The Predatory Pricing – Booksellers Charge It’s Not A Work Of Fiction

What do Sarah Palin and Stephen King have in common?

The answer is not a punchline to a bad joke, it’s that both have books that are selling at 1950s prices, which a group of booksellers view as predatory and worthy of investigation by the U.S. Department of Justice.

The American Booksellers Association (ABA), a 109-year-old trade organization representing the nation’s locally owned independent booksellers, wrote a letter last week to the DOJ urging it to investigate the price war between Amazon.com, Walmart.com and Target.com, and requesting a meeting with officials as soon as possible.  As was widely reported, the three online retail giants began selling new hardcover bestsellers, including books from Stephen King, Sarah Palin, Barbara Kingsolver, John Grisham, and James Patterson, for between $8.98 and $9.00.

The booksellers allege that the retailers are selling the books at predatory prices – below cost – as loss leaders to attract shoppers who then purchase more costly items.

The ABA stated that publishers sell books to retailers at a percentage off the suggested list price and there is a ceiling on the amount of margin a book retailer can earn.  By selling titles below the cost that the retailers pay to the publishers, the ABA argued, Amazon.com, Wal-Mart, and Target “are devaluing the very concept of the book,” adding that: “authors and publishers, and ultimately consumers, stand to lose a great deal if this practice continues and/or grows.”

The ABA argues that on the surface it may seem that the lower prices “will encourage more reading and a greater sharing of ideas in the culture” but, if left unchecked, “these predatory pricing policies will devastate not only the book industry, but [the] collective ability to maintain a society where the widest range of ideas are always made available to the public.”

It will be interesting to see whether the DOJ takes any action and how the retail giants respond.