Saturday, October 24, 2009

Interesting Developments in the World of Publishing

The latest news is the request by the ABA (American Booksellers Association) for a government investigation of price wars.

From the Publishers Weekly:

In a letter sent to the antitrust division of the Department of Justice Thursday, the board of directors of the American Booksellers Association requested that the government begin an investigation into what the organization believes is the illegal predatory pricing policies being carried out by Amazon, Wal-Mart and Target in selling 10 hardcover titles for as low as $8.98. The ABA requested a meeting with officials as soon as possible, arguing that left unchecked, the predatory pricing policies “will devastate not only the book industry, but our collective ability to remain a society where the widest range of ideas are always made available to the public.”

The letter charged that the big box retailers are using predatory pricing practices to “attempt to win control of the market for hardcover bestsellers.” By selling books below cost, Amazon, 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,” the letter stated. Furthermore, the letter noted, the companies involved in the price war are not engaged primarily in selling books, yet their fight could result in the entire book industry becoming collateral damage.

The letter added that the price war over hard covers was precipitated by Amazon’s decision to price e-books at $9.99. “We believe the loss-leader pricing of digital content also bears scrutiny,” the letter stated.

The latest today is that Sears/K-Mart will not offer the books at the $8.98 or $8.99 prices that Amazon, Wal-Mart and Target are offering, however they will give a $9.00 store credit if you bring in a receipt from one of the other stores.

There has long been discord between big box stores and retail stores. The big guys buy huge amounts of books at larger discounts and sell cheaper. This hurts the bookstores. When I used to sell books to bookstores, the managers would tell me that they could go to Sam’s and buy Bibles and bestselling books cheaper there than they could from the publisher or distributor. The big box stores sell certain products at a loss to bring the consumer in to the store. They make it up on other products. A problem for the publisher is that these stores do huge returns, and returns are bad for all of us. This is why some publishers hold back certain funds, anticipating returns and the author has to wait for his/her money. The other side of the coin is this, publishers cannot exist on bookstore sales, they need the sales from the larger clients to stay in business.

There is the chance that these promotions will not hurt the smaller stores if there are only a few titles offered at this low price. They could go to the big box stores and buy them at that price and sell them without a profit at their stores to draw people in. It would be better than paying the publisher or distributor a higher price and selling at a loss. However, if there are only a few books on the shelf, that might not work. It will be interesting to see how this plays out.
Here is some advice from the CBA (Christian Booksellers Association) for the bookstores concerning the Christmas Season:

With more than 43% of holiday shoppers viewing price and discounts as important, according to BigResearch/National Retail Federation holiday-sales research, Christian stores must have bargain and discounted products available and promoted to achieve business success this year, according to Mike Hockett, Strata Consulting LLC president and CBA service provider.

Most Christian Bookstores are stocked with more than books. Gifts, Cards, Music and T-shirts make up a good part of their inventory. I recommend that you support your Christian Bookstores when possible. Even though on-line shopping is so easy, and I order online when I can’t get the book at my Family Christian store, we don’t want to see our bookstores got out of business. There is something so satisfying about going into a bookstore, especially for those of us who are book addicts.

Happy Shopping & blessings,



Stevie Rey said...

Interesting developments, Joyce. I love book stores and would hate to see them driven out of business by Target and Walmart. Those prices for hardbacks are unbelievable!

Lynnette Bonner said...

Here's my question... Don't most authors get paid based on the percentage their publisher makes on the sale of the book? If the publisher doesn't begin selling the books for a lower price to the big distributors how does this effect the publishers and authors? It seems to me that only Walmart and Amazon would be effected by the losses here.

There must be something I'm not understanding.

Hartline Literary Agency said...

You are right, the authors get paid based on the percentage the publisher sells the book to the client - which is the net price.
However, the big box stores get higher discounts than the small bookstores. They will get probably 55% to 60% or higher, which cuts the profit for the publisher, who in turn passes that cut on to the author. In fact, some contracts call for paying the

Hartline Literary Agency said...

To finish the sentence that this comment thing didn't send:
Some contracts call for paying the author 1/2 the royalty percentage. Example if the royalty is 14% the author gets 7% for books sold at discounts higher than 55% or 60%, depending on the publisher. If you have further questions, please don't hesitate to contact me.

Martha Ramirez said...

Interesting, Joyce. Thanks for sharing!

Lynnette Bonner said...

Okay, Thanks for answering my question. That makes sense then.