’t think everyone should just jump straight to self-publishing if what they’re writing IS what New York is still looking for. (If you write something that New York doesn’t think it can sell, but you know there must be readers out there for it, that’s a different story entirely!)

    For example: I have a friend who just signed a three book deal with a $450,000 advance who went through the process the old-fashioned way, and I have a hard time telling him that he should have just posted the files on Amazon and hoped for the best instead. $450,000 let him pay off his house, his car, and quit his day job, knowing that all of his bills for the next SEVEN years are paid for if he doesn’t go crazy with the money… that’s a lot of time to spend on writing and building his brand!

    Maybe he’ll end up self-publishing after these three books to get the 70% royalties (kind of like how Joe Konrath sold his first books to New York and used them to build his following), but I just can’t imagine telling him NOT to take that advance, you know?

    Like

  3. Pj Jones says:

    “A new writer, deciding whether to self-publish or to submit to agents, needs to consider not just what the market is like now. They need to look at where its going to be in two years.”

    So true! Another excellent article. PJ

    Like

  4. “More importantly, it ignores all the readers who will be forced to switch to e-books for one reason or another, whether that’s down to the restricted selection of print titles or the increased cost.”

    THIS!

    It just makes me laugh (Not in a “haha that’s funny” way but more in an “oh my lord how stupid are they” way.). Despite paranormal and urban fantasy being ridiculously popular (ditto steampunk and post-apocalyptic tales), my local bookstores carry such a pathetic collection I could literally find nothing to read. Or if I did, the price was so prohibitive I had to go to Amazon to afford my habit (I read at least 2 full length novels per week.). I’ve been pretty much forced to buy through paper books through Amazon for the past 5 years in order to get the price and selection. But still, traditional publishers seemed to be publishing less and less of what I like to read and their offerings are increasingly … sub-par.

    And yet, the interwebs are jammed packed with amazingly good authors writing amazingly good stories in the genres I love. I just needed an eReader.

    Voila! I receivethed my Kindle and never lookethed back. I have a never ending supply of affordable, well written books in the genre’s I like to read. And I’m not alone. This is going to happen more and more.

    And that doesn’t county the “Baby boomers” who are increasingly switching to eReaders (my Dad’s buying my Mom one for her birthday) so they can adjust the font size. There are so few books published in large print.

    Is it any wonder that the paper book industry and thus bookstores are collapsing?

    Like

  5. Nancy Beck says:

    For example: I have a friend who just signed a three book deal with a $450,000 advance who went through the process the old-fashioned way, and I have a hard time telling him that he should have just posted the files on Amazon and hoped for the best instead. $450,000 let him pay off his house, his car, and quit his day job, knowing that all of his bills for the next SEVEN years are paid for if he doesn’t go crazy with the money… that’s a lot of time to spend on writing and building his brand.

    Congrats for him!🙂 But you do know he probably won’t get that $450,000 in a lump sum, up front? He’ll probably get them in anywhere from 3 to 5 parts.

    Still, nothing to sneeze at…

    Like

    • TheSFReader says:

      And let’s hope he can use that 7 years window to build his brand, that is if the contract’s take on “competing work” is kind enough …

      Like

      • He’s going to do what Joe Konrath did — take the money from his publisher and use it and his publisher’s efforts to sell *these* three books as well as possible and build his email list, etc, etc… And then, like Joe, if he wants to he can just start self-publishing to the fan base his publisher helped him develop. I think it’s a great idea, personally.

        Like

    • Having published a few books myself and seen hundreds of contracts over the years, yes, I’m aware of that. 🙂

      Would you turn down that advance to self-publish?

      Like

  6. Nancy Beck says:

    Heard about the Borders thing this morning. Such a shame that the high mucky-muck who bought them however long ago pretty much drove them into the ground…I have two Borders fairly close to where I live, so I guess they’ll be gone pretty soon. (I never have a hope for these sorts of things.)

