Predatory Pricing, or, What Happens in a Country Without a Fixed Book Price Agreement

Following on last week’s post about the benefits (or in the eyes of Kim Heijdenrijk, the non-benefits) of a Fixed Book Price Agreement, I found this article by Stacy Mitchell about the shift in book sales from B&N and Borders to Costco, Target, Wal-Mart, etc.

It’s a pretty interesting piece about the impact of selling media (books, CDs) as loss-leaders. Not necessarily rocket science: big box stores sell books at a loss, take over huge chunk of the marketplace (they now have a 30% market share—which is as large as B&N/Borders), then, once competition is sufficiently weakened and damaged, they cut the number of books they sell, raise prices, and go on their merry way selling toasters and whatnot. (And returning massive amounts of the books they do carry. I’ve heard from a few sources that Costco’s return rate is in the 60% range. Which means that if you’re lucky enough to have a book that Costco wants to carry, you’re guaranteed to lose a ton of money. Fantastic!)

The section of this essay that I found most interesting—and which relates to the whole FBPA issue—is the bit about predatory pricing:

Selling goods below cost in order to drive competitors out of business — a strategy Wal-Mart first employed against small-town drugstores in the Midwest in the 1980s and now uses for nationwide assaults on entire product categories — is technically illegal. But U.S. antitrust enforcers have taken a very lax attitude toward predatory pricing and other antitrust violations ever since the Reagan Administration.

The consequence is an economy where power is so concentrated that it undermines the free market itself and threatens our individual liberty within it. Bullied and financially squeezed by mega-retailers, manufacturers have little choice but to focus on producing a narrow range of products that suit these companies’ needs, while cutting support for competing retailers and eliminating investment in new products, writers, and artists.

This is the sort of thing that the FBPA is trying to prevent . . . And since we’re pretty far afield here (I swear, the next post will actually be about translation and books), ti seems only fitting to include the video of Douglas Rushkoff’s appearance on the Colbert Report. Douglas’s book — Life Inc.: How the World Became a Corporation and How to Take it Back — is a very interesting examination of the role corporations have played in our history and have shaped so much of our world. Very interesting book, and very entertaining interview with Colbert: