24 July 09 | Chad W. Post

Generally speaking, I’m a fan of the “fixed book price agreement” that’s in place in a number of countries around the world. (At least 18, according to Wikipedia, aka America’s Best Source of Information.) I’ve mentioned a few times in posts here on Three Percent, always emphasizing the way that it slightly levels the playing field by preventing massive corporations from offering discounts on shitty best-selling books that are so deep that no independent store can possibly compete.

Harry Potter is the ultimate example of this. Several major retailers (ya’ll know who they are, and they know as well) essentially sold Harry Potter at a loss in order to increase the number of sales and customers. (I remember when I was at Quail Ridge Books, it was cheaper for us to buy copies of HP from Costco—god help us all—than it was to purchase them directly from Scholastic.)

One of the main arguments for the fixed book price—which, if I haven’t made this clear, is a law that ensures the same book is sold at the same price at all outlets—is that it allows smaller stores to carry a more diverse stock. It sort of hampers the blockbuster model and, in theory at least, promotes a more healthy book culture in which presses can publish poetry and survive, and bookstores aren’t overrun with stacks of shitty popular books.

All that said, I was pretty surprised to come across this essay by Kim Heijdenrijk about why the fixed book price agreement (of FBPA) is damaging to independent stores.

Living in a country that prides itself on its insane laws protecting free economic principles, I probably shouldn’t comment on how well (or poorly) the FBPA actually works. But wtf, it’s America, I’m writing for a blog, etc. So, here’s Kim’s main arguments, and my socialist cautionary counter-arguments.

It was then that I learned how much is earned on a book. Or better said: how little. And this particular shop got quite a big margin, since it is so large and well known. I was shocked. When speaking to my boss about it, he merely said: “Why do you think we also have a music store, a coffee shop and an office supply store?”. Point taken. It is almost impossible to survive on the sales of books alone. Even with a relatively big margin.

This particular Dutch bookstore is very fortunate. A success story if you will. But only because of the business strategy they chose. Books as a core business, other products to stay afloat. How many independent booksellers are in the position to do this? How do you get people to buy at your shop instead of the big chains that are on every high street? The obvious – if not the only – way is to do what supermarkets do. Have a sale. Lower the prices of particular products, in this case particular books. A very good idea, if the Fixed Book Price Agreement did not forbid it.

OK, yes, price is one factor on which a business traditionally differentiates itself, but really? As stated in paragraph one, the margin for books is pretty much shit. So a sale will only effectively improve your long-term business if the people you attract through temporarily lowering prices are converted into loyal customers. And unfortunately, that’s pretty unlikely. The second an independent store starts offering a discount, a chain store will offer a larger one. And if the tacit assumption is that customers are “rational economic agents” (this is a bullshit pro-capitalist belief, but I’m going to let it ride for now) that make decisions primarily because of price, they’ll end up shopping at the indie store’s competitors.

Now the idea behind the FBPA. The idea is that bookshops make the most money on bestsellers. These books, like Harry Potter or the Da Vinci Code, cost little effort to sell. And hardly any advertising money for the bookseller, because these books get enough exposure. Without the fixed book price, a bookshop could offer these books at competitive prices to lure readers into their shops. With the fixed prices, the booksellers loose [sic] this advantage.

Wait a second here . . . So, you have a handful of mega-bestsellers, books that you don’t have to do much of anything to sell by the gaggle, books that you could sell at regular retail price and no one blinks—these are the books you want to sell at a discount? In an industry in which breaking even is a pretty significant accomplishment, this seems like a bad decision. Bookstore owners cherish the time when they actually made money on books like Harry Potter instead of fighting to breakeven, or having to expend a ton of rhetorical energy to convince customers to pay the extra $2 and buy the book from an independent so that that store can continue to serve its local community. Overall, this point seems massively misguided.

The publishers want the bookstores to promote lesser known – more specialized – books instead of the ‘high flyers’. They want to create ‘bibliodiversity’, as is stated in a paper by the International Publishers Association. To make sure that the shop owners practice this innovative word, the publishers offer a guaranteed/larger margin on the bestsellers. This way everybody wins. The publisher knows that the ‘big’ books will sell anyway and therefore they can give a good profit margin to the bookseller. The bookseller should be able to fund the promotion of the ‘small’ books because of this. And they live happily ever after . . .

Exactly.

The so called ‘benefits’ for these little shops can only be viewed as ludicrous. The fixed book price would protect them from the competition of supermarkets in their area that sell books at bargain prices. For this reason the independent bookseller in less convenient places would have a better chance of survival. I would advise the creator of this benefit to pick up an economy book. [Again, sic] The buyer of books in the supermarket is, of course, an entirely different person than the one purchasing a book in a bookshop. The books available at supermarkets are there for the impulse buyer. A person who does not read a lot and heard from a friend that he should read a certain book.

Veering off for a minute into socio-economics (and a totally different topic), I’m pretty much against books being sold in supermarkets. Not only is the selection totally weak, but Wal*Mart/Sam’s Club/Costco detract from the public perception of the bookstore as a unique, worthwhile business. Books in supermarkets are pure commodities, no different than frozen peas. There will always be a specialized group of bookstore lovers who would rather shop for real literature in a real bookstore, yet there’s a growing number of people who believe literature equals the latest Jodi Picoult book on sale for 25% off right next to the super-sized tub of KitKat bars. (I believe they call themselves “Pi-Cultists.”) Yeah, that’s what the world needs now.

One thing Kim doesn’t bring up are the other ways independent bookstores could differentiate themselves in lieu of discounts. The shopping/browsing experience is influenced by space, by design, by customer service. Independent stores tend to be more community-focused and customer-oriented than their corporate equivalents, and also tend to know a lot about actual books that they can recommend to their clientele. There are many more value-added aspects a store could emphasize than price. Trying to fight Goliath by knocking $1 off the list price is a slippery slope to utter bankruptcy.


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