Booksellers Claiming That Competition And Lower Prices Are Bad For Consumers
from the yeah,-that's-convincing dept
Clay Shirky points us to a letter sent by the American Booksellers Association (ABA) to the Justice Department suggesting that a book price war between Amazon and Wal-Mart is potentially illegal. What they appear to be saying -- as Shirky also noted -- is that lower prices are a bad thing: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:Basically the booksellers are saying they can't compete in the marketplace. That may be true, but if it's not actually harming consumers, what is the problem? There is no rule that says books must cost $25. If companies can figure out how to sell books for less, in ways that work for their bottom line, then what's wrong with that?"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."
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Filed Under: books, competition
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No, what they are saying is that if well established authors are $10, what price is an unknown or emerging writer going to sell at?
It gets to the question of if they can put new authors out there are a price that would be profitable for anyone in the process. There is a point where it is no longer valid to publish.
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Confused...
People have always found new authors by talking to their friends, looking for recommendations from reviewers, and just plain old taking a chance on a book that looks interesting. New authors will have just as much chance to sell a book with lower prices than with higher prices. Perhaps more so since people are more likely to buy more books at a lower price than a higher price, particularly from a new author.
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Well, isn't that for the market to decide? Why should the government be involved in any price fixing for artistic works? What your describing sounds EXACTLY like an inability to compete in the current marketplace, no?
"There is a point where it is no longer valid to publish."
Perhaps not in the traditional format, no. It might be time for publishers of new/emerging authors (something I'm working on myself) to publish and market those new authors in e-format first, build a fan base through extremely low costs for the e-books, market to eReaders, etc., before justifying the higher cost, higher quality physically pleasing hard copy book.
Or, if they're having trouble getting published as an emerging author and they truly believe their work is saleable, it might be time for more and more authors to build the fan base themselves through viral marketing campaigns combined with free, or near free, first works via filesharing. That's exactly what I'm going to be doing if things don't work out with my first choice of publisher.
As an aspiring author, I would gladly give away book 1, and make some money selling certain options/scarceties, to get the 4 book deal with a major house after I have proven that my work is palettable to a decent sized audience.
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Independent bookstores generally carry a range of books other than the bestsellers. I believe it is important the ability to purchase these books locally is important.
I am not informed enough to comment on Amazon's role in this...
I believe that the other matter to bring up with in terms of books is the prices that the publishers themselves charge the booksellers. The books themselves cost little to print. The publishers claim that the additional covers marketing &c. However, if you ask any author, most publishers require the authors to do their own marketing. Don't even get me started on the discrepancy on book prices between Canada and the US...
In short, the publishers could learn something from CwF + RtB.
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Re: Confused...
Agreed, most of the new authors I have found came about in these ways. Only one that I can think of off the top of my head was Rich Wulf. But he started writing and posting stories on his web page rather than trying to get them published through traditional means. He now has a publisher and I've bought many of his books.
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Now if the stores are able to sell a book for $10, why does it matter to the Publisher? The publisher is receiving the same amount of money when they sell to the distributor regardless of what price the store ends up selling the book to the consumer for.
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Pretty soon, all the books will be bad chinese to english translations printed in a factory in china, shipped over because it's 6 cents cheaper per book.
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Any way you look at it, they are mimicking the others who think their content is worth a price not supported by basic economics. EX: Real estate “market” - Something is only worth what the buyer is willing to pay.
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(Ha ha ha ha ha ha ha.) Ha. In today's age of internet, while they may manage to push some of yester-years' booksellers out of business, there is no way they could dominate the market--unless of course they also dominate the FEOPI* on the internet.
*(free exchange of other people's ideas)
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Muahahahaaa
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Re: Muahahahaaa
"Good news! You have made it through the interview process and we have decided that you are the most qualified candidate for the position. Now if you will please sit in this chair and lean your head back while we insert this ice pick...."
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http://www.nytimes.com/2007/06/29/business/28cnd-bizcourt.html?_r=1
What the other retailers are worried about is "Dumping" a tactic China "used to" use. Selling at a loss to put the competitors out of business, then raising prices.
