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Demian Rusakov
Demian Rusakov

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* We are sorry to report the death of sciencefiction artist John Berkey, who passed away last week at the age of76. Tor Books' Art Director Irene Gallo provides this brief butmoving notice: * Congratulations to the winners of this year's Nebula Awards, whichwere announced Saturday April 26, 2008, in Austin, Texas. Thewinner for best novel was THE YIDDISH POLICEMEN'S UNION by MichaelChabon. For the complete list of nominees and winners, see * We are excited to pass on the following news from awesome localauthor Simon Wood: "I was made an "author laureate" of San FranciscoLibrary. And my 1st horror book under my horror pen name of SimonJanus, THE SCRUBS, will be coming out in May. It's picked up somerave reviews already. For details and to read an excerpt, go to. * More kudos to Lou Anders and everyone at Pyr Books, who sent alongthe following: Pyr Gets two Hugo Nominations plus two authors up forJohn W. Campbell Best New Writer Award! Pyr, the highly acclaimedscience fiction and fantasy imprint of Prometheus Books, is proud toannounce that its Editorial Director, Lou Anders, and three of itsauthors have been nominated for highly esteemed awards in sciencefiction: Lou Anders for Best Professional Editor, Long Form, IanMcDonald's BRASYL for Best Novel, and both Joe Abercrombie (THE BLADEITSELF) and David Louis Edelman (INFOQUAKE) for John W. Campbell BestNew Writer Award. We are delighted at Pyr's accomplishments andwish them ongoing success! * The always delightfully unconventional Gavin and Kelly at Small BeerPress want you to have free John Kessel and Maureen F. McHughstories! Two whole books of short stories have been licensedunder Creative Commons, so go ahead and download 'em for free righthere: . Wehope you'll also decide to pick up a copy of the physical books, which,although not free, are much more attractive and substantially easier toread in the bath. * Thanks to John Scalzi, if you are, or become, a member of this year'sWorld Science Fiction Convention, you can get FREE electronic copies ofseveral Best Novel nominees for the Hugo Award - Ian McDonald's BRASYL,Robert Sawyer's ROLLBACK, John Scalzi's THE LAST COLONY, and CharlesStross's HALTING STATE: * In the last of the "free book news" for this month, Mort Castle sendsthe following: "As you might know, I've been working the past few yearsto replace Howard Stern as King of All Media, and it seems my latestventure brings me closer to that goal. You can now download sixof my stories in mp3 audio format at ". *Thanks to Pat Murphy for the following notice about the TiptreeAwards: "The James Tiptree, Jr. Literary Award Council is pleased toannounce that the winner of the 2007 Tiptree Award is THE CARHULLANARMY by Sarah Hall (published in the United States as DAUGHTERS OF THENORTH). The British edition was published in 2007 by Faber & Faber;the American edition in 2008 by HarperCollins. The Tiptree Awardwill be celebrated on May 25, 2008 at WisCon in Madison, Wisconsin. The winner of the Tiptree Award receives$1000 in prize money, an original artwork created specifically for thewinning novel or story, and (as always) chocolate . . . . TheJames Tiptree Jr. Award is presented annually to a work or works thatexplore and expand gender roles in science fiction and fantasy. Theaward seeks out work that is thought-provoking, imaginative, andperhaps even infuriating. The Tiptree Award is intended to reward thosewomen and men who are bold enough to contemplate shifts and changes ingender roles, a fundamental aspect of any society." For moreinformation on the Tiptrees, including the Tiptree Award Honor List,see: .

