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Borders Declares Bankruptcy -- While Amazon Sells More Ebooks than Paper

Feb 16, 2011   [permalink]

Yes, it's Chapter 11 — reorganization — but just because they got "Debtor In Possession" financing of some $500 million to keep running doesn't mean they won't ultimately have to convert the chapter 11 into a chapter 7. The ebook-sales-displacing-paper trend could be a tough headwind.

Companies that emerge from chapter 11 tend to be ones where the underlying sector is still necessary. Like airlines -- people still need to fly. (The FAA recently noted they expect air traffic to more than double by 2031. So it's no wonder the many airlines that went bankrupt to get out of onerous labor deals and such emerged and are showing profits.) People still need cars. (Thus GM/etc.) People wont need as many physical bookstores if ebooks continue on the path to replace the majority of print sales. While there are signs this displacement is happening and continuing, I don't know of any signs and portents showing ebook reading on the decline or leveling off, or showing upward demand for print books.

Did you all hear that Amazon said they're now selling more ebooks than either hardbacks or paperbacks? From memory, the breakdown was like 45% ebooks, 40% paperback, 15% hardback. Which is just a snapshot of one point in time on a steeply changing curve: The trend is still toward ebooks and away from paper.

I'll be really sad if the Borders down the street closes, but I won't be surprised.

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