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The letter is defending the ability of independent booksellers and emerging writers to compete with the big chains in a price war over best sellers, citing books not carried or involved in the lower prices as the casualties along with independent bookstores.
The letter is entirely about saying that small bookstores and emerging writers can't compete in a marketplace driven by a Big Box price war and seeking the Dept. of Justice to intercede because if government is fixing prices then it's not illegal.
Hopefully *crosses fingers* the DoJ will at least see through the thin veil and toss the letter in the circular filing cabinet.
If all they were asking is "if well established authors are $10, what price is an unknown or emerging writer going to sell at?" Then the answer could be, I dunno, $10. But in all honesty, the true answer is: the price that the store sells the book at.
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The Net Book Agreement
This means supermarkets made a huge markup on the few books tghey sold, for example, but tiny specialised bookshops could still survive qas some margin was guaranteed. In those days it was believed that if the NBA went away, small niche book shops would disappear because they'd never sell any "normal" books and the specialised books would not keep them in profit.
However, there have been a couple of developments since then.
One, Amazon etc al and the "long tail" have made it possible for a book that sells only 100 copies to just as profitable per book as one that sells a million.
Two, small niche dealers can still reach a worldwide market via Abebooks.
With these two developments, I don't think anyone could defend the NBA today.
You could maybe criticise Walmart for selling books dirt cheap as they only carry high volume books and don't care about the low volume stuff which might suffer as a result, but Amazon don't suffer from that problem. No reason why they can't sell every book cheap if they want to.
Plus Amazon can reprice everything in minutes if they want and Walmart simply can't be that responsive.
Can't see the problem, myself.
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Re: Confused...
Therefore little need for publishers or recording companies. The artists or authors can sell directly to the customer and use the services of some company such as Google etc. The plus side is that the item costs less to the consumer, and the artist or author receives more. Like getting your food from the farmer at half the price and cutting out the middle men. Market economics.
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Only a problem for the middleman
very quick to use alternative marketing ideas.
He is a best selling author and still puts his
work on the net for free. Uses Creative Commons
license.
I attended a Jack Williamson Lectureship this year.
The authors (SF) were happy, writing, excited about
reaching out to their fans. The agents and publishers
were crying and wringing their hands.
It is a new world.
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If these books are just loss leaders, intended to get customers to buy other things at their store&website/website, then it's probably perfectly legal the same way the $2/gallon milk at a supermarket near my house is.
Other nearby supermarkets seem to be doing fine despite charging the usual $3-3.5/gallon for milk because they offer other advantages (e.g. better selection, other things on sale) to get people into their stores. In fact, I sometimes even end up buying milk at those other stores despite being "used to" a much lower price.
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Now if the author set it up for download, and 50,000 downloads happen, and only 10% donate a dollar to the author, he is in the same boat, without any obligations to a publisher.
What we are going to loose is the editorial direction that publishers give the field. If you buy a book from TOR, you know you are going to get a well written book. If you buy a book from BAEN, it's bound to have a military or right wing slant on it.
And then there is still the thrill of getting the writer/artist to sign their work at conventions...so at very least, there is bound to be at least a boutique market for printed books.
Of course, if we didn't use trees to print on, but some weed or something, printing costs wouldn't be so astronomical...but that would only delay the inevitable...
ttyl
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Cost of printing
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And if I was an emerging author I'd rather get a lot of sales at a low price than a handful at a high one. (Disclosure: I actually write fiction, and gave up on the big publishers in favour of the website linked at the top of this post.)
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This is why I rarely buy booksmagazines these days
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That WalMart has apparently already got Amazon "reply pricing" suggests that WalMart can in fact wag that dog.
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That, and the DoJ has no place setting how much books cost. Might the problem with what books cost lie in the prices set by the publisher?
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My concern is that to protect "small" booksellers and "new" authors, the government gets involved and eliminates market forces on pricing.
The alternative is that Wal-Mart, Amazon, or another large volume seller allows competitive market forces to push costs down to the point where only extremely high volume retailers can survive. With only a very few extremely high volume retailers in the game, the market forces gear towards high volume stuff and you end up with a ton of crap books.
