Third place lesson from Borders and Starbucks locations in NYC: they still need to bring in money

The story that Borders is closing many locations (see earlier posts here, here, and here) is related to news that some Starbucks locations in New York City are going to cover up their electrical outlets to discourage people from staying too long:

Well, now some Starbucks in New York City are reportedly pulling the plug on that idea, actually covering up their electrical outlets to discourage squatters.

“Customers are asking (for it). They just purchased a latte and a pastry and there is nowhere to sit down in some of these high-volume stores,” Starbucks spokesperson Alan Hilowitz said…

It is a move that has some Starbucks regulars saying … it’s about time.

Some, including Starbucks CEO Howard Schultz, say these two businesses provide “third places” between home and work. Thus, if the companies do things that inhibit social behavior, such as close locations, the suggestion is that they weaken the social realm as people will then be more isolated. (See a recent example of this argument here.)

But these businesses are not just providing a public good and this is one lesson that joins these two stories: they need to make enough money to keep the third places open. At Starbucks, the people who sat too long and used the free Wi-Fi ended being a nuisance to customers who wanted to pay for coffee, sit down for a short while, and then leave. At Borders, the best way to make sure the locations would stay open was to purchase more. Sure, a book at Borders might cost more but the purchase helps subsidize the cafe and the social life that may come with it.

This leads to a bigger question: would Americans be willing to pay for third places with their consumer dollars? If given the choice between a cheaper book at Amazon.com or a book at the nearby Borders, which would most people choose?

This is also a reminder that these locations are not public spaces: they are privately owned and can set their own priorities and values for the space. There still are public spaces in the United States: public parks like Rittenhouse Square in Philadelphia draw attention (in this book – though it also talks about shopping malls and markets, both privately owned). Instead of lamenting the loss of Borders or Starbucks, one could fight instead for taxpayer supported public spaces that should be open to all people.

Don’t romanticize the loss of bookstores: rue the loss of tax dollars and jobs

One response to the closing of bookstores is to lament the loss of a place to browse for books and drink coffee. But another reason to rue the loss of these stores is the loss of tax dollars and jobs. Here is how this plays out in Wheaton:

The eventual closure of Borders books will have an impact on Wheaton in terms of lost sales tax revenue and jobs, said Jim Kozik, the director of planning for the city. And replacing a large retailer isn’t easy in times like these…

Locally he said Borders absence will mean a loss of jobs, a loss of tax revenue for the city and a loss of lease income for the management company that runs the shopping plaza at Butterfield and Naperville roads. But he said the amount of revenue the city will lose is hard to quantify because it is not spelled out by state government…

Kozik said the city has had discussions with Anderson’s Bookshop, an independent seller with locations in Downers Grove and Naperville. But ultimately the talks didn’t produce.

With liquidation plans announced for Borders books, Wheaton could face having two large vacant former bookstores – the other being a space in the Town Square shopping plaza formerly occupied by Barnes and Noble. That store closed a few years ago, said Kerry O’Brien of the Wheaton chamber of commerce.

It is little wonder that more states are looking to gather sales taxes off internet sales. The loss of bookstores has an economic impact that is perhaps more important than the cultural and social implications of the loss of a potential “third place.”

This story is also a little more intriguing because it is Wheaton, a community that is fairly educated and yet has lost two big chain bookstores. If they can’t survive in Wheaton, where else can they survive? (I wonder how the Barnes & Noble in downtown Naperville is viewed.) In general, the Chicago suburbs are lacking in independent bookstores, a type of business that might mark a more educated demographic.

San Fran “coffeehouse and tech incubator” inspired by idea of “third places”

Starbucks CEO Howard Schultz has said in recent years that the company seeks to become a “third place,” a space between work and home. This term was popularized by sociologist Ray Oldenburg in The Great Good Place. But exactly how a coffee shop should operate in order to be a third place is up for debate. A new San Francisco firm, The Summit Cafe, envisions a coffeeshop plus a center for technological incubation:

With its copious power outlets, Gouda-wrapped meatballs, and a curated magazine rack featuring vintage Steve Jobs covers, the Summit café sits at the intersection of San Francisco’s three most conspicuous tribes: techies, foodies, and yuppies. Yet what separates the Summit from being just another Wi-Fi boîte is the dual-purpose nature of the 5,000-square-foot space. One floor above the Laptop Mafia, the café features a cluster of offices where groups of programmers and developers toil away in an effort to launch the next Twitter—or at least the next OkCupid. Created by i/o Ventures, a Bay Area startup accelerator comprising former executives from MySpace (NWS), Yahoo! (YHOO), and file-sharing site BitTorrent, the Summit is equal parts Bell Labs and Central Perk—and probably the country’s first official coffeehouse tech incubator. Every four months, i/o selects and funds a handful of small tech ventures to the tune of $25,000 each in return for 8 percent of common stock. In addition to the cash, each team gets four months of office space at the Summit, mentoring from Web gurus like Russel Simmons of Yelp, and discounts on all the Pickle & Cheese Plates or White Snow Peony Tea they could possibly need. Since the café opened on Valencia Street last fall, two companies have already been sold, including damntheradio, a Facebook fan management tool. To hedge against any potential risk, i/o also rents half of the Summit’s other desk space to independent contractors and fledgling Web entrepreneurs. It’s even experimenting with an arrangement in which customers can pay $500 for a dedicated desk—on top of a $250 membership fee.

Is this sort of thing only possible in San Francisco (high-tech culture) or perhaps just in major cities?

But this space does seem more like a work space than a true third place. Are there people who come here just to hang out? Do fledgling companies that come here mix with other fledgling companies to form new ideas and firms?