As competition wanes, Amazon slashes discounts

Written by New York Times | Updated: Jul 6 2013, 09:25am hrs
July 5

Jim Hollocks first book, a true-crime tale set in Pennsylvania, got strong reviews and decent sales when it appeared in 2011. Now Born to Lose is losing momentum yet Amazon, to the writers intense frustration, has increased the price by nearly a third. At this point, people need an inducement, said Hollock, a retired corrections official. But instead of lowering the price, Amazon is raising it.

Other writers and publishers have the same complaint. They say Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money, has been cutting back its deals for scholarly and small-press books. That creates the uneasy prospect of a two-tier system where some books are priced beyond an audiences reach.

It is difficult to comprehensively track the movement of prices on Amazon, so the evidence is anecdotal and fragmentary. But books are one of the few consumer items that still have a price printed on them. Any Amazon customer who uses the retailers Saved for Later basket has noticed its prices have all the permanence of plane fares. No explanation is ever given for why a price has changed.

Bruce Joshua Miller, president of Miller Trade Book Marketing, a Chicago firm representing university and independent presses, said he recently surveyed 18 publishers. Fourteen responded and said that Amazon had over the last few years either lowered discounts on scholarly books or, in the case of older or slow-selling titles, completely eliminated them, he said.

Amazon says it is not belatedly trying to improve its anaemic profit margins.

We are actually lowering prices, said Sarah Gelman, an Amazon spokeswoman. We pay for these price decreases with relentless focus on improving our execution and this commitment to low prices is one of the reasons our print books business continues to grow.

Offered a list of random titles whose discounts had dropped, she said she would not talk about specific books. They included David Foster Wallaces essay on John McCain, which went from 20% off to 10%. Ellen Galinskys Mind in the Making went from 32% off to 24%. Jim Harrisons Songs of Unreason dropped from 32% off to 16%.

Higher prices have implications beyond annoyed authors. For all the hoopla around e-books, old-fashioned printed volumes are still a bigger business. Amazon sells about one in four printed books, according to industry estimates, a level of market domination with little precedent in the book trade.

It is an achievement built on superior customer service, a vast range of titles and, most of all, rock-bottom prices that no physical store could hope to match. Even as Amazon became one of the largest retailers in the country, it never seemed interested in charging enough to make a profit. Customers celebrated and the competition languished.

Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices.

Stephen Blake Mettee, chairman of the board of the Independent Book Publishers Association, said that Amazon was simply following in the tradition of any large company that gains control of a market. You lower your prices until the competition is out of the picture, and then you raise your prices and get your money back, he said.

Amazons experimentation with its pricing comes against a backdrop of tumult in bookselling and publishing. The justice department sued Apple and major publishers, accusing them of conspiring to raise the prices of

e-books as a defence against Amazon. The publishers were worried that Amazon was setting an artificially low price to gain control of the e-book market. (The publishers settled without admitting guilt. Apple went to trial and is awaiting a verdict.)

In its 16 years as a public company, Amazon has received unique permission from Wall Street to concentrate on expanding its infrastructure, increasing revenue at the expense of profit. Stockholders have pushed Amazon shares up to a record level, even though the company makes only pocket change. Profits were always promised tomorrow.

Small publishers wonder if tomorrow is finally here, and they are the ones who will pay for it.

One small non-fiction publisher, which requested confidentiality because Amazon is a crucial account, said the retailer sold its books at a discount ranging from 25% to 35% for years. Then, despite steady sales, the discounts began to shrink. Their most popular book this week was 16% off. For this publisher, that means less revenue and less profit as some buyers reject the more expensive books.

For Hollock, the Born to Lose author, the issue is readers, not dollars. His award-winning book, published by Kent State University Press, had a steep list price of $35 to begin with. In the authors view, Amazon is simply compounding the trouble by raising its price to more than $30 from $23. I see all these other books out there that are cheaper, Hollock said. I thought, Man alive, I dont know how Im going to compete.