walkitout (walkitout) wrote,
walkitout
walkitout

No Fair Predicting What Is Already Happening

I have been known to call people on predicting things that are already in progress, then taking credit for their precocious prognostication (come on, I _had_ to type that once I'd thought of it). That might not be a fair thing to blame them for. Possibly they just don't realize the trend is already in progress.

I'm willing to allow this, since I've been discussing with R. the last few days/weeks/months/oh, let's not go there what the world will look like should e-readers trip down the path laid down by the music industry -- a path that the music industry is still barreling down with no obvious end in sight. Pete posted in a note over on FB drawing music, books and video content all together and contemplating consumers, pricing and retailing collectively for content which is digitally transferrable. I have been insisting that B&N (BKS) and Borders (BGP) are going to have a helluva a time not being Tower Records (or, for that matter, Virgin's music stores). Particularly since I suspect they have substantial investment in the real estate their stores sit on, and if the Peak Oil and/or Climate Change trends are real, that real estate isn't going to get more valuable over time (in general -- yes, I know there are some urban stores, but many of the stores are suburban). R. noted that BGP was already a penny stock and in danger of being delisted. Today, I thought I'd go check in and see what was going on with those two stocks.

http://www.thestreet.com/story/10672918/1/borders-spikes-on-ackmans-bullish-call.html

"Ackman, appearing on CNBC's "Fast Money," Tuesday night declared that Borders has a better risk/reward than its rival."

Because _that's_ saying a lot.

Someone else is trying to buy enough BKS to match the Riggio brothers' stake; more power to him. I'll just sit over here with popcorn and enjoy the shark feeding frenzy.

R.'s skepticism that these guys are just going to go under is persistent, however, and I was willing to concede they could last a good long time on gift books, occasional book buyers, people drinking coffee and reading magazines, children's books, and the hard core of frequent book buyers that wants physical copies (altho enough of those are die-hard indy bookstore supporters that you do have to wonder how that's going to turn out). I am a lot less concerned about the remaining independents, at least the ones like Willow (Acton, MA) and Toadstool (Milford, NH and Peterborough, NH). They're already selling a ton of non-book items: toys, music, puzzles, maps. They're Third Place kinds of places that are used to scraping something out of a tough environment. One theory R. and I bounced around was that B&N and Borders might decide to go after Hallmark's clientele. The knick-knacks are already kinda thick in the chain stores, and I seem to recall them having greeting cards.

But Hallmark is fighting back with a line of giftable objects that can be customized with your voice or whatever: bears and cards and books which can talk in your voice to the recipient. Hmmmm. So all those people thinking ereaders should be able to support books with movies and crap in them? Bet you can't make those books soft and cuddly.

Where did B&N come from, anyway? It's not like suburban book superstores have always existed. Quite the contrary. I know the Riggio brothers have this whole spiel worked out, but let's not lose track of this:

http://www.barnesandnobleinc.com/our_company/history/bn_history.html

"Through the 1980s, Barnes & Noble experimented with different store formats and sizes, seeking to develop a suburban superstore version of the original Barnes & Noble store. In 1987, the company made its largest acquisition when it purchased B. Dalton Bookseller from Dayton Hudson."

Now, depending on where you have lived, how old you are and how much attention you've been paying, you may or may not have already made the connection that Dayton Hudson is also known as Target (that's a slight oversimplification). Another component of the books = music prediction is that if Wal-Mart and Target are now huge sellers of CDs, replacing places like Tower for the not-buying-online crowd, there's no particular reason that Wal-Mart and Target wouldn't end up selling books in a similar way. They already move a lot of books. A _lot_ of books. If the chain superstores go away, they are what's left that is not online (yes, I know both have online stores. Work with me, here.).

Further in that B&N corporate history:

"The company also acquired Doubleday Book Shops from the Bertelsmann Company and the rights to the Scribner’s bookstore trade name from Macmillan."

Really, what the Riggios did was buy a bunch of crap that the publishers were smart enough to realize they really didn't want to be caught holding the bag on, spend a bunch of money on real estate and branding. It looked kinda smart while it was happening (and yes, I've spent a good chunk of money there and at Borders over the decades), but now? Now it looks like a roll-up of turds. So the next time you're sitting there thinking that publishers are a bunch of idiots who can't find their own butt with a flashlight and a mirror with a long handle that can adjust at an angle, think again. They were smart enough to get rid of the physical real estate.

When I sit here in my rocking chair, happy that I have child care today, and contemplating the demise of BKS and BGP in the next ten years (if you heard it here first, that was purely because you missed someone else predicting it a while back), the survival of some fraction of existing independent bookstores but looking more like content stores that got all jammed up with a card shop and a toy store, I can't help but wonder. The publishers were A-OK with the Sony reader: it was going to be a slow transition and they were going to increase their pricing power. How much of a surprise was it when Bezos pulled the kindle out of a hat? Sure, Macmillan "won" this latest maneuver, but how many negotiations _haven't_ made it to the dying newspapers?
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