Bill Petrocelli on the Price War

Under the title “Not a Simple Price War -- It's a Fight Over What You Get to Read” Marin bookseller Bill Petrocelli of Book Passage in San Francisco and Corte Madera has published an absolutely right-on screed about the current price war on books.

I mentioned the situation here two weeks ago, and was planning to say more. Writing for the Huffington Post, Bill said it for me and for all fans of good books. I’ll devote the rest of this Words on Books to excerpts from Bill’s article:

“What looks like a simple price war between Amazon, Target, and Wal-Mart over a handful of bestsellers is symptomatic of a much deeper problem in the book business. The larger fight is really over what you get to read.

“The price war began October 15 when Walmart.com dropped its prices drastically on several bestsellers. Amazon.com and Target.com quickly followed suit, and within a couple of days the prices were down to $8.99 and heading lower... these behemoths were clearly selling those books below cost and engaging in an illegal form of predatory pricing.

“The authors affected by this price slashing were not amused. James Patterson said, "Imagine if somebody was selling DVDs of this week's new movies for $5. You wouldn't be able to make movies." John Grisham's agent added, "I think we underestimate the effect to which extremely discounted bestsellers take the consumer's attention away from emerging writers." The American Booksellers Association saw things the same way, saying in a letter to... (the) Anti-Trust Division of the U.S. Department of Justice, that these companies are using books as loss leaders to sell other kinds of merchandise. ‘The entire book industry is in danger of becoming collateral damage in this war.’

“Predatory pricing is a means of driving other booksellers out of business. When this happens, the choice of books is one of the first things to suffer.

“... the literary life of America has to go through two very narrow choke points: publishing and bookselling. Both of these choke points have become more and more constricted in recent years as a result of economic concentration and market manipulation.

“Publishing is now consolidated in the hands of a few large conglomerates that control most of what is published in America. There are, to be sure, many booklovers in the publishing divisions of these giant corporations, but they are outnumbered and out-maneuvered by the bean counters... It is not an atmosphere that favors innovation or literary discoveries...

“... The chain stores had been doing their best to squeeze out the independent stores over the last 20 years or so, and now they in turn are being squeezed by the mass merchandisers... Big-box mass merchandisers, like Wal-Mart, Target, and Costco, have taken over 30 percent of the book market. These mass merchandisers are now selling as many books as Barnes & Noble and Borders combined.

“It's hard to exaggerate the consequences of this mass-merchandiser dominance. These (big-box) outlets carry, at most, a few hundred titles at any given time. This means that a handful of books -- far less than one percent of all the books published -- are probably accounting now for more than 30 percent of all sales in America. Price wars in this segment of the market... (are) driving more customers to these merchandisers in search of quick bargains on a handful of big-name books.

“Publishers are under more and more pressure to subsidize these new, ruinous prices, and they will probably end up pushing more and more of their resources in that direction. But it's a devil's deal...

“...There's a big difference, say, between 500 buyers all buying for their own stores and one chain-buyer purchasing for 500 outlets... ...when the system is dominated by a small handful of powerful buyers, their decision can make or break a book... One of the dirty little secrets of the book business is that publishers often check in advance with the buyers for the chain stores and mass merchandisers before agreeing to publish a book. If the answer they get is no, the book may never see the light of day.

“One of the ironies of the current price war is that it includes ‘The Lacuna,’ the latest novel by Barbara Kingsolver. But Kingsolver wasn't always a bestselling author. When her first novel, ‘The Bean Trees,’ was published in a modest print-run in 1988, independent booksellers recognized it as a literary treasure and sold thousands of copies. After that the chain stores climbed on the bandwagon, but without that first push from independent booksellers Kingsolver's career might never have taken off.

“Anyone who loves books should worry that the doors seem to be closing on the Barbara Kingsolvers of tomorrow.”

NOTES:

"Not a Simple Price War -- It's a Fight Over What You Get to Read" was published on the Huffington Post on October 28. Read the entire posting here, with references and attributions to document his points:

From the bookseller newsletter Bookselling This Week: “William Petrocelli is an author, a bookseller, and a former attorney. He spent a few years as a Deputy Attorney General for the State of California and then as a poverty lawyer in Oakland, California, before going into private practice. For the past 30 years or so, he has been the co-owner with his wife, Elaine, of Book Passage in San Francisco and Corte Madera, California.

Petrocelli is the author of ‘Low Profile: How to Avoid the Privacy Invaders’ (McGraw-Hill) and co-author of ‘Sexual Harassment on the Job: What It Is and How to Stop It’ (Nolo Press). He is also the author of the forthcoming novel ‘The Thirteen.’ ”