For Whom the Bell Tolls...It tolls for Borders and, quite possible, a number of publishers as well if they are foolish enough to buy into Borders' latest attempt to save itself.
Much of the news from the publishing world this week has centered around Borders Books and its attempts -- very late attempts -- to save itself from bankruptcy. There have been firings, the announcement that it is closing one of its distribution centers and talks with publishers all so it can get refinancing on its outstanding debt. Is it a case of too little too late? In my opinion, yes. Worse, if the publishers buy into Borders' "solution", I won't be surprised at all to see not only Borders but some of those publishers shutter their doors in the next year or two.
Here's a quick time line of what's been happening with regard to Borders since the first of the year. It started with a new round of firings or resignations in the executive suite. Gone are Thomas Carney, longtime legal counsel, Scott Laverty, the chief information officer, Tony Grant, v-p of real estate, Bill Dandy, senior v-p, marketing, and Larry Norton, senior v-p for business development and publisher relations.
Then came the news that Borders wanted publishers to push back the date for payment of outstanding bills -- ie, Borders wanted to keep books already shipped to them by the publishers but not pay for them. As talks between Borders and the publishers commenced, we learned Borders wanted the publishers to convert this debt into "interest bearing loans". This brought Borders stock tumbling to a low of 84 cents a share. From the same article: "Several publishers said Borders owed them millions of dollars in payments, up to tens of millions each for the larger publishers. Publishers said they had been told by Borders executives that more than two dozen vendors were owed money."
Compounding the bad news is this report of the announced closure of one of Borders distribution centers. This center, located in Tennessee, had already seen layoffs of 200 employees. Now, another 300+ will lose their jobs. This is a cost-cutting move aimed at streamlining their distribution chain. Again, too little too late, in my opinion. This is something they should have realized before opening the center a couple of years ago.
Indicative of the problems facing Borders the announcement that Diamond Book Distributors has suspended shipments to them. DBD is a major source for graphic novels. From ComicsBeat.com: "They have informed their clients that since Borders has suspended payments to them, DBD is suspending product shipments and has put the Borders account on hold." Now, you might not think this is major news, but think about it. Titles included in the DBD stable are Streetfighter, Gantz, Shrek, Transformers, G.I. Joe. Darkhorse Comics uses them as a distributor. We're talking comics and manga. This is an entire demographic Borders has lost, for a short time at least, because of their halting of payments.
The latest news is that Borders has given publishers until Feb. 1st to accept or reject their latest proposal. According to the article, Borders is asking publishers to take on somewhere between one-quarter and one-third of the company's "reorganized" debt.
All I can say to this is, WTF? I'm sorry, publishers are in trouble. They are barely keeping their
heads afloat as is. Now Borders wants them to take on more debt. Where is the money going to come from? Ask most writers and you'll find that advances are down -- and that's when they are able to find a traditional publisher for their books. Some are reporting late and/or incomplete royalty payments. There is a growing discontent linked to the belief royalty accountings are anything but accurate. Book prices continue to go up and sales of hard copy books continue to stagnate or decrease. What Borders is asking these publishers to do is tantamount to suicide for some. "Take on my debt, continue to supply me with books but don't charge me for them, and I get to stay open. Oh, wait, you'll have to close your doors? Sorry, can't help you there. But we'll send flowers to your corporate funeral."As much as I hate to see any business close its doors -- not so much for the business itself as for the employees -- perhaps it is time to let Borders take its lumps and either close or downsize to a point where it can stay afloat. But it has to be done in a way that doesn't put the rest of the industry in jeopardy as well. I don't have all the answers...not even a few of them. But I do know I don't want to see the major -- or minor, for that matter -- publishers chain themselves to a sinking ship.
For an excellent overview of what went wrong with Borders, check out this article by Peter Osnos.
(cross-posted to The Naked Truth)
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12 comments:
Borders is definitely committing suicide in the Pratchettian Ankh-Morpork sense ("He announced in the Drum that his name was Vincent the Invulnerable" "Suicide.")
Unfortunately, they seem to be accompanied by rather a lot of the publishing establishment.
That Chinese (or Counterweight Continent) curse is far too apt. Interesting times indeed.
It's like watching a movie. "No! Don't go down that dark corridor!" gasps the entire audience. Miss Borders eyes the darkness and takes another step...
I could try to comment on the whole debacle, but frankly most of what I've though is already (much more effectively) said by other worthy adherents.
Kate- thanks for the "Counterweight Continent" comment, now I've got socio-economical philosphies about north american and Asian cultures crashing back and forth, *time for a blog post to dump it to text?*
And Matapam,
Thank-you... the comment and connection, it made me laugh outright... All we need now is "The Blob" or "Mutant Triffids" jumping out of the darkness.