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Books Without Borders This is the second in a four-part series of stories about changes inthe book world. In part one I gave a quick overview of threemajor changes. In this part I'm going to focus on Borders Booksand Music's recent financial problems and what they may mean forreaders, writers and publishers over the next year or two. Thefinal two columns will focus on's recent business changesand eBooks respectively. As always, comments are welcome First off, a quick disclaimer -- I don't like Borders. I likethem better than Barnes & Noble but still, like any independentbookseller, I don't like them. Despite my intention to be asobjective as possible in the article, I'm sure that my bias is going tocreep in here and there. But, if you were looking for objective,dispassionate news, you wouldn't be reading this. I'm going tostart with what has been going on with Borders over the past year, thenI'm going to talk about the implications, and I'll finish off with thereasons that it matters to everyone who loves books. What's Been Happening - At the beginning of 2007 reports indicated thatBorders had a poor holiday season and that their same-store sales weredown compared to the 2005 holiday season. Same-store figures areone of the best measurements of sales since they compare sales atstores that have been open for more than one year and cut out the(usually huge) sales increases that are typical at a store that hasjust opened and is still in the "honeymoon" phase of a rapidly growingcustomer base. To be fair (and clear) the drop wasn't very large,somewhere around 1%, but in the world of big business that'sserious. What was even more serious was that Borders' showed aloss of $151.3 _million_ in 2006 (that's compared to a profit of $101million in 2005). Most of that loss was a result of theiroverseas operations (over $100 million) but the domestic side wasn'tdoing very well either. Borders' reaction was very strong -- they decided to close or sell alltheir overseas stores, close more than 120 of their shopping-malloriented Waldenbooks locations (they started 2006 with 678 Waldenbooksstores and ended 2007 with 490) and started a massive redesign effortfor their flagship stores. This store redesign is based onstocking _fewer_ books, providing all sorts of high-tech, multi-mediaservices (vanity book publishing, photo album design and ordering,eBook and music downloads and more), and, according to the originalplan, a stronger focus on CD and DVD sales (which changed to a much_weaker_ focus on CDs sometime last year when they realized that musicdownloads were killing the CD business). The multi-media servicescome along with staff specifically trained to give assistance to peoplewho aren't terribly comfortable with computer stuff. This process moved along slowly (the first of the redesigned storesopened this January and they still haven't found a buyer for theiroverseas stores anywhere except in the UK) and, as last yearprogressed, it seemed to be too little and a bit too late. By theend of last year, Borders' management was really hoping for a goodholiday season. Which they didn't get. At the beginning ofthis year, Borders was short enough on money that they set up a loanfrom Pershing Square Capital Management (an investment fund and one oftheir major shareholders) at a very high interest rate. Exactlywhat Borders needed the money for is beyond the scope of this articlebut, to put it very simply, companies are just like you and I -- theydon't take out loans at a high interest rate unless they really needthe cash and don't have another place to get it. Based onBorders' recently released shareholder report . . . wow, did they needthe money. Their loss in 2006 was $151.3 million, right? In2007 the loss was up -- $157.4 million. In two years, Borders haslost over three-hundred million dollars. As of last month they managed to get better terms on the loan (stillnot great though -- around one-and-a-half times the current, usualinterest rate for businesses) and they've gotten themselves somebreathing room so that they can, in the words of Borders' CEO GeorgeJones, "review their strategic alternatives". But they're stillin financial trouble and everything hinges on whether their newbusiness model is going to work (and if they can manage to make theirinterest payments). If it doesn't, they're very likely on the wayout. What Might Happen - It's possible that Borders' current plan willwork. Closing less profitable stores and their new super-storeformat should reduce their losses and open up new sources ofincome. But closing stores isn't a cure-all. Closing astore creates other types of loss (selling off the fixtures at a loss,returning inventory, and getting out of leases which are far fromexpired) as was clearly demonstrated last year when closing theiroverseas stores produced an enormous loss. This may be a littlegraphic but closing stores is a little bit like cutting off a mangledlimb -- the blood loss and infection stops but the patient is stillmissing the leg. The new super-store format is very smart in a couple ways: Theplan to reduce stock by eliminating titles that sell slowly (or not atall) instead of trying to have