Either way the consumer ultimately loses as the market seems to eliminate itself. Either through capitalism destroying culturally valuable works for profit engines or through the government eliminating the market.
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How Much Does it Cost to Print A Book?
The marginal cost of printing an additional hardcover book during a print run, and shipping an additional copy to a customer or a retailer, or a distributor, as the case may be, is extremely low, typically less than a dollar. There is essentially no hand-labor in the book manufacturing process. In the case of a best-seller, the costs of copy-editing, pre-production and set-up are distributed over a sufficiently large number of copies that the per-copy share is only a penny or so, the same as they would be for a newspaper, or a telephone book. The author's royalty is of course based on the list price, say 10% of $25.00, or $2.50. That said, the publisher can probably make a marginal profit on sufficiently large orders at anything above $3.50, and considerably less if the author agrees to make concessions about royalties in exchange for volume (eg. a paperback deal, or remaindering, where the author might accept only fifty cents per book).
The publishers are not giving special privileges to Wal-Mart. They are simply saying that if you buy books by the truckload of each title, you can have them for something like five percent above actual costs, viz. paper, ink, and the author's royalty-- mostly the latter. Wal-Mart, in turn, believes in selling things for about five or ten percent above cost-- and doing quite a thorough job of driving its own internal handling costs down. To have any kind of anti-dumping case, the price of a hardcover best-seller would have to be less than four dollars or so, and maybe one dollar for a paperback.
Wal-Mart already has a mail-order book operation, partially modeled after Amazon. However, thus far, it has not handled used books. For a super-bookseller, such as Amazon, the used-book operation is quite important. It provides a means to discipline publishers of "'backlist" books. The bookseller can say, in effect, either sell us new copies on advantageous terms, or better still, participate in our print-on-demand and e-book systems, or else we will sell the customer a used copy, and you will get nothing. Amazon's used-book operation is still only moderately efficient from an industrial standpoint. It could be improved considerably, with more automation, and more outsourcing of cataloging to India, and could probably get its costs down to a dollar a book. Well, presumably Wal-Mart will step up the pace somewhat, and Amazon will have to match them.
Once you have print-on-demand in place, of course, with a sufficiently large number publishers participating, a little kiosk can sell essentially everything.
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a few words from an editor
2. It's rich that Gernert is harping about $10 books. It was Grisham, thanks to his staggering advances, who pioneered the $7.99, then $8.99, then (wait for it) $9.99 mass market paperback. His agent doesn't want prices to drop because then Grisham's advances will have to drop.
3. If the new Grisham sells like Painted House (1,000,000+ sales according to Bookscan), then a 1.25 million first print would cost $.69 per unit, and 1.5 million first print would cost $.68. The actual costs will be higher because the first print won't be that high, not in this economy, and those earlier sales were likely the result of multiple reprints, which would be more expensive, but you get the picture.
Stephen King sells between 400-500,000 copies in hardcover. His new book, substantially larger than Grisham's, would cost $2.33 a unit for a 400,000 print and $2.31 at 500,000 copies.
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This is like the nonsense argument that without copyright no one would ever come up with a new song. Yet, as we see, there are plenty of people that release songs (and books) under creative commons licenses (licenses designed to alleviate copyright restrictions) absolutely free (ie: creativecommons.org) there is absolutely no shortage of such material. You're just making up nonsense without anything to support your nonsense. Mike writes all these blogs and people read it for free, there is no shortage of literature. Heck, you just wrote a response and didn't charge anyone. You falsely assume that the only reason people write and publish work is to make money and that copyright and artificially expensive prices are required for anything to be published. Actually, you do not assume such a thing, you know better, you're just downright dishonest.
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Cost Figures for Book Printing.
http://www.gmanews.tv/story/195603/companies-brace-for-end-of-cheap-made-in-china-era
say s: "Printing a 9-by-9-inch, 334-page hardcover book in China costs about 44 to 45 cents now, with another 3 cents for shipping, says Goodwin. The same book costs 65 to 68 cents to make in the U.S."
Hat Tip: Tioe Dong, on History News Network.
http://hnn.us/readcomment.php?id=143513&bheaders=1#143513
in:
http://hnn.us/roundu p/comments/128896.html#comment
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