Goodbye Borders, Hello Kindle?

Things are looking shakier by the day for Borders, with GalleyCat now reporting that a Major Distributor Raises Concerns about their financial situation:

GalleyCat has received a copy of a “special alert” sent from a major book distributor specializing in independent publishers to its clients, warning them that Borders, whose financial difficulties are widely recognized, “now tell us that they will not be paying us for two months due to anticipated excessive returns,” a situation the company views with understandable concern. This distributor “typically carries receivables of approximately two million dollars with Borders,” the memo continues. “A default of that amount would by no means put [us] out of business, but it would be painful, weaken the short-term health of the company, and would mean we would have to defer some of our plans for future growth.”

This on top of Barnes & Noble announcing their expectations for a brutal holiday season and no sign of things getting better any time soon:

The chairman of Barnes & Noble Inc. last week told employees via an internal memo that the nation’s largest bookstore retailer is “bracing for a terrible holiday season,” and that he expects “the trend to continue well into 2009, and perhaps beyond.”

In his memo, Leonard Riggio, the retailer’s largest shareholder, noted that comparable store sales, a key retail indicator, recently declined for the first time in the retailer’s history.

“Never in all of the years I’ve been in business have I seen a worse outlook for the economy,” wrote Mr. Riggio. “And never in all my years as a bookseller have I seen a retail climate as poor as the one we are in. Nothing even close.”

So, if the two biggest brick-and-mortar book retailers in the country are having such a rough time of it, perhaps is picking up the slack and the future of bookselling lies online and the printed book slowly gives way to the Kindle and iPhone?


“Amazon shares have surged as much as 36% post the third-quarter results, primarily due to growth rates that are surprisingly strong in a severe recession, but also due in part to increased enthusiasm for its Kindle product,” wrote Mahaney, referring to the company’s popular electronic book reading device.

“In the meantime, consumer spend datapoints have become consistently more negative,” he added.

Mahaney cited a 20% sales decline over at online jewelry retailer Blue Nile for the month of October as well as negative comments from online travel provider Expedia as evidence that the online sales environment is slowing. He also predicted that same-store retail results set for release on Thursday morning would be disappointing.

On the Kindle, Mahaney stood by his forecast for unit sales of 380,000 this year and noted that the device got a serious boost with a recent endorsement from talk-show host Oprah Winfrey.

But he added that Kindle sales won’t be “material” to Amazon until at least 2010. The online retailer does not disclose unit sales of the device.

Or maybe not:

Over at TeleRead, David Rothman reports that iPhone production may have been reduced–which could be gloomy news for readers and writers hoping that the mobile phone could change the digital book market. Nevertheless, Rothman also speculates that “multi-use” iPhone could actually flourish in a world where consumers grow more “thrifty.”

Part of the problem with the Kindle and iPhone is that they’re expensive, proprietary devices that haven’t fully broken through to the mainstream.

While the Kindle seems to offer a solid reading experience, and a better value over the Sony Reader, until it’s available at brick-and-mortar retail outlets where people can interact with them, I don’t see it reaching iPhone levels of popularity. And while the iPhone has proven popular despite its being anchored to one network, it’s not a dedicated eBook platform and, IMO, isn’t a major player in the space.

All that said, if I were a publisher — tradtional or independent — eBooks would definitely be a part of my planning for 2009 and beyond, and I’d be pushing as much of my backlist as possible onto the Kindle, but at a notably lower retail price than the printed versions.

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