Price War Thoughts

Josie Leavitt - October 22, 2009

Price wars are all over the news. In fact, unless you lived under a rock, you’d be hard-pressed to not have heard about the Amazon/Wal-Mart/Target and now Sears (yes, Sears!) ever-escalating one-upmanship (or is it one penny-upmanship) for the ten hottest books coming out in November. Everyone has been weighing about how they feel about this, so I thought I’d take a moment and address it.

It’s ridiculous. It’s maddening and once again I feel like it puts independent booksellers in the very untenable position of being the folks who cry foul and get thought of as whiney. To sell the brand new Barbara Kingsolver novel, which I personally have been waiting for, for either $8.98 or $9 is on the one hand laughable, and on the other hand, it’s a great bargain for folks who can’t afford hardcovers right now. NPR had a segment on this and a customer was quoted as saying about the new prices, "I could get used to this." I hear this and I start to cringe.

How hard is it going to be to explain to customers why we’re not offering more than our usual, very generous hardcover discounts? Do all indie booksellers have the time to explain with every transaction why it’s important to not buy books for up to 74% off their cover price? And honestly, do customers really care? Does anyone but the indie booksellers care about anti-trust laws? Can I even explain this to customers in such a way that they’ll care about it? No, no and no.

So how am I going to salvage my fourth quarter? I have no real idea, yet. So far, I don’t feel like I’m losing business to this price war from my regular customers who "get it." But we all could be losing the casual book buyer, the one who might only come in during the holidays to get books. They don’t need recommendations, they just want the new books by their favorite authors. These folks might be gone, for good.  I am being optimistic here — this trend could cause an enormous siphoning-off of customers from independent bookstores. I mean how can handselling and staffs full of book knowledge compete with 74%  off the newest Stephen King? I hate to say it, but at some point, price will win out if things remain unabated. 

It seems inherently unfair — and if you read all the blogs and listservs on the topic, possibly illegal — to sell these books at such reduced prices, yet it is allowed to happen. There seems to be no concerted effort in the independent bookselling world that I’m aware of (if your trade association is planning something, please comment. Since the publication of this post the ABA announced it was seeking an investigation into this matter by the Justice Department. ), so we’re all moaning to the choir and nothing is changing, except that some booksellers are actually buying those ten books form Walmart or Amazon and saving an additional twenty or so percent than they can get from the publishers, which is not helping the cause. I can totally understand the rationale behind this, but it seems like a very short-sighted thing to do.

I have no answers to this and that frustrates me. All I can do is what I know: I will continue to stock the hot new books as well as the backlist that makes my store unique. I will try to educate my customers as to why buying literature, art really, for such an undervalued amount diminishes our culture. I will continue the conversation about mega-stores dominating the publishing world and the effect that has on editorial content and I will do all of this while I cheerfully wrap your present and ask after your family and give your dog a biscuit.

19 thoughts on “Price War Thoughts

  1. L. Ellsworth

    I give author-signed books to everyone at Christmas – I get those at my local independent bookstore. That’s something you have to offer that Walmart doesn’t. People do care about Independent Booksellers – and they should support them especially during a price war.

  2. K. Brechner

    Great piece Josie. I agree strongly that buying from Wal-Mart and Amazon is short sighted. For example we’re always hearing about the low frontlist sell in numbers from Independendents. If Independents start treating mass merchandising retailers as wholesalers what will that do to the numbers? This is a case for activism not for accommodation.

  3. Carole

    Please forgive my ignorance, but I would very much appreciate an explanation of why it is so important to not purchase the majorly discounted books. Frankly, this would give me the push I need to understand why I should choose to pay the same amount of money to buy less of the books I want from an independent bookseller than I would be able to do so online from Amazon or Alibris. Thank you – I do want to be a conscientious consumer, but need an education!

  4. Freeman Ng

    The Cody’s here in Berkeley used to offer a discount on bestsellers to keep up with the chains, but also posted a sign asking customers to consider foregoing the discount in support of independent bookselling. Alas, it was not, evidently, enough, as you probably know. Cody’s is no more. But it was still a good idea. It allowed customers who didn’t care about the political ramifications to still get the super low price, while educating the rest about the issue.

  5. Charles Colley

    I’m a self pub’d author, with my own imprint, trying hard to pitch for an agent, a “real” publisher, a movie deal. I’m selling 2 novels at the same time. My whole business life (I’m 59 and have written novels for 30 yrs) was one of selling at high volume and tiny markup-gasoline the biggest and longest, at retail. EVeryone crying is assuming one thing. That publishers will keep their splits the same; that they’ll keep demanding 50% of retail. Volume, real increases in numbers, make profits for everyone. At first blush, the price wars may be a good thing if they lead to more book buyers, more books bought per buyer, and forced changes in marketing. Suppose you were offered X per book sold and you believed your book would sell a million copies. You’d think twice about that possible number versus an advance against a future split. Just being provoking. Vist me-www dot charles colley dot com;

