Beyond Borders

Megan McArdle looks into the future now that Borders Books has declared bankruptcy from the perspective of books and real estate.

While the largest publishers are owed the most, independent presses could face more serious ramifications. Although a number stopped shipping to Borders, many continued to. NBN, owed just under $2 million, was only shipping books to the outlet after clients agreed that NBN wouldn’t be responsible for money lost in bankruptcy. Perseus Distribution Services is owed $7.8 million. The country’s largest distributor has various kinds of agreements with its publisher clients regarding the Borders bankruptcy, with some houses more exposed than others. NBN and Perseus battled over acquiring PGW clients when parent company AMS went bankrupt late in 2006, and helped keep some struggling houses afloat. It’s unclear if they will be able to help again in a much different publishing environment.

The trickle-down impact will affect everyone from manufacturers to agents. Borders accounted for about 8% of overall industry sales, a higher percentage in some categories. A downsized Borders means publishers are likely to receive smaller orders and in turn place smaller first printings, resulting in less business for printers. The likelihood of lower print sales, one publisher said, means that books acquired one or two years ago when Borders was much bigger will have a more difficult time earning the advance back and that less shelf space could mean lower advances.

One has to wonder if Barnes & Noble will begin to downsize their stores in the near future — the Nook can’t possibly help them afford all of those giant megastores they’ve opened up in the last two decades, can it?

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