An American Editor

January 3, 2011

Call for Barnes & Noble! Call for Barnes & Noble!

I suspect most readers are too young to remember the heady days of tobacco company commercials, especially radio commercials, or even the cigarette brand Philip Morris. Its print (1940s) and early TV commercials featured a hotel bellhop carrying a tray with a pack of Philip Morris cigarettes on it and bellowing “Call for Philip Morris!” The radio version (also 1940s), popularly heard on programs like The Jack Benny Show, really was well done.

The commercial came to mind as I digested the recent news about Borders Group’s continuing quarterly losses. It was only a week or two ago that Borders wanted to buy Barnes & Noble. But now — if Leonard Riggio is doing any real thinking about the future — might be the opportune time for B&N to buy Borders.

OK, I hear the naysayers screaming that the last thing that B&N needs is Borders’ bricks-and-mortar stores. True, but that is narrow thinking. By buying Borders, which should be available for almost nothing, B&N can accomplish some important things, such as the following:

  • First, it can immediately close all the b&m stores that currently compete with its own brand. This would increase traffic to its own brand for those of us who like to shop at real bookstores rather than virtual bookstores. And it could convert Borders members to B&N members; there is a lot to be said for loyalty programs.
  • Second, it can replace Borders as a partner in Kobo. This strikes me as a good move for B&N because it would rapidly expand B&N’s ebook reach.
  • Third, B&N could become the partner with ebookstores like the Sony ebookstore, which is currently partnered with Borders. Where else could Sony turn? Perhaps to Kobo but if B&N was a significant partner in Kobo, it would still benefit. If you start adding Sony’s and other “independent” ebookstores that are really run by Borders, B&N could suddenly see a significant rise in its share of the ebook marketplace.
  • Fourth, by replacing Borders as a partner with these other “independent’ ebookstores, B&N would be in a position to incentivize these independents to upgrade to the B&N DRM version of ePub, which would expand its marketplace. (Yes, I know it is relatively easy to strip the B&N DRM, but most people don’t/won’t/can’t do it.)
  • Fifth, it would give B&N a further leg up against both the Amazon and Google juggernauts, something it is going to desperately need it the not-too-distant future.
  • Sixth, if B&N were smart, it could cut a deal with Sony to offer the Sony readers as premium readers — for those people who are willing to pay more for higher quality — and have Sony include perks, perhaps such as wireless access to the Sony, Kobo, and B&N ebookstores, that are not currently available on other devices. This would be a boost to both B&N and to Sony.

Unfortunately, no deal involving Borders is a problem-free deal. There are the debt problems and leases, but the easy way out would be to run Borders through bankruptcy. Inventory debt could be reduced by returning all of Borders’ inventory.

The real issue, I think, is who will be faster on its feet — Google or B&N. An unknown possible player would be Kobo or some of its partners like Chapters, but I don’t see any advantage to them in taking over Borders.

I suppose that someone could pump more capital into Borders but its management team certainly inspires no confidence. Consequently, I think that is a long shot. B&N should strike while Borders is crippled. The question is: Will B&N hear the call?

5 Comments »

  1. […] by Rich Adin […]

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    Pingback by Call for Barnes & Noble! Call for Barnes & Noble! — January 3, 2011 @ 9:48 am | Reply

  2. Left a lobe comment over at The Digital Read, the gist of it being that this is madness! I’ve pasted it below. Don’t get me wrong, I see the initial attraction of the idea, but:

    1) By the looks of things this will happen anyway! On top of which buying a company to close it and incur management expense and time is just daft right now when it faces the challenge of closing its own stores over the next few years.
    2) B&N is selling lots of devices itself and has access to lots of content too, helping Kobo is of no use to it now unless it was looking at buying kobo …
    3) See 2
    4) See 2
    5) Launching an effective international ebook platform would be more useful in this regard (see mention re Kobo in 2)
    6) Madness, see 2

    No one will buy Borders. Some of its stores maybe, but the business is dying. Maybe it is better that way! Except for the workers of course!
    Eoin

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    Comment by Eoin Purcell — January 3, 2011 @ 10:40 am | Reply

  3. OK, this is an even weirder suggestion than the one I made that Amazon should buy B&N!

    I don’t know that Borders has any connection any longer to Sony’s eBookstore. They’ve replaced that with Kobo Books, as far as I can see.

    And with Nook2 allegedly coming Real Soon Now, why would B&N even want to bother with Sony?

    Also, B&N doesn’t have to buy Borders to close competing stores. They can just wait for bankruptcy to do that for them, for free!

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    Comment by mikecane — January 3, 2011 @ 1:59 pm | Reply

  4. Well, the ad is referenced in Pulp Fiction’s Jack Rabbit Slim’s sequence, so even us younguns can recognize it.

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    Comment by Fran Ontanaya — January 4, 2011 @ 6:26 am | Reply

  5. I always felt like Barnes & Noble “got it” while Borders was sort of fumbling in the dark. I shop Borders because its close and Barnes & Noble is not. Now that my neighborhood Borders is closing I hope that some sort of book vendor will take its place. I’d love to see B&N slide right into the slot that Borders is vacating, but somehow, I’m not particularly optimistic. More likely that a nice “mom & pop” may want to give it a try. Just have good coffee and a reasonable selection in stock. I’ll be a regular!

    — Judson

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    Comment by Judson — February 16, 2011 @ 4:24 pm | Reply


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