(I originally posted this at another site.)
There's no way that the Borders type of bookstore can survive the change in the way people receive literature-- and the cost at which they receive it. Stand inside one of the big stores and consider their overhead. Heating in winter? Air conditioning in summer? Lease or property tax costs? Staff? Maintenance?
The big stores have to sell a lot of volume to break even, and they need an adequate profit on each sale. The model works when they're selling $25 books. Even given the fact the stores are designed to be inefficient-- the wasted space; the browsers who read at the store and never purchase anything. Because of volume, the stores were able to accommodate this.
Now they're getting hit on two fronts. A third or so of all books sold are purchased as ebooks. Plot the trend. This percentage has gone up and will continue to go up. Stock analysts considering whether Barnes & Noble is a sound investment will have charts printed out showing the trend. There's no sign of the trend stopping. No-- instead, count on bookstores lucky to have a third of the market in a few years. You can buy e-readers now at drugstores like CVS, for $99. That price will continue to go down. Who needs bookstores? How can the big store model, with its built-in overhead costs, possibly be maintained?
The stores and the big publishers will be hit in a second way, by being drastically underpriced. The big stores can't make an adequate profit on three dollar books. The same thing, by the way, has happened to music stores. The $25 book will no longer be a mass market phenomenon. There's not enough value in a James Patterson for his audience to pay $25 for him when they can get him on an ebook for much less. The $25 book will become strictly a boutique product, sold to decidedly upscale folks at small, trendy boutique stores.
It's not the economy. It's revolutionary change in how people receive their words. Or, as they say in the Bronx, recession reschmession.