Journalism (Remix)

I have written before on how the news business model is in dire need of an update. Here and here, I've argued that what we casually refer to as news is actually a conflation of the two processes that go into making the news product. The first is journalism, or the actual gathering of news, the second is the process of distributing that product to consumers.

This distinction is crucial. Much is being made of the death of news, but the loudest voices making this argument all come from the traditional news industry. No surprise then that all this hot air is merely code for the increasing irrelevance of newspapers. But this should hardly be a surprise to anyone. Indeed, the surprise is that a nearly century-old business model still has some life left at all!

Death Is Simple Pt. II: Book Stores vs. App Stores

A friend of mine has written a multi-part piece explaining the concept behind the the name of this blog. Here is Part 2:

Goodbye bookstores, hello online app stores? I hope not, I truly enjoy the sanctuary a real bookstore has to offer, especially Ann Arbor, Michigan’s own Borders, the second largest bookstore chain in the U.S. However, the advent of versatile e-readers (Apple’s  iPad, Amazon’s Kindle, Sony’s Reader, Barnes & Noble’s Nook, Borders’ Kobo Reader and more definitely on the way) has permanently transformed the basic paradigm of a bookstore to a virtual model based upon a reading device and its corresponding app store.

Bookstore chains can no longer rely on selling paperback books within the serene comforts of a brick and mortar store. Ultimately, the basic premise of a bookstore is no longer solvent; the focus has shifted to creating an e-reader ecosystem while maintaining relevance among existing customers, two points I will refer to later.

As I outlined in my previous post, an inflection point for our purpose occurs at the point when business as usual starts putting companies out of business. It is the point when past success stops paying dividends and begins to prevent growth in profitable directions. Everyone returns to zero once the paradigm shifts.

International Data Corporation (IDC) estimates about 2.5 million e-readers were sold in 2009, and that number is expected to double to 5.1 million this year. For now the Kindle rules 60 percent of the e-reader market share. Its place at the top is by no means guaranteed, but without a doubt e-book reading is gradually replacing the omnipresent paperback at your local bookstore.

Among my favorite bookstores, Borders is on the brink of succumbing to the e-book assault. Narrowly avoiding default on a $42.5b debt on April 1st of this year, it will live to fight another day. But the long term outlook for the company is grim, as the trends that have nearly brought it to its knees will only get stronger with time.

This author believes that Borders' best long term hope is an “acquisition by a larger bookstore chain like Barnes & Noble.” But, as I said last week, death is not simple in the business world. I disagree with the author’s long-term survival diagnosis. Borders should follow Barbes & Noble’s blueprint and attempt create its own inflection point, otherwise it will be facing something more akin to liquidation than acquisition.

But what has B&N done that has allowed it to become the top bookstore chain in the US? For one, it has been much quicker to jump onto the e-reader bandwagon than Borders has. In a smart strategic play, it recently unveiled compatibility between its Nook and the Android platform, plugging it in to an existing base of applications and users.

In addition, B&N is touting a feature called Read In Store, which allows Nook users to browse the retailer’s library of e-books free at any B&N location, with the entirety of each book accessible for an hour per day for free. This may prove to be popular, especially for fast readers out there, and may provide a partial solution to the question of how to lure customers back into physical bookstores.

Additionally, B&N will sell their updated Nook not only on its website and its bookstores, but also in Best Buy stores. Similarly, Amazon has announced that it will start selling Kindles in select Target stores. Selling the Nook at retailer store with retailer pricing may allow B&N and Amazon to partially avoid being outflanked by threats from the iPad and other e-readers.

Particularly, touting the “Read In Store” feature may allow B&N to remain on the offensive and at very least establish novel niche in the digitalized book business world and above all, revitalize the brick and mortar concept of selling books:

B&N's goals (and Borders' as well, if they are wise) can be summed up thus:

-Move quickly to maintain relevance among remaining bookstore customers.

-Integrate digital avenues of expansion into brick and mortar model.

It may be too late for Borders to successfully break into the e-reader/app store space, but waiting around for an acqusition is certainly not going to enrich shareholders in the long term. Either way, B&N is the model it should be trying to follow while rebuilding or positioning itself for acquisition.

That said, Borders and B&N still face a real long-term threat from dedicated e-reader companies like Apple and Amazon. This is the Catch-22: as e-reader devices add more performance enhancements and improve their online selections, fewer customers will enter a real bookstore and buy physical books. The real question may not be whether Borders can survive, but if bookstores in general will make it. 


Adesina "Ade" Aladetohun is a Communications Officer in the US Marine Corps