The middle class is shrinking. Those in power have run up enormous debts on public credit while shoveling most of the money into private pockets. The corporations that have benefitted from this borrowing binge, meanwhile, leverage the global trade system to transfer their profits beyond the reach of national governments.

Meanwhile, we have been told lies by Democrats and by Republicans, divided into artificial camps and led into debates that are either irrelevant or so dramatically scripted that we fail to realize every choice leads to the same result: the dismantling of the social framework that defined and sustained the opportunity of the last century. National mobilization of resources has given way to radical individualism under a narrative that, in the wealthiest nation in the world, we must always expect less.

In this tumultuous time, we search for a way forward - a new Square Deal for the American people.

Saturday, July 23, 2011

A Loss for Paper Books

Vini, vidi, vici -- "I came, I saw, I conquered." These words, attributed to Julius Caesar, might as easily have been attributed to retail giant Borders Books and Music (more recently, Borders Group).

As of yesterday, however, one making such attribution would need to add a fourth phrase: perivi, or "I passed away."  Founded in 1971 -- the same year that much-older Barnes & Noble embarked on its campaign of expansion -- Borders and its counterpart wrought upon the book industry changes as unprecedented as they were profound.

Prior to the rise of Borders (and B&N), most cities and towns across America had small bookstores.  Many were independently operated, while some were limited-scope chains like Waldenbooks.  Even these chains, however, were merely branded embodiments of the same concept of small-scale bookselling; that is, they carried books and perhaps some games or greeting cards, and they generally sold books for retail price from storefronts about the size of a modern McDonald's.  That model had persisted for more than a century.

With the debut of the mega-retailers, it collapsed.  Borders and B&N sold books for massive discounts, often 40% or more off of retail price.  They brought together easily as many books as one might find at a major library with vast selections of music -- first records, then tapes and CDs -- and ultimately expanded to include videos and DVDs.  (Experiments in offering video games were short-lived but lasted long enough to provide me with a copy of X-COM: Terror from the Deep in 1995.)

Borders was acquired by K-Mart in 1992, eight years after that company had also acquired Waldenbooks.  The acquisition did not last long, but it did result in the re-emergence of independent Borders Group as the combination of the two bookstore chains.  Generally, Waldenbooks persisted in malls, where space was more expensive, while standalone Borders mega-stores popped up in suburban and urban settings.

As a means of getting people to buy books, the growth of the Borders and B&N chains was significant.  For better or worse, by the 1990s, many libraries had stagnated as places to congregate.  They had plenty of books and the merits of being free, but libraries also had several strikes against them:
  1. Public libraries almost without exception did not allow food or drinks, which the mega-stores not only allowed but actually sold at their own branded or contracted coffee shops.
  2. Libraries generally stocked hardcover books because these were more durable and lasted longer, but that made their stacks primarily older books that were still holding together decades after they had been acquired, while mega-stores had rapid book turnover in mostly paperback form.

  3. Libraries were (and are) beholden to the Dewey Decimal System of book classification, which suffers from being designed in the 19th century as a top-down model for things known at that time, while the mega-stores could and did opt for flexible categorization to suit marketing genres.

Because the mega-stores readily encouraged people to browse and even read entire books without making purchases, the advantages listed above rapidly helped the mega-stores outcompete libraries (whose administrators often failed to appreciate that they were even in competition). 

Meanwhile, because they sold at such deep discounts, they drove independent bookstores to ruin, either by simply putting them out of business or forcing them to try and become "mini-megas" that led to the same outcome but cost more along the way.  (My hometown of Newark, Delaware hosted such a mini-mega in the form of Rainbow Books and Music, which had once been Rainbow Records and tried quite unsuccessfully to compete with the Borders not far away in New Castle.)

In those days, rarely was a market sufficiently large that Borders and B&N each built a store within an area; these were not Walmart and Target.  Instead, they appear to have divided the world between them -- a sort of literary Molotov-Ribbentrop Pact, as it were, each agreeing to leave the other largely alone as it consolidated power within its agreed-upon sphere.  Thus, New Castle had a Borders to serve Newark, while the closest B&N was near the Pennsylvania state line and served Wilmington.  (A third mega-store chain, Books-a-Million, persists to this day but is far smaller; there were and are none in Delaware.)

Confrontation was inevitable, of course, and the catalyst was technology.  When Amazon.com exploded on the scene with the first wave of Internet commerce, it quickly seized on a weakness in the mega-store concept: while mega-stores could undercut local storefronts by sheer volume, Amazon also had the benefit of not needing to maintain storefronts at all.  In no time, Amazon was able to leverage centralized storage, rapid shipment, and volume puchases to undercut both Borders and B&N.