** for those who don't know what Triffids are.. Here[http://en.wikipedia.org/wiki/The_Day_of_the_Triffids]
Cheers,time to get back to work.
Dan Casey.
>macerdi? no idea....
Kate, not only have they decided to take a lot of the industry with it but, I'm afraid, the lemmings -- or at least some of them -- will follow willingly. I understand publishers are worried about losing an outlet for their books. (After all, they run in fear at the mere mention of the "A" word. How often have we heard them blame Amazon for all their failings?) What I don't understand is why these very same publishers would even consider buying into Borders' debt.
How much does Borders already owe them? I've seen everything from thousands to tens of thousands to possibly more for some publishers. While I understand Borders wanting to do all it can to stay afloat -- and damn the torpedoes in the process -- I haven't seen anything yet to show they actually have a new business plan in place to do so. It is going to take more than just refinancing and getting publishers to agree not to demand payment for some set period of time.
Like publishers, Borders is in sore need of an operational overhaul. It goes beyond firing some of their upper management -- especially when one of those let go was one of the few at that level with real publishing experience. It goes beyond closing a distribution center. The whole corporate philosophy needs to be tossed and replaced.
Perhaps they need to look once more at what made Borders so unique when it was founded. They definitely need to start listening to the needs and wants of their customers. This is the time when all of publishing -- from writers to publishers to distributors to sellers -- need to evaluate what is working and what isn't and to embrace the new tech and customer trends.
Oops, I got up on that soap box. Sorry, climbing down now.
Matapam, except I think there are a lot of disgruntled customers who are yelling just the opposite -- "There! Go into the dark! Don't listen to them about the light. You can hide in the dark."
Or perhaps that's the mindset of Borders management. They like the dark so they stick their heads in the proverbial sand.
What is truly scary are the number of publishers who seem to be considering going into the dark with Borders. Maybe it's the march of the lemmings and they don't see the cliffs up ahead.
Daniel, there have been some wonderfully insightful posts about this debacle. What's sad is that I don't think those who ought to be paying attention to them are.
As for The Blob and the Triffids, they're probably boycotting Borders now. After all, they're manga fans and Borders has quit paying at least one supplier. ;-p
I'd say the rot started before "Borders" came into existence, if we dig deep enough to try to meake real sense out of what we're seeing.
Niven's "Ringworld" opens with Louis Wu hopping from one time zone to the next to make his 200th birthday last 47 hours. Along the way, he bemoans the fact that modern advances in communication and transportation have produced an effect which would -- a generation later -- come to be called "Wal-Mart-ification", the sense that every city is becoming essentially interchangeable with every other, the whole world being consumed with a cookie-cutter homogeneity.
That book was published in 1970.
We created a culture that was unique, a culture that hinged almost entirely on individual thought an initiative, a culture that took us from the horse and buggy to the jet engine in less than a generation. And then we turned the maintenance and management of that culture over to a vanishingly small and intellectually-inbred group of professors and "management theorists". Theorists who produced a generation of managers with the universal belief that Resources + Labor = Goods, and that the exact nature of the Resources, Labor or Goods involved really matters very littl to the management of the process.
The problem is finding people who genuinely understand both readers and authors, someone to stand where Jim Baen and John Campbell used to stand. (Like you're doing with NRP -- but when you're editor-in-chiefing, you're not WRITING ...)
There is no question that people still want stories. The vehicles for delivering those stories may be evolving (video game scripts, anyone?), but the thirst for stories continues. It is our job, as purveyors of stories, to find some method of getting our cattle to market. It's just a little more challenging, with the topography changing and the water-sources moving ...
Do you know, I wonder if some of the larger publishers are thinking about a debt for stock swap. It's got to be tempting to own one of your major retail outlets.
Stephen,
Terry Pratchett caught the same thing somewhat later with one of his pre-Discworld novels, Strata.
The gist is that the Inuit learned cost accounting, but no-one learned ice fishing - in short, regional differences got wiped out and replaced with a kind of bland one size fits all modernity.
Pratchett's point was that it didn't have to be that way.
Pam, that idea would be the worst of all possible worlds for the publishers, unless Borders really does have a new-and-improved business model. As it stands, as creditors/vendors, they have legal protection validating their claim to either the money for the stock on the shelves, or the return of the stock itself when the guillotine falls. If they become *owners*, then the shelf-stock becomes subordinated property which they could conceivably lose at auction in order to cover the daughter-corporation's other debts (salaries and benefits, taxes, real estate defaults, utility bills, etc ...)
ARGH!!!!!!
I'll come back and respond later...after Blogger quits eating anything over two paragraphs.
Yeah, it depends on how many bills to whomever they aren't paying. Are the publishers the first people they've not paid, or the last?
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