Based purely off the number of companies that seem to want to jump into the ebook game, you would figure that it’s a highly lucrative business with plain benefits for a company line. That may still be true, but according to reports, at least one major bookseller has stumbled, and may soon fall.
Just after the new year, Borders suspended payments to a number of its suppliers on book shipments it took in the month of December. In response, several publishers, including Rowan and Littlefield, have since suspended deliveries to Borders stores, choking off their supply and causing Borders’ stock to plummet on the New York Stock Exchange.
The source of the company’s financial woes is obvious, with third-quarter sales down 17.6 percent in 2010, even compared to the anemic numbers in 2009. They reported double the losses during that period to the tune of $75 million.
Borders is reportedly trying to work out some sort of financing with publishers, but the most likely outcome in this scenario seems to be a Chapter 11 bankruptcy filing. That doesn’t necessarily mean that Borders as we know it will disappear from the face of the earth, but it does mean debt shedding and some restructuring, which will likely result in a number of store closings and reduced orders with publishers. Said publishers have a vested interest in keeping the nation’s third largest book seller alive, but their ability to help them do that only goes so far.
While a number of factors likely contributed to Borders’ troubles, their tepid approach to ereaders has to be cited as one of the biggest. They managed to put together a partnership with Kobo in 2010, launching the Kobo eReader and Borders eBookstore over the summer. Priced at $150, the Kobo had its brief moment in the sun as the value ereader in its class, but both Barnes & Noble and Amazon subsequently marked down their prices and squeezed the Kobo out of the market.
It probably goes without saying that purchasing a Kobo eReader at this juncture is ill-advised. The last thing you want is an ereader that doesn’t offer you a store from which to purchase books. There’s always the long-shot possibility that Barnes & Noble could buy them out and roll them into the fold with the Nook, but that is far from a foregone conclusion.
We’ll be keeping a close eye on this story, because it could send ripples all throughout the epublishing industry.