    Picked up a lot of books at both locations over the years. Now if I still want a print book – or a particular book is only availabe in print – I’ll either buy it used online or mooch it off of Paperback Swap.🙂

    Like

  7. I’m reading the LA Times online and they list the creditors who objected to the bid by Najafi, citing concerns they might not be appropriately compensated if Najafi later liquidates Borders, cutting out their benefit all together. Those creditors, who quite possibly just ensured Borders liquidation – Penguin, HarperCollins, Random House, Perseus Books. ??? Wouldn’t it make better sense that these publishing houses do everything they can to keep Borders open. How much do the Big 6 benefit from liquidation? Obviously, they are in it for the dime, but if the outlets where they can sell their books no longer exist, where are the dimes then?

    Is there some logic I’m missing? Holy cow.

    Like

    • And this is what makes me wonder if those creditors thought they would not be getting a worthwhile profit if Borders stayed open anyway… ie another sign pointing to the spiral in print book purchases, thus not justifying massive distribution of print anymore?…. hmmm, okay, maybe that’s an oversimplification of the issues involved in the liquidation hehe but it did jump out at me:)

      Like

  8. Col Bury says:

    Fascinating article this – thanks, David.

    I hope I don’t miss the proverbial boat, but I’m still mulling over these fast-evolving changes. However, the ‘traditional advance story’ above is somewhat heartening. Hats off to that author.

    Thanks for sharing your thought everyone.

    Like

    • It’s an AMAZING time to be a writer, and keeping up with all of the changes can be tough, especially if you’re new to the business in general and don’t know all of the implications.

      But I really do think, if you’re writing something New York would actually pay you good money for, why not at least try to get an agent? Is that six months of query letters and submissions going to be THAT hard on you? If you do get an agent and they get offers for the book, you do NOT have to accept what you’re offered. If Simon & Schuster offers you $8,000 for your novel (which is about what you can expect for “most” authors), you can always say no and THEN self-publish.

      But if they add a couple of zeros to that offer, what does it hurt to go the traditional route and get some good money upfront? None that I’m aware of right now…

      Like

  9. Col Bury says:

    ‘Thoughts’ – damn tyops!🙂

    Like

  10. Above, J.M. Harrison- the big Six is owed a lot of money by Borders~millions $. Business is business and so far, for the most part, the publishing industry seems to refuses to change or modify its course.

    Great article, David! I agree with everything you said. As a self-publishing author, I made a decision a few months ago to not even bother to establish an author account with Borders, anticipating that this day would come and even if someone bought one of my books from there; I’d never see a royalty check because the line is long as to who Borders owes money.

    Like

  11. I don’t have time to answer all the comments until later (formatting), but I just wanted to address that $450,000 advance.

    Obviously, that is a life-changing amount of money, and I’m not saying to turn it down!

    You would need to look at the deal closely (is it for one book, five books), to see how that actually breaks down. But on the face of it, that is a deal that few would or should say no to.

    Having said that, if it was for, say, a six book series, and those checks were spread over ten payments over ten years, I would be looking at how much money I got upfront (and partly wondering if the company would be around in ten years, and if so what happens to my rights and my payments).

    We should also keep in mind that the chances of snagging an agent are very small. Also, agents are struggling to sell half the books they take on. And even if you got a deal, the chances of that deal being the kind of eye-popping number quote above are so remote, that it shouldn’t really be a factor in deciding which path to choose.

    I could also argue that if your book really is THAT good, that you will be a huge self-publishing success anyway, and will have your pick of publishers and deals, if you want to go that way.

    (Oh and congratulations to the writer involved, that’s a stunning offer.)

    Like

    • Payment is broken into thirds between now (first 1/3 already paid) and publication of the first book summer 2012. The second book is due out winter 2012/2013 and the third book is due out summer 2013. It’s a great deal if you ask me.

      I would argue that the chances of 99% of self-published authors making $450,000 over the next 18 months or so are pretty remote, too. I know *you* can’t say that — you have an eBook on self-publishing to sell, after all, and that would be bad for your marketing, ha! — but for every Amanda Hocking who gets a huge number of sales and big print deal, there are THOUSANDS of self-published authors who sold 10 copies or less last month…

      Which is a lot like traditional print publishing! 🙂

      Like

      • Oh, I can definitely say that. Here you go:

        The chances of 99% of self-published authors making $450,000 over the next 18 months or so are pretty remote too.

        There!

