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Refreshingly Bitter And Twisted Observations On Life's Passing Parade.

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Friday, July 28, 2006

Do Used Book Sales Hurt Sales of New Books?

M. J. Rose reprints James Grippando's article “Buy New”: The Internet, Used Books, and the end of the World as We Know It.

Grippando argues that sales of used books hurt the sales of new books, especially mass market paperbacks. Because a reader can buy a used hardcover for considerably less than its cover price, no one will ever pay full price for a hardcover.

Grippando argues, "Is this really a bad thing? You bet it is. If this trend continues, publishers may well be able to publish only those authors who can earn out the bulk of their advance in the first few weeks of hardcover publication. That means fewer authors will get published."

What is Mr. Grippando's solution? First, publishers should get rid of remaindered books or deface them in such a way that they do not present an attractive alternative to new books.

Second, readers should be shamed into buying new books based on an unproven argument. Grippando writes, "Hey, it’s perfectly legal to buy used books, but people who do it should know two things. One, the author, publisher, and local bookstore make nothing on the resale of books. Two, diminished profits for the people—yes, we are talking about people, not just corporations—who write, publish, and hand-sell books leads to one inevitable consequence: fewer choices for consumers."

Mr. Grippando is beating a dead horse which has already been beaten before.

In the July 28, 2005 edition of the New York Times, UC Berkeley economics professor Hal R. Varian analysed the impact sales of used books have on new books. Here are the money quotes:

"When used books are substituted for new ones, the seller faces competition from the secondhand market, reducing the price it can set for new books. But there's another effect: the presence of a market for used books makes consumers more willing to buy new books, because they can easily dispose of them later.

But Mr. Bezos is not foolish. Used books, the economists found, are not strong substitutes for new books. An increase of 10 percent in new book prices would raise used sales by less than 1 percent. In economics jargon, the cross-price elasticity of demand is small.

One plausible explanation of this finding is that there are two distinct types of buyers: some purchase only new books, while others are quite happy to buy used books. As a result, the used market does not have a big impact in terms of lost sales in the new market.

Applying the authors' estimate of the displaced sales effect to Amazon's sales, it appears that only about 16 percent of the used book sales directly cannibalized new book sales."

Used books are not the problem. Mr. Grippando argues that the impact of used book sales will compel publishers to cut back on the number of authors and books they publish.

Good! Publishing today is structurally unsound. There are too many books chasing too few readers. Publishers should drastically reduce the number of books published. The consignment model of bookselling should be ended and the losses on returned books will no longer contribute to the price of new books.

Publishers must abandon the blockbuster and star mentality they now embrace. Pay all authors the same advance and royalty. Brand name authors with an established demand for their books will still get rich and the average debut author will be no worse off than they are now. But publishers will reduce the risk and resulting losses when a heavily hyped book flops if they don't invest millions in it.


Anonymous Lynne W. Scanlon said...

A complicated issue. I understand that used books (which are often brand new, never-read books sent for free to reviewers)are selling for as little as $.01 and the seller is making his/her money off the shipping and handling.

Of course, Amazon and B&N make money every which way: selling books in stores, selling books online, and taking a piece of the action from the independent "like new" seller using Amazon and B&N Web sites.

Making money is what it is about. Ask shareholders.

Yes, publishing needs a new model and a shakeout. I think they are acomin', perhaps compliments of Google.

Lynne AKA The Wicked Witch of Publishing

5:07 AM  
Anonymous Jeff Nordstedt said...

Somehow I missed it the first time I read it, but the point that I find most objectionable about Grippando's argument is his concern that used books will lead to fewer authors getting book deals.

Is this a bad thing? I actually think the best thing that could happen to the industry is to publish fewer books.

I am a baseball fan, and I sort of compare it to pitching. Due to an increase in the number of teams there are more professional pitchers in baseball now. But at the same time there is less pitching talent.

I find it hard to believe that the number of great authors has increased in-step with the big increase in the number of new books being released over the last 10 years.

If used books guaranteed fewer new books I'll start shopping tomorrow.

4:07 PM  
Blogger Peter L. Winkler said...


First, thanks for dropping in and commenting.

We both think fewer books would be better.

Correct me if I'm wrong, but you are arguing that publishing more authors means dilutes the talent pool.

The sticky wicket that your argument raises is which books deserve to be published? If you could have prevented half of last year's books from seeing the light of day, how would you choose whch to keep?

If you arbitrarily cut the list in half, do you think the remaining books would be better?

Since a books is a discrete object, I don't think that a good book can be harmed by the plethora of many bad books. I think the increasing number of books makes it that much harder to discover which books will appeal to me.

5:30 PM  
Anonymous Jeff Nordstedt said...

I guess what I really mean is that more books dilutes the publisher's attention span.

More and more books are just being pushed into the system in the interest of publisher's cash flow.

So more books does make it more difficult for you to find books that interest you because it is more likely that the publisher will spend less time marketing a specific good book because they are busy pushing through a bigger mediocre list.

Publishers all know which books on their list are the good ones and which are the ones they are just moving through.

So what is the best way to cut the fat? Well, I think the publishers need change their approach a bit. Each publisher knows where they would cut if they needed to cut their list by 25%.

7:39 AM  
Blogger Peter L. Winkler said...

" I guess what I really mean is that more books dilutes the publisher's attention span."

Thanks for clarifying.

Having been directly involved in publishong at Barricade Books, can you tell me, why do publishers publish books that, as you write, they are only "moving through?"

I wish some of the editors who read my proposals had been willing to make them some of the moving through books they publish.

BTW, what's going to happen to Barricade now? I was going to query one of the Stuarts. Can you tell me who is actually acquiring titles there now? Thanks.

9:47 PM  

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