Thursday, March 22, 2007

Run for the Hills!

After the recent dismal quarterly reports from both Borders and Barnes and Noble, merger rumors have begun. Oh shit. If this were to take place, I don't think it would be very good for consumers since competitive pricing will dwindle. They'll buy less books, meaning less money to publishing houses and, ultimately, less money to writers. This may also mean fewer book releases, and hence, more and more competition in getting novels published.

Borders short term solution for its woes is to abandon its relationship with Amazon and sell books from its own website. But since that operation would have to help with the cost of running its brick and mortar stores, I doubt consumers will receive the same discounts they receive now. If Amazon continues to operate with its discounts, then this move will only aid in closing those physical stores.

Mergers look good on a financial sheet because it takes the assets of two companies while reducing most of the debts by cutting half of the redundant liabilities (work force, physical stores, distribution centers); thus creating a healthy profit report. However, like any layoff strategy, the effect is only temporary and the profit margin settles from an artificial jump back to its natural place. Meanwhile, the loss of jobs and competition hurt the economy in the long run. And while the current administration is in power, and laizze-faire economics is rising as the dominate business theory, mergers are all the rage. Even a recent Supreme Court decision shows that the judicial branch isn't so keen on most anti-trust legislation.

The solution to this problem? Eliminate high school and college literature classes so people stop getting turned off from reading and start going out to buy more books. I think forcing Ethan Frome on people has probably destroyed a lot of readers. But the chance that the American education system will produce more readers than it does is pretty slim. So, mergers it is.

1 comment:

pattinase (abbott) said...

When was the last time there was good news in the publishing industry? Maybe about the time they invented the printing press.