News Headline: Fight breaks out over e-books in Gaylord Michigan barber shop

While making the long trek north to the Upper Peninsula of Michigan last week I looked in the mirror and decided it was time for a haircut. Sixty miles south of the Mackinac Bridge is Gaylord which is a mecca for snowmobiles in the winter and golf during the warmer seasons.

Pulling off the Interstate I drove through the downtown and discovered City Barber Shop, an old fashioned barbershop that would remind one of Floyd's from the timeless Andy Griffith Show. I parked my car and went inside. There, sitting on their barber chairs, were three barbers: A young woman, a middle age man and a older man. The young woman showed me to her chair and we soon were all focused on CNN playing on a small TV at the front of the shop.

Soon we started conversing. The young woman asked where I lived and what I did for a living. When I told her I was in publishing immediately the three barbers began to banter. The middle age barber asked what I thought of Kindle. Before I could answer the young woman said there was no way she would ever give up printed books. That led to a full scale outbreak of back and forth, sometimes heated, conversation on the merits of e-books. I weighed in to say that I thought tablets such as the iPad were going to be bigger than the Kindle due to their ability to stream video and other technology innovations.

Two points were interesting about the exchange. First, it was taking place in a small town barbershop in northern Michigan. Second, the middle age man was so excited about reading using a electronic device while the young woman wanted to hold onto the printed book. Research has told us for years that the typical reader in the United States is female and that young women are far more interested in books than young males. In other words, since females are already reading they are showing their satisfaction with conventional books by their actions. Young men, on the other hand, are more likely to be interested in video games than books.

Therefore, if the tablet reading experience can duplicate some of the live action from video games then it is more likely young men will be interested in reading.

In marketing the goal is to widen or enlarge existing markets. We know women are already reading. To grow the book market the key will be making the experience more interesting to younger men through disruptive technology. The market is now wide open for those who innovate with the content available in their books. This year over a hundred tablet devices similar to the iPad will be introduced. Those authors and publishers who are early adopters in their respective niche will surely benefit.

Borders Books and Best Buy—do they matter anymore?

A quick glance of articles on business pages reveals that there are struggles for two large merchants: Borders Books and Best Buy. The former being having such dire issues with its cash flow that is in negotiations with its vendors to extend payments of its bills and the latter trying to reboot its business model.

While we certainly would not want to wish any ill will toward either of these fine companies, or toward their stockholders and employees, they represent the latest in the ebb and flow of big retailing. Remember Circuit City and Montgomery Wards? Both chains were once thought invincible yet, still, they have exited the scene.

The truth is that large retailers, like all organizations, have natural life cycles that eventually lead to their demise, extinction or being absorbed by someone else. Though it sounds ruthless, it is what happens in a free market society.

In the case of Borders their business model was rooted in the notion that people would continue buying books in brick n' mortar stores. They were slow at responding to opportunities to sell via the Internet having long since ceded that position to Amazon.com. Further, as mass merchants such as Walmart and Target heavily discounted the price of bestselling books, Borders could not compete without matching their price. Now as readers are beginning to switch to e-books, they are left without the capability of developing their own e-reader or tablet device. With their stock price tumbling they are left with the prospects of reducing their overhead along with closing a number of stores. But it may be a case of too little, too late.

As for Best Buy, their business model was all about generating weekly traffic for small items—such as Cd's and DVDs—in the hope of becoming the destination for all things electronic. That strategy worked well until demand for these high traffic producing products diminished. This was due to the customer having more convenient options such as downloading music to their mobile devices or having movies directly delivered to their door. Additionally, fierce competition from big box discounters such as Walmart for large ticket items like flat screen TVs and computers further reduced their profit margins. Looking forward, it is hard to see Best Buy continuing to hit the sales and profitability targets that made them a Wall Street darling.

While we hope both companies survive, in order to do so they will have to reboot their business models and redefine their niche. In the case of Borders Books, because they waited so long and are in a weakened position, this will be just that more difficult. However with Best Buy, since it is still a strong company, they have the luxury of time and resources on their side. Key for both companies will be to ramp up their customer service and product offerings to differentiate themselves from the competition.

The fact is that we live in a time when the convenience of purchasing products online has resulted in far too many stand-alone retail stores. Just take a drive around your own neighborhood or business district and see how many empty storefronts are littering the landscape. Do we actually need so many stores?

In the world of publishing we live with the same reality. In the past decade, due mostly to self publishing, the number of new book titles published each year has more than quadrupled. This as the same time as the overall demand for printed books has shrunk. Do we really need so many books? Or might some of the intellectual content being produced be better served through blogs, websites, iPad applications and e-books? Only time will tell as the best produced book content continues to be essential to readers while those books that are ill conceived—or poorly written, designed and edited—are left to the scrap pile of history.

Borders Books takeover bid for Barnes and Noble

Yesterday the book industry was met with the astounding news that the number two bookseller, Borders, was bidding for ownership of industry leader, Barnes and Noble. On the news B&N shares shot up nearly 20 percent as investors weighed in on the proposal.

Why would the two largest book chains merge?

First, sales of physical books sold in conventional stores have been falling. This is because online sellers like Amazon.com have been grabbing huge chunks of book sales and major retailers, such as Walmart and Target, have been selling large numbers of bestselling book titles at discounted prices. Add to this the growing number of electronic (e-book) book sales To put it mildly, this has caused a perfect storm for traditional brick n' mortar booksellers who have always prided themselves as the place to go to find books. Now, more and more, the least profitable part of their business is book sales with more profits coming from their in-store coffeehouse along with ancillary sales coming from gift items and greeting cards.

If this deal goes through it will be reminiscent of the merger of K-Mart and Sears over six years ago as orchestrated by real estate investor Edward Lambert.

Depending on whether you were a customer or investor, the results of that merger could be telling when it comes to the proposed Borders - Barnes and Noble deal. In the Sears - K-Mart merger, operations were consolidated in the Sears headquarters in suburban Chicago and the corporate offices of K-Mart in Michigan were shuttered. They then changed the name to Sears Holdings to reflect the ownership of its real estate. To Ed Lambert the Sears - K-Mart deal was all about leveraging their properties by closing underperforming stores then selling the property. This drove the stock price up and satisfied most investors.

On the other hand, the surviving physical stores operating under the Sears and K-Mart names continued to languish right up until today with their stores continuing to lose any competitive advantages. Other than hard goods lines like Craftsman and Kenmore, there are few reasons to shop one of their stores.

If a Borders - Barnes and Noble merger result in similar results, over time there will be fewer bookstores filled with fewer book titles. Some have imagined their bookstore of the future consisting of a cafe, gifts, periodicals and a small number of books. Rather than look through stacks of books customers will instead be ushered to download stations where they would be able to purchase e-books while sipping on a cup of coffee.

Stores would be half the size of today with fewer employees.

However that would be a short term situation as other big box chains such as Walmart and Target add their own download stations.

That could force the Borders - Barnes and Noble stores to downsize once more resulting in a Panera Bread style cafe with gifts and book downloads.

Whatever happens, for some time it has been speculated that the end of the conventional bookstore was on the horizon. All of which has been hastened by the technology that has led to eBooks and eBook readers.