B&N recognized this threat for what it was and faced it head on, building its own BN.com Web presence to sell books directly to customers while shrewdly tying these efforts to its storefronts with options like ordering a book for in-store pickup.  Borders went the other route, outsourcing its online sales so that these flowed through Amazon. 

It might have been an excellent partnership leading to a merger, but it wasn't, because whatever the intentions of Borders executives, Amazon had no interest in a physical presence.  Under Jeff Bezos' leadership, Amazon expanded to become a seller of virtually everything.  Borders soon found that its arrangement with Amazon only drove more traffic to that site while taking away a cut of its sales -- sales that B&N retained through its own Web site.

Then came the electronic book reader craze.  Several e-book readers had already made appearances by the time of the Amazon Kindle debut in 2007, but that Kindle was immediately more successful than competing products for three reasons:
  1. With built-in and free cellular technology ("WhisperNet"), the Kindle allowed customers to buy books "on the fly" and download them without having to connect to a computer, a feature that has made impulse-buying much easier;

  2. It was hyped by Oprah Winfrey on television, leading to sell-out sales despite the first-generation device missing the mark on "retro" and just looking old; and

  3. Using "electronic ink" technology more akin to an Etch-a-Sketch than to a computer monitor, the Kindle not only didn't tire a reader's eyes but also used very little power.
Because Amazon.com already had the means of selling books, it was able to quickly offer many thousands of titles in its Kindle electronic format, and the ubiquity of the brand overcame the downside that this format was proprietary. 

Again, B&N recognized the danger and immediately began work on its own electronic book reader.  The B&N Nook, which debuted in November 2009, used the electronic ink just like the Kindle but worked off of a touchscreen model rather than the key-press concept of its rival.  The first-generation Nook had 3G cellular to compete with WhisperNet.  The next release shifted to wireless Internet (Wi-Fi) for over-air downloads at any hotspot -- including free connectivity at any B&N, making it practical to browse the shelves and then buy a book in electronic format.

Significantly, B&N also opted for the open EPub format of electronic book, giving the Nook broader appeal in some ways than the proprietary Amazon format.  That a color version of the Nook based on Google's Android OS debuted in November 2010 at the dawn of the iPad-fueled tablet craze didn't hurt.

Borders, in contrast, largely missed the mark.  Though it did ultimately partner with another vendor to offer the Kobo reader in its stores, that gave it neither its own hardware to sell nor a particularly easy way to make money from selling the books; the Kobo was (and is) primarily an EPub reader, making it entirely possible and practical for buyers of the device to do subsequent shopping at B&N or BN.com.  As electronic book sales expanded, ultimately outpacing print sales in the United States by mid-2011, Borders found itself in dire straits.

Those straits reached their conclusion yesterday.  On Friday, July 22, Borders began a liquidation sale at all of its stores across the country.  A few offers were made to buy the struggling chain, but no one could close the deal.

This is the market at work -- it's capitalism, what drives the American economy.  The loss of Borders as a company is not something with which we need concern ourselves.

However, as with all things, there will be repercussions.  Borders did not simply rise and fall; its rise took with it virtually all independent bookstores within its spheres of influence and caused the decline and closure of a great many libraries.  Where Borders stores will now go vacant, we should not imagine that B&N will swoop in and take over those locations.  B&N may be much more profitable, but it also locked in a struggle with Amazon.com that is increasingly digital in nature.

So, what will happen?  Given recent spending cuts on an unprecedented scale, it is very unlikely that states or locales will sponsor a resurgent library system.  Americans will of course be able to buy books online, or to download them to devices like the Kindle, Nook, or Kobo.  But while one can read those kinds of books, they don't lend themselves to browsing, to the sort of free-flowing curiosity that leads people to learn things that they wouldn't have usually looked to find.  We will, instead, continue to turn our attentions online.  We will seek our free-flowing information from Web sources -- blogs like this one, snapshot news and commentary, Wikipedia

Again, these are good sources.  But they're not primary sources; they can't be counted on to convey factual knowledge.  It is far easier to pass off an unresearched opinion online than could be done in print.  In the long term, we can't sustain a universal democracy on the basis of speculation, vitriol, and feelings.

Perhaps as devices like the Kindle and Nook continue to advance, the ease of browsing through electronic books will also improve.  Tablets and touchscreens may not replace keyboards any time soon, but they do have their advantages.

But that's just a possibility.  Only one thing is certain: within a few months, many, many towns across America will have lost their only bookstores. 

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