By mid-September, Borders Books will have pretty much completed the closing of its physical bookstores as well as auctioned off its intellectual property holdings. How does a company as large as Borders, with over 500 retail stores and employing almost 20,000 people, come to its demise? Most fingers point at e-commerce technology in the form of online book sales and electronic books. In fact, Borders was slow in embracing both: its online sales were initially outsourced to Amazon and it was quite late in offering a competitor (the vastly unknown Kobo) to Amazon's Kindle and Barnes and Noble's Nook.
It's not like Borders is the first to fall to recent technology. Blockbuster, Inc. went from over 5,000 stores and almost 60,000 employees to a bankruptcy filing and eventual sale to the DISH Network. The process resulted in the closing of thousands of stores and the down-sizing of many others. Many analysts feel that it's only a matter of time before all face-to-face movie rentals will be replaced by mail-order and kiosk-based rentals and that ultimate destroyer of physical rentals: online viewing.
The General Music Industry
exaggerated, the facts show significant declines in both album sales (where the higher margins reside) and general CD revenues that are not compensated by increases in digital sales (notice how the overall size of the Digital Music News pie chart at the right gets smaller over time even as digital becomes proportionally larger). This has led to the closing of a number of physical music retailers, from small local stores to entire chains. The main culprit? Again, most experts place the blame on technology, from digital downloads to streaming music access.
So Who's Next?
Are Borders and Blockbuster anomalies? Or are they just the tip of the iceberg when it comes to Death by Technology? Will the book and movie industry join the music industry and fall victim to technological innovation? There has already been talk that online ordering, direct shipping, and cloud computing may harm local pharmacies, traveling salespeople, video game console manufacturers, public libraries, and community banks. We know that the internet has changed the way we shop, from car buying to electronics to even clothing and food. It's also changed marketing interactions for a number of services in industries such as banking, investing, medicine, and consulting.
So what's your take? What industries do you predict will be seriously challenged or even be completely obliterated due to the ease and efficiency of e-marketing exchanges?
New technology is nifty, but only when it's sensible.
“Chapter 11 Auction of Borders' Intellectual Property to Be Held on September 14th. Likely Suitors Include Amazon, Barnes & Noble, and Apple.” PR Web, September 6, 2011. <http://www.prweb.com/releases/2011/9/prweb8765897.htm>
DeGusta, Michael (2011), “The REAL Death of the Music Industry,” Business Insider, February 18. <http://www.businessinsider.com/these-charts-explain-the-real-death-of-the-music-industry-2011-2>
Parker, Lyndsey (2011), “July 4-10: Reports Of the Music Industry's Demise Greatly Exaggerated?” July 8. <http://new.music.yahoo.com/blogs/thatsreallyweek/134449/july-4-10-reports-of-the-music-industrys-demise-greatly-exaggerated/>
NOTE: Graphic linked from Digital Music News: http://www.digitalmusicnews.com/stories/081611thirty