everything that any possible customermight want is a technique that has worked well for independent storesthat were struggling (Cody's in Berkeley and Kepler's in Palo Alto aretwo prime examples). Offering computer services, freecomputer time, and tech help for people trying to build a "digitallifestyle" are all things that make a bookstore both a destination andhang-out spot. The best-case assumption is that these servicesare going to both attract shoppers as well as creating a new source ofincome. Of course, attracting shoppers is only useful if they buysomething but in principle it's a good thing. The flip side of the new store format is that it's still predicated onselling books, DVDs and (to a much lesser and perhaps vanishing degree)CDs. A fair amount of Borders' current troubles came from theunanticipated (at least by them) crash of the music CD market (their CDsales were down more than 14% last year) and, based on plummeting CDsales, they abandoned the CD-heavy element of their new store designand have been shrinking their CD sections in all stores likecrazy. But may DVD sales go the same way? Apple is busilybuilding their movie download market and Amazon is working on a similarproject (more about Apple and Amazon's competition for downloadablemedia next month). If DVD sales follow CD sales then Borders canexpect another huge revenue hit in the next couple of years. As for book sales, Borders is still facing competition from on-lineretailers (21% of overall book sales last year) and places like Target,Walmart, and CostCo (9% of sales). Though the last two outletsare not likely to increase their sales, internet sales will probablycontinue to grow over the next few years, especially as some towns areleft without a bookstore as Borders continues to close Waldenbooklocations. Overall 33% of book purchases are at chainbookstores. In comparison, independent stores get 3% ofsales. Though it's possible that the sales going to the internetwill come from independent store customers, it seems unlikely since themajority of people who shop at independent stores do so for qualitiesthat the internet cannot provide, whereas shoppers at chain stores areoften motivated by price, convenience and selection -- three qualitiesthat on-line companies have in abundance. In summation, one ofthe three lines that Borders concentrates on is pretty much gone (CDs),one of them may be on the way out (DVDs), and the final one iscertainly not going to grow and is likely to shrink (books). Theyare building a new service-based income source (on-demand bookprinting, photo album printing, download services, and etc.) that,while useful to many people, is dependent on a customer base thatdoesn't have the knowledge to do it themselves. The catch here isthat, if their customers get educated, they evaporate, since everythingthat Borders is offering can be had on-line at a lower cost and withgreater convenience. As my brother, the bank-guy, said, "_I_ wouldn't invest in them". So, let's say that Borders continues to have financial trouble. What happens? My bet is that they close. I'm pretty sureno-one is going to buy their business, neither the whole company orpiecemeal (i.e. a local chain buying up three or four locations). The only business that might be interested in buying Borders as acomplete business entity would be Barnes & Noble and, to be blunt,there's no reason that B&N would want it. Most places wherethere's a Borders there's a B&N nearby so B&N wouldn't buyBorders to add to their markets. Borders' inventory is verysimilar to B&N's and the same goes for their staff. Bordersdoesn't own any of their buildings so there is no real estate assetthat would be attractive. In short, Borders doesn't have anythingthat B&N would want, other than its customers. And, ifBorders goes out of business, all B&N needs to do to get thecustomers is wait. It's possible that some other company wouldwant to buy Borders but essentially all that Borders owns that's worthanything is its inventory and store fixtures. That's not enoughvalue to be worth the trouble of buying the company. The sameargument applies to the possibility of Borders being broken up and soldpiecemeal to other bookstores. There just isn't anything thatBorders has that's unique or particularly difficult to duplicate. Without a buyer or a source of capital, continuing losses for Bordersprobably means bankruptcy. In cases of bankruptcy like this, it'svery common for creditors to be paid somewhere between 30 and 70percent of what they are owed by the bankrupt company (though it can goas low as 10% or less in some cases). That would mean that almostall of the publishers in the US could lose as much as 14% of their_total_ accounts receivable. To put that in real-world terms,imagine what your personal financial situation would be like if youremployer cut your pay by a similar amount (i.e. instead of making$40,000 a year you made $34,000). The effect on publishers wouldbe at least as bad. What Are The Consequences - If Borders declares bankruptcy and closesthere will be a cascade of effects. Publishers will lose a greatdeal of money owed to them. The five major US publishers(Hachette, Macmillan, Peterson, Harper and Bertelsman) and the the