Not a Simple Price War -- It's a Fight Over What You Get to Read

October 29, 2009

By William Petrocelli of Book Passage in San Francisco and Corte Madera, California

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. At this point, 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." (New York Times, October 17, 2009). The American Booksellers Association saw things the same way, saying in a letter to Christine Varney, head of 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." (Bookweb.org, October 22, 2009)

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. Some readers think that if their favorite store closes they can always buy the book they want somewhere else. But that's a dangerous delusion -- the books they want may not be there at all. In fact, these types of disruptions in how books are sold or distributed have a profound effect on what publishers decide to publish in the first place.