        But I can also say that 100% of the authors stuck in the slushpile over the next 18 months will make $0. I don’t know any self-publisher making that little.

        That does sound like a great deal – now I really have to get back to work!

        Like

  12. Bill King says:

    Great article again, Dave,
    I agree with the general point that now is a good time to be an indie writer and that e-publishing is definitely a viable option. I am not sure I buy the whole “print is dead” thing. I remember the time before Borders and B&N and the other big chains. Books still got sold. I also suspect that Amazon and the online retailers are killing bookstores as much with print books as with ebooks. How many people do you know simply stopped going to their local Borders but bought their print books online? I know dozens personally. I really do think e-books are going to explode in popularity but I would not write off either big publishing or print just yet.

    Like

  13. E Hunter says:

    This news seems sad, but inevitable. I’m not going to lie, for a lot of medium sized communities in the US, Borders was the only real bookstore in town and there are 11k jobs that will be effected, so I can’t laugh at this.

    That said, it also seems inevitable to me and I’m thrilled to be writing at a time when there are so many options available to writers and readers.

    I want to agree with those who mentioned e-readers for the middle aged and add that the elderly are also a huge market! Large print books are expensive. Both my grandmothers are in their 90s and still avid readers. (Very avid, I would estimate both read at least 2-3 novels a week.) One has a Kindle, one has a Nook. Both love the ability to personalize their reading experience.

    Like

  14. Nice post, and I agree completely.

    One minor thing: what we’re seeing is actually a positive feedback loop, like the feedback that occurs when you get the microphone too close to the loudspeaker. A negative feedback loop controls parameters to restrict them within acceptable limits. A positive feedback loop causes things to spiral out of control.

    Like

  15. Hmmm, I’m feeling pretty awful now, thinking of all those jobs lost. I’m hoping there’ll be opportunities for the employees to cross-over into other industries somehow…

    I was thinking the other day about what would happen if publishing houses like the Big 6 begin to falter… You know, lots of employees in publishing houses definitely have the skills to set-up small outfits (small companies offering freelance editing, formatting, cover design, coupled with marketing maybe) to service what is gonna be a booming self-publishing industry in the future (or right now, actually:D). I can see lots of opportunities for the world of small business to come up with editorial solutions, which would actually expand employment opportunities. In fact, editors would probably get paid better and have more say in what they accept to work on if they take advantage of what’s happening and strike out on their own…

    As to big bookstores… it’s useless (and probably counter-productive) to want them to stay forever, but boy am I gonna miss them if they go too fast… I’ll have to start visiting that place called the ‘library’ lol to get that feel of being surrounded by books if that happens… Hmmm, not a bad idea that:)

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  16. As to big bookstores… it’s useless (and probably counter-productive) to want them to stay forever, but boy am I gonna miss them if they go too fast… I’ll have to start visiting that place called the ‘library’ lol to get that feel of being surrounded by books if that happens… Hmmm, not a bad idea that:)

    Alas, libraries aren’t likely to outlast bookstores by much. I’m sure the buildings will remain for some time, but they’ll be re-purposed as continuing education centers or whatever. As ereaders continue to gain market share, the demand for print fiction will drop to nothing, especially since nearly all new print fiction will be ebook-only. And non-fiction has already decreased greatly in popularity in libraries, as more and more research is done on-line.

    At current ereader pricing, a huge percentage of serious readers have already made the transition, and even casual readers are converting to ebooks, albeit often with a reader app running on their smartphones or iPads. The trajectory of ereader pricing tells me that they will soon be essentially free, on the King Gillette model of giving away the razor to sell the blades. At that point, anyone who wants an ereader can have one, regardless of their economic circumstances. The combination of cheap or free ereaders, cheap ebooks (compared to print, anyway), and new releases being ebook-first or ebook-only will not only kill bookstores, but libraries as well. Why would anyone visit a library when they could download the book electronically without spending time or gas money to visit the library?

    Like

    • Hmmm, my first thought when I read this was ‘Omg, I need a drink to deal with the demise of all big buildings with printed books in ’em’ hehehe But you bring up some good points, Robert.

