Fresno Famous

Here's another developing story that you should be following. If you like books, anyway.

Earlier this month, Amazon, Wal-Mart and Target went into an all-out price war on the pre-sale of new hardcover
bestsellers from the likes of John Grisham, Stephen
King and James Patterson. Sarah Palin was also in this list for what it's worth. The books, which typically retail for up to $35 are selling at all three for $9 or less.

Last week, the The Board of Directors of the American Booksellers Association sent a letter to the U.S. Department of Justice asking them to investigate.

According to the letter the board believes the practices constitute illegal predatory pricing that is damaging to the book industry and harmful to consumers.

From the letter:

It's important to note that the book industry is unlike other retail sectors. Clothing, jewelry, appliances, and other commercial goods are typically sold at a net price, leaving the seller free to determine the retail price and the margin these products will earn. Because publishers print list prices indelibly on jacket covers, and because books are sold at a discount off that retail price, there is a ceiling on the amount of margin a book retailer can
earn.

The suggested list price set by the publisher reflects
manufacturing costs -- acquisition, editing, marketing,
printing, binding, shipping, etc. -- which vary
significantly from book to book. By selling each of these
titles below the cost these retailers pay to the
publishers, and at the same price as each other, and at
the same price as all other titles in these pricing
schemes, Amazon.com, Wal-Mart, and Target are devaluing
the very concept of the book. Authors and publishers, and
ultimately consumers, stand to lose a great deal if this
practice continues and/or grows.

What's so troubling in the current situation is that none
of the companies involved are engaged primarily in the
sale of books. They're using our most important products
-- mega bestsellers, which, ironically, are the most
expensive books for publishers to bring to market -- as a
loss leader to attract customers to buy other, more
profitable merchandise. The entire book industry is in
danger of becoming collateral damage in this war.

It's also important to note that this episode was
precipitated by below-cost pricing of digital editions of
new hardcover books by Amazon.com, many of those titles
retailing for $9.99, and released simultaneously with the
much higher-priced print editions. We believe the
loss-leader pricing of digital content also bears
scrutiny.

While on the surface it may seem that these lower prices
will encourage more reading and a greater sharing of
ideas in the culture, the reality is quite the opposite.
Consider this quote from Mr. Grisham's agent, David
Gernert, that appeared in the New York Times:

"If readers come to believe that the value of a new
book is $10, publishing as we know it is over. If you
can buy Stephen King's new novel or John Grisham's
'Ford County' for $10, why would you buy a brilliant
first novel for $25? I think we underestimate the
effect to which extremely discounted best sellers
take the consumer's attention away from emerging
writers."

For our members -- locally owned, independent bookstores
-- the effect will be devastating. There is simply no way
for ABA members to compete. The net result will be the
closing of many independent bookstores, and a
concentration of power in the book industry in very few
hands. Bill Petrocelli, owner of Book Passage in Corte
Madera, California, an ABA member, was also quoted in the
New York Times:

"You have a choke point where millions of writers are
trying to reach millions of readers. But if it all
has to go through a narrow funnel where there are
only four or five buyers deciding what's going to get
published, the business is in trouble."

We would find these practices questionable were they
taking place in the market for widgets. That they are
taking place in the market for books is catastrophic. If
left unchecked, these predatory pricing policies will
devastate not only the book industry, but our collective
ability to maintain a society where the widest range of
ideas are always made available to the public, and will
allow the few remaining mega booksellers to raise prices
to consumers unchecked.

We urge that the DOJ investigate and request an
opportunity to come to Washington to discuss this at your
earliest convenience.

On a somewhat related note is this piece from Huff post, which argues that the future of the industry might rest on $4 books.

I don't know enough about the law to tell if what Target and the rest are doing is out-and-out illegal, but no one wins by lowering the value of books (especially the perceived value) is dangerous.