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Friday, July 5, 2013

The Price of Amazon

The Amazon.com story is remarkable. Within living memory, bookselling was a local activity. A major city would have two or three large independent stores selling new books and other large, scruffier stores selling secondhand books. Paperbacks would receive wide if uneven circulation on bus station and drugstore racks. It was not a perfect system, but it had the advantage of being diffuse and thus hard to control. The hippie, black and women’s movements of the 1960s would not have been so successful in challenging authority without the bookstores, which made their ideas widely available and sympathetic in a way that television, for instance, did not.

That transmission system has now been largely dismantled, killed by high rents and new technology. With little discussion, Amazon has skillfully absorbed a large part of the book trade. It sells about one in four new books, and the vast number of independent sellers on its site increases its market share even more. It owns as a separate entity the largest secondhand book network, Abebooks. And of course it has a majority of the e-book market.

The company is a marvel in many ways. You can get almost any print book you want, by the end of the week! And Amazon will pay the postage! For book lovers, it was a dream come true. Amazon presents itself as less a company and more a public utility. One of its greatest accomplishments is the way it has made the future of bookselling seem as if it will inevitably be owned by Amazon.

One consequence of this shift is that soon no one will know what a book’s “real” price is. Price will be determined by demand and perhaps by whim. The first seeds of this can be seen in the Justice Department’s suit against the leading publishers, who felt that Amazon was pricing their e-books so low that it threatened their viability. The government accused the publishers of colluding to raise prices in an anti-consumer move. Amazon was not a party to the case,  but it emerged the big winner.

Perhaps as a result, the question of how Amazon prices books is now a radioactive topic with some publishers. While reporting my article in Friday’s New York Times, I tried to ask the University of Chicago Press why Amazon seemed to be cutting discounts on its books, effectively making them more expensive and thus possibly less salable. Laura Avey, promotions manager, replied: “This just isn’t something that anyone here is going to be able to comment on. Pricing questions involve proprietary information, and we just aren’t able to share that.”

One of the few publishers willing to speak his mind about Amazon is Dennis Loy Johnson, proprietor of the Melville House, one of the most interesting new presses since its founding in 2001. Melville had an immediate hit last month with a rediscovered article by James Agee, “Cotton Tenants.” But as sales slow in the days since publication, Amazon is charging more for it.

The price-tracking site camelcamelcamel shows “Cotton Tenants,” which lists for $24.95, moving from $16 on Amazon shortly after publication to $19.79 last week before falling back slightly to the current $19.23. If you were a few weeks late getting the news about “Cotton Tenants,” you paid 20 percent more.

But it is still cheaper than the neighborhood bookstore, assuming of course there is one left. Right?

“I don’t like the fact that there’s one retailer able to so massively underprice other retailers, especially in a business that so desperately needs more retailers,” Mr. Johnson said. “And I don’t like the inconsistency of the pricing, either â€" the raising, the lowering â€" because it sends a confusing message that good books are worth less, and because it encourages buying based on something other than the quality of the book. It’s just an unhealthy business if people are buying a thing mostly because of its price, not its quality. That’s how you sell widgets, not books.”

“Discounting, and especially inconsistent or shifting discounting, really messes with a publisher’s ability to price a book fairly and accurately to its cost,” he added. “You have to consider the fact that whatever price you put on the cover, Amazon is going to reduce it by as much as half â€" unless they don’t â€" or they may, but only for a while. But in short they’re going to make your book look like a thing with a cost lower than the one you placed on it.

“So do you raise the price, knowing they’re going to lower it, so that the price will then appear closer to what you need it to be? But if you do that then you’re screwing the more honest retailers who can’t discount. And we’ve gotten a long way from recognition of the fact that publishers have costs in making books, and that should have something to do with the price.”