  6. Scifibookcat

    What concerns me is what is going to happen when this promotion ends. Does anyone really think that these major retailers can afford to sell thousands or even hundreds of thousands of copies at a loss indefinitely? I don’t think so. In the meantime many of the small and medium bookstores will go out of business. Some will be able to successfully diversify; others will try and fail due to poor execution or even lack of access to credit to tide them over the lean weeks. Businesses need a monthly cash flow to continue. Does anyone remember what happened to Mervyn’s Stores? They were making it month to month but needed credit to purchase their holiday inventory. No credit available and bye bye Mervyn’s. How many other stores are in the same position or got a loan for this holiday but now won’t be able to sell enough copies/make enough profit to repay their loans at the end of the season? I work at a chain bookstore. We’re hanging in there for now, but this holiday season could mean the success or failure of our business. We are the only bookstore in a town of 130,000. The next nearest is another chain bookstore 25 miles away. That doesn’t sound so bad until you realize that’s a 50 mile round trip and will cost most people about $6.00 in gas and at least 90 minutes of their time battling traffic to get across town and back. I wish customers understood the repercussions of the choices they make. Oh, you don’t have that in stock right now (or it’s cheaper online), I’ll just order from Amazon/Wal-Mart/whoever. What’s going to happen next year when little Johnny needs a book for a book report…due tomorrow. Or Aunt Sue wants to pick up a backlist title of her new favorite author to take on her vacation…leaving in two days. Or Mike needs a business reference book to bone up on marketing strategies before his meeting tomorrow with his boss? Where will Amazon, et al be then?

  7. Freeman Ng

    Carole, here are two reasons that matter the most to me. Others might have additional considerations to contribute. 1. From a literary standpoint, it’s better to have more booksellers and publishers in the world, all with their own differing tastes and agendas. The fewer decision-makers there are controlling what appears in bookstores, the less variety there is likely to be. At a recent children’s writers conference I attended, a well-known author talked about how decisions are made at the big publishers. The final hurdle a book must pass before it is bought by a publisher is an editorial meeting. And do you know who else is in that meeting? she asked us. Representatives from Borders and Barnes and Noble! And if they say they won’t sell the book, the publisher will reject it. Chilling. 2. From a political standpoint, the money you spend in local, independent businesses of any type is more likely to stay within your community. Not just your geographical community, but your socio-economic class. The money will continue to do what it was meant to do: serve as a medium of exchange enabling the life of the community. Profits made by big chains mostly go wherever that chain’s headquarters are based, and a percentage of it goes to enrich the already very wealthy men (and the few women) at the top of that corporation’s pecking order. These are the issues I care most about, but again, others may have other reasons to suggest.

  8. E. Van Lowe

    Josie, I am a new YA author. Brand New. My book is not important, I’m not looking for publicity here. I am also a TV writer for many years. I bring this up because several years ago when minorities were not being hired the WGA went after the studios. I went before the guild and said, studios don’t hire writers, writer/producers hire writers. Don’t appeal to studios, appeal to writers. I feel the same way here. We need to appeal to the writers. If Stphen King tells his publisher DO NOT discount my book they won’t. They don’t want to lose him. As in Hollywood, WRITERS need to be held accountable. We cannot allow celebrity status to strip us of our humanity. If we do, the independent book stores that nurtured us all will be gone. Great post, Josie.

  9. Peni Griffin

    Carole, authors don’t like big discounts because, unless they have very good agents indeed, there’s a clause in their contracts that reduces and in some cases eliminates their royalty if the bookseller buys from the publisher at a deep discount (defined in the contract). The reason the public should dislike deep discounts is that they reduce fair competition. A bookseller who is charging below cost for one item is not going to lose money on the deal, no way no how. Either he is increasing prices on other items in the store to cover the loss, or he has a time frame over which he can afford to lose money in order to accomplish a particular goal. Frequently, this involves selling at the discount until the competition goes under, at which point the prices go back up – and up – and up – because the competition isn’t there anymore. This is called price-fixing and it is illegal under anti-trust laws. I don’t know what it takes to trigger an anti-trust lawsuit in this country, but the bookselling world has been overdue for one for decades.

