(say that real fast three times!)
At first, I was saddened by the bankruptcy filing of Borders Books. Not that we have one near us, but that any bookstore closing/failing is never a good thing.
But then someone reminded me of why it is an awful thing in this case. Let me explain.
As a writer, my publisher sells my book for me. Regal Crest is listed with several distributors who produce catalogs from which bookstores, such as Borders, order books from. But, unlike you and me ordering from a catalog, books are done differently. If I order seeds from a catalog, I pay for those seeds first, get them, and if I don’t use them all, unless the packet was unopened and IF the company has a decent return policy, I am S.O.L. and have seeds left over. Now let’s say Borders orders 5 of my books. They don’t pay for them. Consider it commission sales, I suppose. They sell 3. They return 2 (returns are standard practice and publishers who don’t accept returns, don’t survive for long). And, eventually, they get around to paying the distributor for the 3 they sold. Then, the distributor pays Regal Crest who then pays me. Bigger publishing houses are their own distributors so Borders would be paying them directly.
Now, back to the seeds. If I bought the seeds on my credit card, the credit card company pays the seed company then waits for me to pay them. If I declare bankruptcy, I can either pay them back a very small fraction or not at all, depending on the type of bankruptcy. So the credit card company is out of the money I owe them.
Borders is declaring bankruptcy. They sold a lot of books. They got paid for them immediately by the customer or shortly after by the credit card companies. But they’ve not paid the distributors or publishers yet. Which means RCE’s distributor isn’t getting paid which means RCE isn’t getting paid which means, you guessed it, I’m not getting paid.
In reading an article about Borders, I came across this information: (bolding mine)
Now the company is set to close some 200 stores and shed much of its staff in the coming weeks. The stores slated for closure are scattered throughout the country, including three outlets in Manhattan, 35 in California and 15 stores in the Chicago metropolitan area.
The company currently operates more than 650 stores and employs 19,500 people. Borders said that its stores would remain open during the bankruptcy process and that its rewards program would remain in effect. The company said it would continue to honor gift cards and coupons.
In its filing in United States Bankruptcy Court in Manhattan, Borders listed $1.29 billion in debt and $1.27 billion in assets. As of the filing, Borders owed $272 million to its 30 largest unsecured creditors â€” including $41.1 million to the Penguin Group USA.
Now, first, FIFTEEN stores in the Chicago area?! Fifteen? For real? And that’s just the number they are closing. FIFTEEN!?
Second, $41.1 million owed just to Penguin. That’s a lot of money. And you can bet those writers aren’t going to be paid any more than I will be.
I am betting that we are going to start seeing other large chain stores start to falter. Like Borders, a lot of them exploded in growth that no longer has the demand. Borders (and the other Big Box Book Stores) killed a lot of small, locally owned bookstores. And now the Internet has killed them. Karma’s a bitch.