18 February, 2011

What’s going to happen to my bamboo Borders?

Melbourne Herald Sun, February 18, 2011.

It was such a shock this week to hear about the threat of destruction against one of my favourite habitats. Like a panda without his bamboo forest or a chimp without his jungle, how could I survive without Borders?

These wonderful shops filled with books and disks on every topic imaginable are living in the shadow of an axe. In the US they have filed for bankruptcy on yesterday.

In Australia their parent company, REDGroup Retail, also owns Angus & Robertson and is totally separate from the US. But now they too have hit the rocks, entering administration just yesterday. Not totally surprising after they posted a $43 million loss last year. Supposedly the timing is a coincidence.

Those who've lived in Britain in the past will remember the treasure houses of Foyle's in London or Blackwell's in Oxford - huge, great bookstores the likes of which have not existed in Australia since Cole's Book Arcade shut down. Then along came Borders and the big, rambling bookshop was reborn - at the Jam Factory, South Yarra in 1998.

The chain grew but more recently faltered. It was slow to react to way the wind was blowing with the online revolution. Amazon created a whole new form of book buying. Barnes & Noble were able to adapt to it. Borders, instead, gave this side of their business into the hands of Amazon. The fox is not Henny Penny’s best doorman.

In Australia it tried to push through the scrum in the e-reader revolution, with the release of the Kobo, and was price-fighting Amazon. But over the sides have gone a chief executive, managing director, and communications director in less than a year.

The market’s speed of change is dizzying. Take a look at your Yellow Pages and compare it with the five-year-old one that's still buried at the back of your cupboard. The new ones look like they've been through a slimming program with stomach clamps.

Here in Australia the online advertising market is growing by 21 per cent and is now at $2.3 billion. Pricewaterhouse Coopers, for the Interactive Advertising Bureau, found that revenue increased by $393 million, with every category rising by double digits.

This paper's boss, Rupert Murdoch, has been trying to make the online model work, jumping the difficult hurdle of getting the public to pay for news off their computers. Just this month he launched The Daily, a newspaper exclusively for the iPad. Be sure that all of the media are watching closely, hoping he can find the right formula they all need.

Personally I’ve long been an advocate of bundling online and newspaper into the one subscription package. I was pleased to see this week that in the US, one of their biggest magazines, Sports Illustrated, has taken this step. When you buy their home delivery subscription you get the web access - and vice versa, at the same price.

The other ducks and drakes we’re familiar with is mobile phones. Nokia is still the biggest but with iPhone doubling their sales last quarter - they’re now 16 million against Nokia’s 28 million units - the cool Finn is breaking into a sweat.

They think their latest alliance could be the answer, joining up with another faltering winner. A few days ago the two Steves walked hand in hand into the spotlight to plight their troth: "Together, we see the opportunity, and we have the will, the resources and the drive to succeed," said Stephen Elop of Nokia and Microsoft’s Steve Ballmer.

Microsoft will inseminate Nokia’s newest hardware with Windows 7 software, the intention being to give birth to a big, bouncing Apple squasher.

Ray Beatty