Booksellers ask feds to investigate book pricing

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By Kelly Jane Torrance

Airline tickets, gasoline, video-game systems — a wide variety of products have been the target of price wars. It's been rare to see literature a part of that list, though, until now.

Amazon.com Inc., Target Corp. and Wal-Mart Stores Inc. are vying to undersell each other not on big-ticket items like big-screen televisions, but on mere books.

Wal-Mart began the battle by announcing its Web site would sell 10 of the most anticipated pre-orders of the season for $10. Amazon immediately matched the price, so Walmart.com lowered it again, to $9. Amazon matched that, and Wal-Mart went down a further 2 cents.

As it now stands, Wal-Mart is selling the titles for $8.98, Target is selling them on its Web site for $8.99, and Amazon has them for an even $9.

Those prices might result in bigger sales, but the 10 titles are mostly books destined to be best-sellers anyway. They include Stephen King's "Under the Dome," Dean Koontz's "Breathless," James Patterson's "I, Alex Cross," the late Michael Crichton's "Pirate Latitudes" and former vice-presidential candidate Sarah Palin's memoir, "Going Rogue: An American Life."

Hot books like these are often discounted, but not to this extent. With list prices ranging from $24 to $35, the $9 price tag means they're being sold at up to 74 percent off.

It seems like a pre-holiday bonanza for consumers, at least those who enjoy reading popular fiction, which makes up most of the list. But the American Booksellers Association is forcefully arguing that it's not.

The ABA last week sent a letter to the Department of Justice, asking its antitrust division to investigate the three retailers. The trade group said it thinks their pricing practices "constitute illegal predatory pricing that is damaging to the book industry and harmful to consumers." The price war, it warns, could eventually put the book business in the hands of a few big retailers that aren't really that interested in selling books.

Of course, the ABA has a vested interest in the matter — it represents locally owned, independent bookstores. Because books are all they sell, it's hard for them to compete on even terms with big-box retailers and online shopping giants, as they can't make money off other, less discounted items.

It's clear the Big Three are taking a loss on the best-sellers; as the ABA notes in its letter, "Publishers sell these books to retailers at 45%-50% off the suggested list price." That means Amazon is buying that $35 Stephen King book for $17.50 or more and losing at least $8.50 on each sale.

Some might see the ABA as a killjoy, out to rob the reading public of low-cost books. Yet if you value literature, it's difficult not to be sympathetic to the booksellers' plight. The rise of chain superstores Borders and Barnes & Noble already has killed off many of the group's members; now big retailers like Amazon, Target and Wal-Mart, along with discounters including Costco and Sam's Club, are set to finish the job and take Borders down with them.

If you've ever walked into a chain store — even a bookstore — and tried to find a lover of literature knowledgeable about the subject, you'll know why independent bookstores are so important to the nation's cultural life. Chain stores don't tend to employ people dedicated to the printed word; as one Borders employee told me, they offer a home to often transitional workers looking for work between jobs.

And nowadays at the bookstores, literature gets lost amidst the candles, lotions and knickknacks they're selling to increase profit margins. If a new writer has trouble getting noticed in between the new Stephen King and the new John Grisham, imagine how much trouble he has making a sale when there are cheap spa products to be had.

These weaknesses of the megastores suggest ways for independent bookstores to distinguish themselves in the marketplace. Amazon and the other retailers aren't offering deep discounts on every title, after all — they're only loss-leading 10. You can pick up that well-known best-seller anywhere, anyway. Maybe the independents should simply concede the best-seller market to the big-box stores and focus on the things they do much better — offer expertise, customer service and the ability to winnow intelligently a selection of the vast number of books published each year.

There is, of course, an ongoing shakeout under way in the book-retailing business, just as there was earlier in music retailing. And, just as many independent record stores disappeared, so will some booksellers, difficult as it is for my literature-loving heart to accept this pitiless market logic.

Yet if independent retailers were more focused on the future instead of fixated on enlisting the government, in the form of the Justice Department, to solve their business woes for them, they'd be better equipped to recognize and seize the newer, narrower niche-market opportunities that have arisen.