News & Reviews
ABA asks Department of Justice to investigate bestseller price wars
Edited Press Release
The Board of Directors of the American Booksellers Association
announced it sent a letter a
to the U.S. Department of Justice on Oct. 22, requesting that it
investigate practices by Amazon.com, Wal-Mart, and Target that it
believes constitute illegal predatory pricing that is damaging to the
book industry and harmful to consumers.
The ABA, which
represents independently owned bookstores with storefront locations
across the USA, sent the following letter to Christine Varney, Assistant Attorney
General, and Molly Boast,
Deputy Assistant Attorney General for Civil Matters and Antitrust
Division, who are in the Antitrust Division of the US Department of
Justice in Washington, DC:
We are writing on behalf of the American Booksellers Association, a
109-year-old trade organization representing the nation's locally
owned, independent booksellers. A core part of our mission is devoted
to making books as widely available to American consumers as possible.
We ask that the Department of Justice investigate practices by
Amazon.com, Wal-Mart, and Target that we believe constitute illegal
predatory pricing that is damaging to the book industry and harmful to
consumers. We are requesting a meeting with you to discuss this urgent
issue at your earliest possible opportunity.
As reported in the consumer and trade press this past week, Amazon.com,
WalMart.com, and Target.com have engaged in a price war in the pre-sale
of new hardcover bestsellers, including books from John Grisham,
Stephen King, Barbara Kingsolver, Sarah Palin, and James Patterson.
These books typically retail for between $25 and $35. As of writing of
this letter, all three competitors are selling these and other titles
for between $8.98 and $9.00.
Publishers sell these books to retailers at 45%-50% off the suggested
list price. For example, a $35 book, such as Mr. King's Under the Dome,
costs a retailer $17.50 or more. News reports suggest that publishers
are not offering special terms to these big box retailers, and that the
retailers are, in fact, taking orders for these books at prices far
below cost. (In the case of Mr. King's book, these retailers are losing
as much as $8.50 on each unit sold.) We believe that Amazon.com,
Wal-Mart, and Target are using these predatory pricing practices to
attempt to win control of the market for hardcover bestsellers.
It's important to note that the book industry is unlike other retail
sectors. Clothing, jewelry, appliances, and other commercial goods are
typically sold at a net price, leaving the seller free to determine the
retail price and the margin these products will earn. Because
publishers print list prices indelibly on jacket covers, and because
books are sold at a discount off that retail price, there is a ceiling
on the amount of margin a book retailer can earn.
The suggested list price set by the publisher reflects manufacturing
costs - acquisition, editing, marketing, printing, binding, shipping,
etc. - which vary significantly from book to book. By selling each of
these titles below the cost these retailers pay to the publishers, and
at the same price as each other, and at the same price as all other
titles in these pricing schemes, Amazon.com, Wal-Mart, and Target are
devaluing the very concept of the book. Authors and publishers, and
ultimately consumers, stand to lose a great deal if this practice
continues and/or grows.
What's so troubling in the current situation is that none of the
companies involved are engaged primarily in the sale of books. They're
using our most important products- mega bestsellers, which, ironically,
are the most expensive books for publishers to bring to market-as a
loss leader to attract customers to buy other, more profitable
merchandise. The entire book industry is in danger of becoming
collateral damage in this war.
It's also important to note that this episode was precipitated by
below-cost pricing of digital editions of new hardcover books by
Amazon.com, many of those titles retailing for $9.99, and released
simultaneously with the much higher-priced print editions. We believe
the loss-leader pricing of digital content also bears scrutiny.
For our members-locally owned, independent bookstores-the effect will
be devastating. There is simply no way for ABA members to compete. The
net result will be the closing of many independent bookstores, and a
concentration of power in the book industry in very few hands.
We would find these practices questionable were they taking place in
the market for widgets. That they are taking place in the market for
books is catastrophic. If left unchecked, these predatory pricing
policies will devastate not only the book industry, but our collective
ability to maintain a society where the widest range of ideas are
always made available to the public, and will allow the few remaining
mega booksellers to raise prices to consumers unchecked.
We urge that the DOJ investigate and request an opportunity to come to
Washington to discuss this at your earliest convenience.
ABA Board of Directors:
Michael Tucker, President (Books Inc.-San Francisco, CA)
Becky Anderson, Vice President (Anderson's Bookshops-Naperville, IL)
Steve Bercu (BookPeople-Austin, TX)
Betsy Burton (The King's English-Salt Lake City, UT)
Tom Campbell (The Regulator Bookshop-Durham, NC)
Dan Chartrand (Water Street Bookstore-Exeter, NH)
Cathy Langer (Tattered Cover Book Store-Denver, CO)
Beth Puffer (Bank Street Bookstore-New York, NY)
Ken White (SFSU Bookstore-San Francisco, CA)
Founded in 1900, the American Booksellers Association is a
not-for-profit trade organization devoted to meeting the needs of its
core members -- independently owned bookstores with storefront
locations -- through education, information dissemination, business
products and services, and advocacy. ABA exists to protect and promote
the interests of independent retail book businesses, as well as to
protect the First Amendment rights of every American. The association
actively supports free speech, literacy, and programs that support
local and independent retail shops. A board of nine booksellers,
representing thousands of members, governs the Association. ABA is
headquartered in Tarrytown, New York.
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