      To answer your question from a personal standpoint, I really, really enjoy being in big buildings with racks of books (no doubt it’s a case of being conditioned to enjoy the tactile experience of paper products), so I’d make the effort to go visit … Taking into account the digitalising of everything though, I’m guessing that libraries will probably evolve into having an ebook selection to download alongside print products (especially those rare editions that never seem to disappear from library shelves). Even if you go by ebooks alone, if you enjoy the experience of being in a place dedicated purely to reading ebooks or browsing ebook catalogues (especially if they include cute little cafes on the side to hang around in:DD) while doodling on a piece of blank paper, listening to a song on your Ipod, and wondering what the stranger sitting nearby is reading on their ereader, you probably wouldn’t mind the time or gas money involved. Heck, I just made the library sound a lot like Starbucks, didn’t I?

      Anyway, somehow I just don’t see libraries disappearing. Even if it’s only for the sake of quoting from print material for the sake of esoteric academic pursuits, I’m pretty sure libraries are gonna survive… like cockroaches after a nuclear meltdown… heheheh sorry, no offense meant about the cockroaches. I actually do like libraries. As you can probably tell:)

      Like

  17. Don’t get me wrong. I love libraries. I’m married to a librarian. And I love bookstores. But neither is long for this world, based on simple economic realities.
    My wife swore that she’d never convert to reading ebooks. I confess that I had a similar reaction, but back in January I bought a Kindle, and it took me literally five seconds to decide that reading on the Kindle beat reading paper in just about every respect. My wife is quickly coming to the same conclusion. What used to be my Kindle has transitioned into being our Kindle, and the other day Barbara referred to it as her Kindle. With only a couple of exceptions, most of our friends who are serious readers have already made the transition, and seldom visit bookstores or libraries any more. Some continue to check out library books, but as ebooks, which don’t require visiting the library. My attitude is that most of what we read is available for $0.99 to $2.99, so why bother waiting for a library copy when we can just buy it on the spot.
    We used to find a new-to-us author that we liked and then spend lots of time and money tracking down all the other books in a series, most of which usually weren’t available new. Buying indie authors, as we mostly do now, lets us just download the whole series of books for usually less than the price of a new hardback.
    I don’t doubt that some research libraries will survive, but I seriously doubt that in ten years there will be any libraries open to the public remaining. Don’t forget that Google has already digitized most of the world’s books, including very rare and obscure ones. Pretty much anything you’d want to read is already available electronically. While you (and I) might enjoy the ambiance of a library or bookstore, the economics just aren’t there to sustain them, particularly in an era of very tight budgets and cuts to government spending. We really are seeing the last days of bookstores and libraries. I’ll regret that in the same way that I probably would have regretted watching the horse being replaced by the automobile, but I’m afraid technology is relentless. Print books just aren’t going to survive, and without print books there’s not much point to having physical bookstores and libraries.

    Like

  18. Good article. Thanks for the link thru to The Library Thing. That looks like a good article too.

    There is no question in my mind that ebooks are the future, and that traditional publishers continue to not quite get it. When ebooks cost as much or more than their paperback siblings I certainly am not buying. And the percentage going to the actual authors is often times laughable.

    I always thought ebooks needed a reliable review system in order to take off. That has quietly emerged all on its own via the free sample chapters virtually all self published authors now use. It takes much of the fear out of reading an unknown author when you can read the first several chapters before you commit to buy.
    ~jon

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  19. In a way I’m not sorry the Big and Nasty chains are going under. i watched them put a lot of indies out of business a couple of decades ago. But the niche indies who survived that particular apocalypse may survive this one as well. Paper books will certainly become a niche market, but I predict they will survive. After all, lots of people still buy CDs and rather than download to an iPod.

    There will still be the coffee table book, the beautiful children’s picture book, the oh-so-exquisitely-written literary book that impresses the guests when left out on the table–plus the biographies of politicians to give out as gifts at fundraisers. Also, for people who only read one book a decade, there will always be the Snooki book. I think the superstars–the Hockings and the Eislers who have proved themselves in ebooks–will get to go into paper for the gift book market.

    But the fiction market–especially the adult genre fiction market–will be driven by e-commerce. Hell, It already is.

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  21. The thought of bookstores closing is sad but inevitable. Good post though, David!

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