Being a reprint of an ABA headline from yesterday. Thanks to Fred Bubbers for the heads up.
The Board of Directors of the American Booksellers Association today sent the following letter to the US Department of Justice requesting that it investigate practices by Amazon.com, Wal-Mart, and Target that it believes constitute illegal predatory pricing that is damaging to the book industry and harmful to consumers.VIA OVERNIGHT MAIL AND E-MAIL
October 22, 2009
The Honorable Christine Varney
Assistant Attorney General
Antitrust Division
U.S. Department of Justice
950 Pennsylvania Avenue, NW, Suite 3109
Washington, DC 20530Molly Boast, Esquire
Deputy Assistant Attorney General for Civil Matters
Antitrust Division
U.S. Department of Justice
950 Pennsylvania Avenue, NW, Room 3210
Washington, DC 20530Dear Ms. Varney and Ms. Boast,
We are writing on behalf of the American Booksellers Association, a 109-year-old trade organization representing the nation’s locally owned, independent booksellers. A core part of our mission is devoted to making books as widely available to American consumers as possible. We ask that the Department of Justice investigate practices by Amazon.com, Wal-Mart, and Target that we believe constitute illegal predatory pricing that is damaging to the book industry and harmful to consumers. We are requesting a meeting with you to discuss this urgent issue at your earliest possible opportunity.
As reported in the consumer and trade press this past week, Amazon.com, WalMart.com, and Target.com have engaged in a price war in the pre-sale of new hardcover bestsellers, including books from John Grisham, Stephen King, Barbara Kingsolver, Sarah Palin, and James Patterson. These books typically retail for between $25 and $35. As of writing of this letter, all three competitors are selling these and other titles for between $8.98 and $9.00.
Publishers sell these books to retailers at 45%-50% off the suggested list price. For example, a $35 book, such as Mr. King’s Under the Dome, costs a retailer $17.50 or more. News reports suggest that publishers are not offering special terms to these big box retailers, and that the retailers are, in fact, taking orders for these books at prices far below cost. (In the case of Mr. King’s book, these retailers are losing as much as $8.50 on each unit sold.) We believe that Amazon.com, Wal-Mart, and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers.
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.
Sincerely,
ABA Board of Directors:
Michael Tucker, President (Books Inc—San Francisco, CA)
Becky Anderson, Vice President (Anderson’s Bookshops—Naperville, IL)
Steve Bercu (BookPeople—Austin, TX)
Betsy Burton (The King’s English Bookshop—Salt Lake City, UT)
Tom Campbell (The Regulator Bookshop—Durham, NC)
Dan Chartrand (Water Street Bookstore—Exeter, NH)
Cathy Langer (Tattered Cover Book Store—Denver, CO)
Beth Puffer (Bank Street Bookstore—New York, NY)
Ken White (SFSU Bookstore—San Francisco, CA)CC: Oren Teicher, CEO, American Booksellers Association
Len Vlahos, COO, American Booksellers Association
Owen M.
October 24th, 2009 at 6:10 PM
What's amusing is of course that the ABA finds itself on the same side of this battle as Barnes & Noble. If ABA wins it will be helping B&N.I doubt ABA will win this particular fight. What exactly should the U.S. Government do, in this situation? Set a DIFFERENT "low low price" for the books in question??The U.S. has never been a nation friendly to price-fixing. In my opinion indie bookstores need to develop models that don't depend on big blockbuster books.
October 24th, 2009 at 7:56 PM
Yeah, this is such a weird issue. On the one hand, I think it is in fact pretty predatory and underhanded of the Big Boxes. And it will in fact hurt indie bookstores… maybe a lot more than one might realize; all these books are coming out for the holidays, and I am certain these stores count on the once-a-year frenzy of blockbuster hardcover novels.But you are right, Andy. What is the government gonna do? Dictate a minimum price that you can sell a book for? That seems egregious to me.As for different models that don't rely on blockbusters… any suggestions? I know, I am selling indie books via AuthorsBookshop and in that I am shielded from this war. But a)It aint easy and b)not every one can do it.But I guess it stands as an example. Any other suggestions?
October 24th, 2009 at 11:26 PM
Well I think that opening a new independent bookstore today requires extremely careful advance work. Lining up all the ducks. Your future customers have to be completely identified ahead of time. No trusting to luck. Do not simply rent a storefront. Instead, canvas and survey and poll and learn about possibly communities you think you can serve. Attempt to quantify the amount of business your potential customers will be willing to point your way. Clarify what you intend to do, if adequate interest in the target communities is indicated. Then, raise money: sell bonds, sell shares to your future customers. It's like running a political campaign. By the time your store is open, everyone will be heavily invested in your success. This is what has just happened with Greenlight Bookstore in Brooklyn. In such a store, "bestsellers" will be titles that are extremely specific to that bookstore. Because different communities are likely to elicit different bestseller lists from their bookstores.The only other option is ensconcing a bookstore inside an existing high-traffic community institution, and spinning off fundraising dollars from the store to the institution (library, church, museum). This has been my own approach since 1994. Here too, "bestsellers" will be highly specific to that exact store and probably unrelated to the New York Times national bestseller list.
October 24th, 2009 at 11:36 PM
Brilliant. Very sound ideas.I think you could also do what Cyclops books is doing here in Baltimore. They have a large space, and they do all sorts of things there. They are making themselves something of a hub for the writer/diy/punk/indie scene in Baltimore.He holds concerts there every week, bringing in musicians touring through the area as well as locals. But he also holds open mics for local poets and writers. It's all very gound-level, non corporate punky and fun.And he promotes promotes promotes via facebook, twitter, all the social media stuff.He is basically building a culture around the store, and the books become almost an afterthought… or so it appears. But really, when we are all there to listen to music, we are browsing… and buying… the books.
October 25th, 2009 at 1:25 AM
Here you guys go:http://snipr.com/sqnil