The book-seller Borders may become the first casualty of a changing publishing industry. According to reports, the company has been delaying payments to book publishers in order to help refinance its debt.
Borders is the second largest book retailers in the U.S., after Barnes & Noble, but even so, Borders says “there can be no assurance” that these refinancing efforts will be successful in keeping the company afloat.
Electronista likens Borders’ downward spiral to that of Circuit City, noting the similarity between the companies’ “lack of faith” from suppliers who no longer trusted credit from the chain. According to the blog, Borders has lost $74.4 million in its most recent quarter and has lost money in most every quarter for the past two years, save during the holiday season when sales helped prop up profits.
It isn’t simply a downturn in the economy or in the publishing world that has put Borders in trouble. Unlike Barnes & Noble and Amazon, Borders has not built its own e-reader hardware. The company has partnered with Kobo, a spin-off of Canadian publishing company Indigo Books & Music, and offers a branded Borders e-bookstore and reader but only via the Kobo software and hardware.
As e-books have exploded in popularity, both Amazon and Barnes & Noble have found themselves well placed, and there have been rumors of Borders buying Barnes & Noble, in no small part in order gain a share of the lucrative e-book business.
If Borders does go belly up, the results could have a ripple effect on the e-book industry. Kobo would clearly suffer by losing its major partner, a shame as Kobo is one of the few supporters for open-formats for publishing. But there seems to be plenty of other companies – Apple and Amazon – that have the (DRM) e-books ready to deliver.
