Book Wars

I love it whenever book publishing makes the business pages, and it’s there now, bucko. Lemme see if I can run it back for you.

Wal-Mart is sick of being encroached on bestsellers (which is pretty much all they carry, though they sell pallet-loads of them) by the likes of Amazon, and continues to maintain that in-store satisfaction trumps having to wait for your stuff to arrive in the mail. Separately, Amazon announced same-day service in larger cities if you order by 1 p.m., so there goes that advantage. Remember, unlike most retailers, Amazon lets you sample, and read reviews by other customers, from the comfort of your own home. That’s why they started with books in the first place: if you can see the cover, get a sense of what’s inside, you don’t need to touch-and-feel.

So Wal-Mart came up with a holiday promotion: its top ten upcoming releases for $10 apiece. To Wal-Mart’s apparent surprise, Amazon said, OK, us too! It’s the opposite of a bidding war, but the two entities – along with Target, which is kinda watching helplessly from the side – have essentially auctioned the price downward to $9. Wal-Mart lopped it by a penny, to $8.99. That’s the everyday holiday-season low price for new books by Stephen King, John Grisham, Barbara Kingsolver, Michael Crichton, and a brand new author named Sarah Palin.

Now, King’s book is a thousand-page doorstop that sounds like fun, but it will cost you only $8.99 at Wal-Mart, $9.00 at Amazon – that’s as of today, because this is a “breaking” news story. Several of the publishers are delaying e-book editions of these tomes until Christmas Eve, reasoning that if you get a Kindle for Christmas, you can still download the new King that very day – for $9.99. In other words, this promotion will make the e-book retail price one dollar more expensive than the print edition.

Why isn’t King screaming? Well, he is noting the idiocy of this price war – because besides being one of the earliest champions of e-publishing (he sold an e-story direct a few years ago, and wrote a short story especially for new Kindle owners which works the Kindle into the plot), he’s also sympathetic to newer authors who aren’t getting the benefit of this “loss-leader” pricing. And as a practical matter, he isn’t losing a penny on the promotion. See, publishers sell new hardcover books to retailers for roughly half the list price, which in King’s case is $35.00. (To make it even sweeter, these books are on consignment: you can send them back to the publisher, on his dime, if you don’t sell them. That’s how you get those towering spiral displays at your local B&N…and there is no local Amazon.) So we’re working with a cost of around $17.50 per copy, meaning that anybody who sells an UNDER THE DOME hardcover for $9 is losing about $8.50 per copy, while King, his agent and his publisher are receiving full freight. Movies don’t do that. Recordings don’t do that. You get your deals on what’s called the “catalog” in records, the “library” (!) in movies, and the “backlist” in books. You make your continuing profit on the end of the “long tail,” those works you presented and paid for long ago, but you do not discount your hottest and most expensive stuff! And the publishers, indeed, are not doing this either: it’s the retailers!

Why would retailers aim at their own feet and pull the trigger? The theory is that it’s to preserve customer relationships, which are very difficult and expensive to establish. Book publishing is not a zero-sum game; just because you buy the new Harry Potter doesn’t mean you won’t continue shopping, and any real pro welcomes any blockbuster, because it gets people into the stores (both bricks-and-mortar and virtual). In Wal-Mart’s case, it may be simple corporate testosterone: goddammit, we will not be undersold! But what it’s more likely to do is upend the math of bestseller pricing, just at the worst possible time: when publishers are struggling to raise the $9.99 price point which seems to be emerging for bestselling e-books. I know for a fact that Amazon has been experimenting with e-pricing, because on at least three occasions I’ve refrained from a Kindle purchase of about $15, waited for it to settle to $9.99, and pounced. The tiny bit of Amazon’s database represented by my purchases says, price matters to Kindle owners. Also note that all the tusslers also sell something else. You may have already noticed that Barnes & Noble.com is nowhere to be seen. This is because they have no way to make back loss-leader losses on anything except books!

I’ve said this in a previous post, but if the publisher doesn’t have to pre-sell, print, warehouse, ship, or accept a return for my e-book, then even the $17.50 for King which includes costs for all those line items is far too much. Look, I’m all for generously paying the hard-working editors, copyeditors, managing editors, and whales of other back-office people you’ve never heard of for their unsung and ill-rewarded heroics. But King’s publisher, by its pricing, has informed us that they can pay these folks and make a profit at way less than $17.50 (assuming those other costs, for shlepping stacks of paper around, were not attached to each and every copy), as King’s book works its way into paperback and onto the “backlist.” So I’m offering to take some of their money off the table and buy a fairly-priced e-copy right now! And sure, I can easily wait a month or so to dig in electronically, to give the print edition its own window of exclusivity. But if the retailers start undercutting themselves, in the same kind of frenzy that attends book, movie or record auctions (and causes serious buyer’s remorse more often than not; trust me on this), to convince customers that $8.99 is the loss-leader price for a thousand-page novel, then the business is in serious turmoil, which happens to be the case right now. “You changed the rules!” the slimy Ben Linus screamed in my favorite television program. Yep, they’re changing right before your eyes. Does this all mean the comical pricing is “predatory,” which the Feds have never liked? Stay tuned. But this holiday season, it might be cheaper than ever before — or ever again — to curl up with a good book.