I honestly think Borders will stick around. B&N was in the red just a few months ago. These stories appear and appear. I've read several articles about this in Publisher's Weekly for several weeks and only now are mainstream (non industry) sources picking it up.
Publishers don't want Borders to go out of business because a huge chunk of their sales comes from Borders.
"Publishers as large as Pearson PLC’s Penguin, CBS’s Simon & Schuster, Random House and News Corp’s HarperCollins could lose between $10 million to $50 million in sales if Borders’ goes out of business, Mr. Greco said. Some smaller publishers could go under."
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http://www.ctv.ca/generic/generated/...le1858296.html) - I've seen this article somewhere else, but I was only able to find this version.
"Publishers could lose valuable marketing space if retail stores dedicated mainly to selling books closed. That in turn spills into sales of e-books and books purchased online."
Publishers pay a lot of money for prime real estate in the front of a store. In a Borders right now, you might see a "hot young adult" display. The same titles can be listed on a Listmania list or the like on Amazon/etc but might fail to catch the eye like the in person display would. A screen can't replicate how shiny or intricate a cover might be.
There are several articles on how Amazon basically bullies publishers into discounts and also a little thing called Amazonfail.
Several articles I've read talk about the appeal of the brick and mortar bookstores and speak about how when people go into bookstores, a lot of times, they go to browse. When you go online, you usually have an idea of the subject or author or some clue of the book you want. But the B&M store, you peruse the new shelves, look at the themed endcaps, etc. There also can be a camaraderie in a bookstore - you can ask an employee or even a customer for recommendations or happen into a discussion with somebody who's carrying the same book as you, etc. Book club meetings can be held in a bookstore. Children browse much much more easy in a bookstore than online.
I think Borders will recover, just like B&N recovered. They might cut some of the deadweight, but I think they will rebound.