  10. Josie

    Lots of great comments. Freeman sums up a lot of the issue very well. But I’d like to add a few things from the Indie bookstore perspective. First, thing to E. Van Lowe: the writers have absolutely no control over their book once is purchased for sale from the publisher. The publisher sets the list price and then sells to every retailer at the same discount. So, bookstores buy at the 46% off retail price and are free to charge whatever they like. Be that full-price or 74% off. And there’s nothing wrong with it, except for what’s happening now. The ABA has approached the Department of Justice to look into the price war’s legality, and hopefully something good will come of that. Why should you pay more for your books at an indie? Well, we are in town. We pay taxes in your community which go toward the schools, road upkeep and more. We employ people who live in your community. For every dollar you spend at an independent bookstore 68 cents stays in your community. That same dollar spent at Amazon stays with Amazon since they are fighting hard to not pay sales tax in all states. All my sales tax stays in Vermont. I don’t have corporate headquarters in a tax-free state. On-line retailers may offer deep discounts on a few things, but often you can get better savings at local stores. Then there’s the issue of editorial control that Freeman spoke of. If there were no independent bookstores, what gets published would be largely determined by the head buyers at the chains. That means fewer people looking at books ahead of time, reading galleys and getting excited about a book that is quirky, off beat and might not scream commercial right away. Independent bookstores are often the ones to “break out” a book before anyone else. We take more chances because we’re not buying hundreds of copies for our stores around the nation, we’re just buying for our store. This allows us a lot more freedom to try a first novel by a total unknown. Lastly, go to your local bookstore and ask them why should I shop here and not Amazon/Target/ Wal-Mart? Let them tell what the store does. Do they have a free loyalty program that gives you money or books back after you spend a certain amount? Are certain kinds of books always discounted? etc. You might be surprised to see just how much more affordable your local store is. And, do you want those ten discounted books, or did you come into the store for Eudora Welty or an older Stephen King book?

  11. oliver_optic

    After 30 years of working in independent bookstores the giggle for me is that the indies and the killer ‘B’s’ are all in the same boat selling the ‘true bookstore experience’. Kind of icky indies huh? Lets remember this is only ten titles which many indies would never sell anyway and the indies can buy them at the discounted price and sell them in there stores and make a couple of bucks. It is helping the cause its helping maybe to keep them in business. If you are to stupid or pigheaded to make a buck on this you can you do not deserve to be in business. Is Stephen Kings new novel really worth the $35.00 price tag? A flat 50% discount for everyone and a 30 day return from the publishers might do something about this. Could someone convince you not to pay 74% less for gas for your car?

  12. Freeman Ng

    For what it’s worth, Oliver, I pay 75% *more* for car fuel! I bought a diesel Golf and run it on biodiesel for reasons very similar to the reasons I buy books through my local independent booksellers. Admittedly, this is an extreme case: I can afford it, and the temperate weather where I live allows me to use 100% biodiesel, which maximizes the favorability of the political and environmental equation, and I buy biodiesel made from used cooking oil (as opposed to crops grown specifically for fuel) which tips the equation further. Nevertheless, I mention this to demonstrate that questions like, “Could someone convince you not to pay 74% less for gas for your car?” are not necessarily as purely rhetorical as you might think.

  13. Carin

    Freeman, I used to be an editor at the 5th largest US publisher, and I know a lot of editors at other houses. Never ever is a rep from B&N or Borders (or ANY other customer) in an editorial meeting, nor do they have input on whether or not a book is acquired by a publisher. They rarely weigh in until after the book is cataloged and being sold to stores. The difference the opinion of the national chains can make if they like or dislike a book is on the A) print run and B) marketing/publicity. Granted, if they all pass on a book and only 3000 are printed as a result, it’s kind of the same as the book not getting published at all, but if independents take up the book’s cause and they handsell it, it can still become successful without the chains. And E. Van Lowe, to reiterate what I think is confusing, the publishers are not giving these chains better discounts than usual, so S. King can tell S&S not to give Wal-Mart and Amazon bigger discounts – but it won’t help because that’s not what’s happening. Wal-Mart, Amazon and the others are selling these books at a loss. I’m very intrigued to see if the SEC will look into anti-trust issues. I think that would be very interesting and a lot of unflattering info about Amazon et al could come out.

  14. Freeman Ng

    Carin, are you talking about children’s book publishing? That’s all I was talking about. I think the state of general book publishing is much more healthy. The author I referred to was Patricia Polacco, speaking at the Northern California SCBWI conference at Asilomar in February, 2008. I was just repeating what she said.

  15. Freeman Ng

    Oops! I was just looking over my materials from that conference, and I think I was wrong about the speaker. It wasn’t the author Patricia Polacco, but Andrea Brown, the founder of the Andrea Brown literary agency.

  16. Anon.

    Freeman, you really think general book publishing is “much more healthy” than childrens? I think children’s may actually be in better shape…esp YA. Look at Twilight last year. As far as the contention that Borders and Barnes and Noble are at the editorial meetings, that’s ludicrous! Obviously they have a big influence on the success or lack thereof of a book, but why would they ever want to become involved at that level? Do you realize the manpower that would take? If they were going to go to that length they would get into publishing themselves. And the closest B&N get to publishing is the old classic books that are in the public domain that they can print royalty free under the Barnes and Noble name. Having said that they do have tremendous clout over the jackets and print runs. They’re not going to have a book take up valuable shelf space that won’t turn over because of inadequate supplys or a lame jacket.

  17. Freeman Ng

    I meant healthy in terms of the room there is for less commercial books to be published and find their niche readerships. As for the B&N story: I was simply repeating what I heard Andrea Brown say at that conference, and if anyone has anything factual to report for or against her claim, I’d love to hear it. (I’m especially hoping that Carin will jump back into this thread and give us more info about her experiences.)


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