Are e-Readers Changing our Reading Habits?

e-reader products available todayE-readers have become the rage. That’s clear from how many people are now using them.

A Harris Interactive survey of ~2,180 consumers in July 2011 has found that ~15% of Americans over age 18 are using an e-reader device. That’s about double the percentage compared to last year’s poll.

Beyond this, another ~15% reported that they’re likely to buy one within the next six months.

The Harris research found some interesting regional differences in e-reader usage. I was quite surprised to learn that e-readers haven’t taken off nearly as strongly in the Midwest as compared to the other three regions of the country:

 Westerners: ~20% have an e-reader
 Easterners: ~19%
 Southerners: ~14%
 Midwesterners: ~9%

What are the characteristics of those who own e-readers, besides where they live? It turns out they’re far more active readers than the rest of the population.

For example, about one third of all survey respondents reported that they read more than 10 books during the year. But for those who own an e-reader, that percentage was nearly 60%.

And just because someone owns an e-reader doesn’t mean they’re stopped purchasing actual books. While one-third of all the survey respondents reported that they haven’t purchased any books in the past year … that percentage was only 6% of those who use e-readers.

The criticism commonly heard that e-readers may be the death knell for traditional books because cause people to download fewer books than they would purchase in physical form may not carry much weight, if the Harris survey results are to be believed.

On the contrary, the e-reader phenomenon appears to be making some people even more voracious readers than before. About one third of the e-reader respondents in the survey reported that they read more now than before – and not just on their e-readers.

Clearly, e-readers represent a phenomenon that’s taken firm hold and is here to stay. But whether it’s radically changing the reading habits of its users … that remains an open question. The early signs suggest “no.”

What about your experience? Have your habits changed with the advent of e-readers? How so?

End-Game for Borders and Blockbuster?

Blockbuster logoBorders logoTwo items reported this past week are yet more bad news for one of the most beleaguered sectors of the retail industry. Borders Books & Music will be filing for Chapter 11 bankruptcy and Blockbuster is preparing itself for sale.

Does this mean we’ve now reached the end-game for these iconic brands – and for the entire retail book/movie store segment?

Actually, we’ve seen this play out before. Less than 15 years ago, Tower Records and Sam Goody were two vibrant national chain store operations selling CDs and other recorded music. But these and most other music merchants are now history.

In fact, the only bricks-and-mortar music retail segment remaining is made up of used record and CD stores – typically one or two shoestring operations operating in major urban markets that manage to eke out a hand-to-mouth existence.

It appears that the same thing may now be happening to books. Consider Borders. It’s tried all sorts of ways to branch into other revenue-producing endeavors to make up for the consumers’ shift to buying books online or downloading to e-readers. Those endeavors have included coffee and juice bars, greeting card kiosks, giving customers the ability to download books and music, and even to explore genealogy and family history. Despite all that, Borders has been unable to stem the decline of its business.

Mike Shatzkin of consulting firm Idea Logical Company contends that the problem is bigger than Borders. He believes bookstores are going the way of music stores. “I think that there will be a 50% reduction in bricks-and-mortar shelf space for books within five years, and 90% within ten years,” he predicts.

The immediate question is whether Borders will be able to restructure its business, or in the end will be forced to liquidate. Borders’ debt is so high (it’s expected to report nearly $1 billion in liabilities when it files), the company is already committing to closing about a third of its ~675 Borders and Waldenbooks store outlets.

It’s possible that book superstore rival Barnes & Noble will see at least a short-term gain from Borders’ travails. It’s a larger entity and is doing better financially. Gary Balter, an analyst with Credit Suisse, believes Barnes & Noble could add as much as $1 billion in sales if Borders ultimately goes out of business.

But that kind of benefit may well turn out to be temporary. After all, Tower Records benefited from the closure of Sam Goody – for a time. But ultimately, Amazon and online sales were the big winners, and there’s every indication that they will be the main beneficiaries now as well.

In the movie rental business, things aren’t any better. I’ve blogged before about the challenges faced by Blockbuster, the nation’s leading movie-rental chain that went into Chapter 11 bankruptcy in September 2010. The company is now preparing itself for sale, but there are ominous signs that the initiative may be stillborn.

Some bondholders, led by investor Carl Icahn, are concerned that the company’s value is eroding in bankruptcy court, which has made it more difficult to take the steps necessary to compete with Netflix and other rivals that aren’t hobbled by the cost of running retail storefront operations.

According to business news reports, that is what’s behind the drive to try to sell the company now. Blockbuster’s holiday sales were lackluster at best, and the cost estimates for effecting a successful turnaround are going ever higher. The bondholders have essentially lost their appetite for plowing more money into the enterprise.

So who’s actually going to be interested in buying Blockbuster? That’s a very interesting question, because the company’s business model and financial situation don’t look like strong ingredients for business success. So if a buyer emerges, it may be from among the ranks of those who already have a financial stake in the business – like Mr. Icahn.

Will we look back on this week a few years from now and say that it was the beginning of a turnaround – or the final nails in the coffin? If you’re a betting person – or an investor – where would you place your money?