It’s a question worth asking.
Reasons Borders’ bankruptcy is a bad sign for both Amazon and B&N
It shows a weakness in physical book sales and both Amazon and B&N are still heavily dependent on physical books. An aphorism about falling tides and shipwrecked boats would be awfully convenient.
Without physical books there’s nothing to keep book sales from falling precipitously. While there were $20 hardcovers and $10 paperbacks it was easy selling $5 and $10 ebooks. As physical books become less popular, digital book prices will dictate digital book prices and that will mean severe drops in price.
Borders’ bankruptcy affects everyone and everything – grocery stores will wonder whether they should promote books as much, Borders owes tens of millions of dollars to each of the major publishers, customers will have fewer places to browse for books, there will be fewer options for distributors and publishers.
It’s a tough choice – Would you rather be #1 in a business that is booming and where even the #4 and #5 companies are doing well, or would you prefer to be #1 in a market where even a #3 company can’t survive?
The bottom line is that physical book sales are crucial for both Amazon and B&N and Borders’ demise clearly shows that physical book sales are under threat.
Reasons Borders’ bankruptcy is good for Amazon
More people will have to buy books online.
One competitor is gone. A competitor that was selling lots of non-Kindle eReaders and supporting Kobo, which is a very dangerous ebook rival.
It might mean that B&N is under threat. If nothing else, Borders’ troubles might worry B&N into making stupid moves.
It helps increase eReader sales and ebook sales. It hugely speeds up the shift from physical to digital. Publishers and Authors and Customers will start feeling that the future is ebooks.
Reasons Borders’ bankruptcy is great for B&N
Its biggest retail rival is dying. B&N will benefit greatly from book buyers having only B&N stores to go to – At least for the next few years.
Some of the people who choose online will choose BN.com. Some of the people who choose eReaders will choose Nook.
Its power with Publishers will grow immensely.
Nook’s rivals like Kobo will be weakened as Borders slowly dies.
B&N will be the only retail chain left that has customers of very good intent, i.e. customers who love books.
All the people in love with physical books will gravitate to B&N. They have to – if B&N goes down, their options go down drastically.
It’s very puzzling
It’s almost as if Borders is sacrificing itself so that B&N can do well and make a smooth transition into ebooks and eReaders. If there were any doubts about B&N’s viability and future (and there have certainly been reasons to wonder) – Well, now there’s very little to worry about.
B&N will now get most of the in-bookstore purchases. Nook Color is doing well. B&N should be fine.
It’s also good for readers as Amazon will now face competition from a stronger B&N - forcing Amazon to improve faster. It’s good for Amazon too – a good, healthy competitor keeps you alert and focused.