Tuesday, January 4, 2011

If Borders should Close...

Publisher's Weekly posted this article about Borders this morning. Two major players leave the company and a plan is being put in place to try to get its debt under control. As a former Borders employee myself (1998-1999), I'm sad to see this news as it's another in a long line of bad omens for the retailer. I'm not going to comment on the fairness of the proposal to extend Borders longer terms to pay off their debt to publishers, but I will briefly talk about what it could mean for the comics industry should the retailer close its doors.

I think we're likely to see two things happen should Borders fold. The first is that there will be an immediate loss in terms of sales for publishers. Borders is a very large account, and to lose out on the sales to Borders in the short term, would be a big blow to the smaller publishers' revenue streams. That could, if a small publisher is running on a shoe-string budget already, lead to a company folding. Borders is that big of an account to many publishers. That's the fear. And in the short term, if publishers aren't planning accordingly, this will happen.

The other thing we're likely to see is a small increase in revenue from other retailers and potentially for digital comics as those who would normally purchase books and comics from borders seek other ways to get their comics fixes. But that bump will not directly counter act the short term loss. But that will happen to some extent.

In the long term, we're likely to see whatever demand that Borders does fill currently get filled by other retailers--be it the larger ones like Barnes & Noble, or smaller mom-and-pop shops. The law of supply and demand, while interrupted, will still apply and this will get sorted somehow.

Is there any silver lining should Borders go under? I think there is. The most notable is that the retailer is well known for over-ordering books and then sending publishers large quantities of returns on the books. This can really hurt publishers because the book market is set up that the book store has all the power. Publishers give full refunds for any product that goes unsold for a nearly unlimited amount of time. And those returns, if massive, can mean more money going out from a publisher to a retailer than is coming in from that retailer.

If other retailers are a bit more conservative in their sales estimates, that's probably a good thing for publishers and consumers alike in the long run. It means that a publisher's profit margin will go up overall.

Ultimately, there are big signs here for our little industry that we should be heeding. There's been a lot of talk about the direct market (selling non-returnable product to specialty shops) having a rough go of late. And honestly, this talk has been going on for years, but it seems more true recently as orders across the board on all comics seem to be falling. But while we're all focused on our bread and butter (the direct market), we may get side-swiped by the mass market while we're not looking.

Right now is a tough time to be in the comic and graphic novel business. And now, if ever there was a time, is the time for the industry to be looking for some new options in two major arenas:

1. Distribution. We're almost locked into a monopoly with Diamond Distributors. And no offense to Diamond intended, but we could use some other options. As an industry, we should be looking for new methods of distribution into new markets. I could say a lot about this, but this isn't the blog for that.

2. Diversity of content. The direct market has thrived on super heroes for years--about 30 years. And while I love my super hero comics, the retailers have (understandably) put all their eggs in this one basket. And it's time that publishers and retailers together find new ways to distribute different kinds of comics content to customers who want it. There was a time when crime comics and romance comics out sold super heroes. Horror certainly did, too. And there was a time that the readership in the United States was split 50/50 between men and women. When was the last time you saw an equal number of men to women in a comic shop? Did something change in our genetic make up so that women don't like comics? Nope. And there's no reason that comics can't appeal to women just as much as they do to men--it's a matter of genre. As an industry, we're selling super heroes, and eventually, every super hero falls.

Okay, enough of a depressing rant. The good news is all of this is totally preventable. The comics industry has proven far more resilient than many have predicted. And I don't think it's likely to collapse completely. And even if it does, it'll build itself back up in time as something different.

More later!

Andy

3 comments:

  1. Andy,

    Insightful post. The closing of Borders would certainly be a loss, particularly to impulse shoppers in the mall. As a bored shopper, I have often taken refuge in the lone bookstore, only to leave with a bag full of reading materials. With that opportunity gone, there are fewer opportunities for an impulse buy. Fewer opportunities for books, magazines, and yes, comics. Many comic shops have gone out of business, which means that there are fewer locations in general where someone can discover a new comic book title. Many people wouldn't even know where to find a local comic book store, even if they wanted to buy a comic for a friend or even a child.

    Buddy Scalera
    http://www.buddyscalera.com
    http://www.wordspicturesweb.com

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  2. Great post on a scary prospect. Lots of interesting points. I've witnessed first hand the massive overordering of some of these larger chains at a few different companies. While the largest of comic companies can absorb returns, smaller ones can be hit hard by them. Most are excited by huge print runs only to be left reeling and devastated when the books are returned and end up actually costing the company money. It's a crazy, uneven system, that leaves all the pressure on the publisher.
    On the other hand, we work in a system where there are fewer and fewer "gateway" opportunities for kids to even find out what comic books are. My local newstand and the pharmacy used to carry a ton of comics when I was a kid and I live in a small town. Those opportunities don't exist anymore. So, it would be a shame to lose another one, especially on this massive a level.
    Mike Raicht

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  3. Great post, Andy. I agree that there is a silver lining if Borders ups and vanishes, and there will eventually be something to fill the void in that event. In the past two weeks in Santa Barbara, we lost a huge three level Borders and the large Barnes and Nobles diagonally across the street. Now we are left with Chaucers (a fantastic local book store), my comic shop, a few smaller used book sellers, a much smaller Borders far from downtown, and...let me think...Costco. Does Costco count?
    I really miss the old--and very local--huge bookstore, The Earthling, that was chased out of existence by Borders and amazon.com many years ago. We lost two comic stores in that time as well.
    Intersting times.

    Don

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