Are Amazon, Target, and Wal-Mart Destroying Books?
Pundits wonder whether low prices will hurt the book industry
The American Booksellers Association has asked the Justice Department to investigate a pricing war between Amazon, Target, and Wal-Mart. The three giants have been selling books at such a steep discount in anticipation of the holiday season that publishers and booksellers accuse them of practicing predatory pricing--a monopolist tactic that would drive indepdenent bookstores into the ground. Sarah Palin's new memoir, for example, can be bought for as little as $8 now.
Doomsday wailings about the demise of indie book shops, publishing, and printed-paper books themselves are constantly mounting, particularly since the advent of the e-reader. But are the discount titans really making a bid to control the market, and will the Department of Justice object? Here are four opinions on whether these book wars are anything to be worried about:
- This Looks Pretty Legal The Wall Street Journal's Ashby Jones is a bit "skeptical," looking at the American Booksellers Association request. "[W]hen one monopolist sets prices below profit-making levels for a period of time in order to drive competitors from business, you might have a case," Jones acknowledges. "But when three do it? Well, then, you might tell retailers in the, say, 4-10 positions that it's just the three leaders dueling it out among each other. That it's just robust competition, in other words."
- Explaining the Problem--Or Lack Thereof "At the core of the dispute ," explains business blogger Douglas McIntyre, is that major titles are being sold below the cost that Amazon and its rivals have to pay to book companies. The American Booksellers Association says that this is the equivalent of a conspiracy 'to win control of the market for hardcover bestsellers.'" But that's probably not what's happening, he says. Here's why he thinks the low prices may only last a few months:
The pricing practices among Amazon, Target, and Wal-Mart are probably nothing more than a good old-fashioned price war meant to gain a share of the online shopping audience as the holidays approach. Each of the three big retailers is certainly losing money on all the books that they sell for $9, but they assume that each book buyer may be a buyer of other merchandise.
- What We Should Be Worried About While "publishers don't really care what a retailer sells a book for," Gerald Sindell explains at the Huffington Post ("Retailers want to take a loss? No problem."), the problem comes when these prices stick, and "a Wal-Mart or Amazon pressures a publisher to sell at what is known as a 'deep-discount.'" When that happens, author royalties are cut through a clause in the contract. There's another thing to remember, he adds:
The big take-away here is that nine of the ten books being hacked down in price by Amazon, Target and Wal-Mart are fiction titles ... Fiction is generally sold as entertainment. Entertainment tends to be more fungible. Non-fiction is generally sold on the value of the information it contains ... Is that information worth only $20?
... you have to wonder about the one non-fiction title that's being treated just like all those other nine fiction titles being deep discounted. Yes, it's Sarah Palin's memoir ... Wal-Mart, Target, and Amazon say we can have it all for just $8.99. Maybe they know something.
- This Might Actually Save Book, writes Marion Maneker at The Big Money. In fact, "[c]onsumers are already accustomed to paying varying prices for different editions of the same title. Many a book sells well in the higher-priced trade paperback form even when a cheaper mass market edition is available." Costco certainly hurt independent bookstores, but this "is hardly new." Publishers are just worried that the low prices will eventually force them to lower wholesale prices, cutting into their profit margin, which they "need ... to pay off all the overpriced advances that lie like a dead hand on publishers' profits." But "[p]ublishers shouldn't be risking their capital on authors who bring their own audience to the equation" anyway, she argues, citing Ted Kennedy. "These are the authors who will want Wal-Mart, Amazon, and Target selling their books for $9." Publishers should then use this turn of events to start putting their money where it matters: the emerging writers.