bigdistributors (Ingram, Baker and Taylor, Diamond Books, and so on) willbe able to weather it without too much disruption but all the smallerpublishers in the country are going to be hurt. Many of them maybe hurt badly enough that they'll close. Publishers closing hasthe immediate effect of reducing the number of books that get out tothe consumers and also reduces the number of places that authors cansell books. These effects will be amplified by the loss of bookstore shelf spacenationwide. Here's a simple equation -- the ability of apublisher to purchase a book from an author and print it is determinedby the number of copies the publisher believes will sell. Theformat (i.e. hardcover, large-size softcover, or paperback) of the bookis also determined by expected sales. You would think that thenumber of copies that will sell is simply based on the number ofreaders who will buy the book but it's not that simple. For areader to buy a book, they have to find it and the most common way thatreaders find a book is on a shelf at a bookstore (though word of mouthand publicity are also important). If there are fewer shelves andfewer stores in the country, fewer books will sell. So, in theimmediate aftermath of Borders closing, fewer books will be sold in theUS. Perhaps a great deal fewer -- remember, of every six copiesof a book that are sold anywhere in the country, Borders sells one ofthem. So, on the heels of financial losses as a result of a bankrupt Bordersnot paying its bills, there would also be a potentially major decreasein book sales over all. Which would cause more independentpublishers to go out of business. Consequently even fewer booksare published, authors have more trouble selling their books andreaders have less choices in reading. It's also possible thatprint runs would get smaller, which means less money for authors. Less income from writing means that some authors won't be able to spendas much time doing it, which also means fewer books out there forreaders. Which brings us to the final consequence -- readers' access tobooks. Borders and Barnes & Noble have been so successfulover the years that there are many towns and cities in which the onlybookstore is either one or both of those chains. If Borderscloses, there are many towns that will be without any bookstore of anysort or, if they do have a bookstore, it will be Barnes &Noble. In the first case, the residents will have the choice ofeither ordering books on-line or driving long distances (in thesedays of four-dollar-a-gallon gas) to get to a store. In time, alocal store might open or B&N might move into the area but it couldbe a long time coming, if at all. In the areas that have aB&N as well as a Borders things will be better but there's a catch- the buying decisions for chain bookstores are made at the corporatelevel. In other words, for any given section (like SF and fantasyfor example) one person decides for all the stores not only what booksare going to be stocked but also how many copies each store gets. As far as I know, the buyers for the chains are all nice people andthey really care about books but they are still individual people withall the assumptions, biases, and foibles that you'd expect. Let's say, for example, that the science fiction buyer for B&Ndecides that British hard SF is too complicated for an Americanaudience and therefore won't sell. In a world without Borders,that might mean that a huge number of readers wouldn't be able to readIain Banks or Alastair Reynolds since the only store near them wouldn'thave their books. Even worse, without significant orders fromB&N, it's quite possible that those authors wouldn't even bepublished in the US. And there would be no way of proving thatthe authors would be popular since the books would simply beunavailable (though people might order them from Britishoutlets). If this seems farfetched, consider that A) that commentabout "too complicated" is an exact quote from a US editor and that,due to their huge market share, B) both Borders and B&N have enoughinfluence with publishers to get cover art and even book formatschanged, pretty much on a whim. To sum up, Borders closes. Some small publishers close. Book sales drop. More publishers close. Number of bookspublished per year drop. Print runs get smaller. Authorssell fewer books and get less money for the books they do sell. Fewer books get written. Many areas are without bookstores oronly have a representative of the one remaining chain. Readershave less access to books and the books they do have access to areincreasingly the product of a single corporate "style". Who loses in this scenario? Publishers, authors, and most of allreaders. And who wins? To some degree, independentbookstores since some portion of Borders' former customers would end upgoing to them. But the big winners are Barnes & Noble when they divide up what's left. However many of thepressures that have been squeezing Borders are going to affect B&Nas well, so how long will they stay profitable? And then we'releft with Amazon. Who is making a huge bid to avoid the fate oftheir non-virtual competitors. And that's the topic for nextmonth. - Alan 350c69d7ab


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