Two New Surveys Suggest That Book Price-Elasticity Is Getting All Stretched Out
Among the persnickety trends of 2002 was continued brow-furrowing from industry observers and surveyors about the perception that book prices are disastrously high (see article). Some have cited the ruinous effect of “increasingly ubiquitous remainders” on the one hand, and stunningly deep discounts at mass merchandisers on the other — both of which make people who pay “retail” price feel cheated. Others note that Len Riggio is hardly alone in pushing for more discount and lower prices, further pilfering publishers’ margins. And then, pity the poor book buyer. “Consumers are often baffled at the price tag attached to what appears to be little more than a mass of paper, cardboard, and ink,” declared Salon’s Christopher Dreher last month, worrying over that stumper, “Why Do Books Cost So Much?” The answer: hardcover fiction and nonfiction books don’t, at least from a historical perspective. Bowker statistics show that when adjusted for inflation, hardcover fiction prices have actually sunk by 2% over the past 25 years, while nonfiction hardcovers tumbled in real price by 27%. “I’m not very surprised,” political science professor Robert Sahr told Salon. “Trade books are one of the clearest examples of a completely discretionary purchase. They have to be price-sensitive.”
Still, the same numbers show that even when adjusting for inflation, mass-market paperback prices have shot up almost 40% and juvenile titles soared by about 60%. All things considered, Salon concluded, “what’s taken a huge bite out of America’s book budget is the rise of the trade paperback” — which has “supplanted those less expensive” mass-market titles and driven consumers to wallet-numbed distraction. “The prices are kind of astonishing,” as one sticker-shocked Barnes & Noble customer stammered to the New York Times late last year. “I keep putting things back because I look at the price.”
Price Elasticity: Stretched Out?
It doesn’t take a forensic economist to figure out why, according to a recent poll of over 1,300 visitors to the Book Reporter website, 57% of respondents said they had been buying used books for years — with 42% of the respondents citing price as the main factor. (Another 24% said they wanted to fill in their collection of an author.) More to the point, about 17% said they recently started buying used books, and roughly the same number said they had bought more than 10 used books in the past three months. But before you go and blame Jeff Bezos, consider this: by far the largest number of respondents shopped for used books at their local bookseller, and only 17% shopped for them at Amazon.com (perhaps poking a hole in the Authors Guild’s apocalyptic scenario whereby Amazon’s used-book sales will imperil literature as we know it).
Of those survey respondents that did troll for used volumes at Amazon, 41% said that if offered the used book on the same page as the new one, they’d buy the used one if it were more than 50% off. However, 38% would still buy the new book. (Taking another tack, the New York Times reported that customer loyalty at Amazon seems much higher than at BN.com: a 1% price increase at Amazon reduces sales there by half a percent, while the same increase at B&N spurs a 4% sales drop — eight times as large.) Also of note in the survey, when respondents were asked what one format they would choose if price were not a factor, 55% said they’d buy a hardcover. “To me that indicates it’s not about rising paperback prices,” says Book Report founder Carol Fitzgerald. “It’s all about the price of the hardcover.”
Meanwhile, as the swivel-screen dawn of the Tablet PC rekindles e-publishing visions, consumers may soon wonder why ebook prices are so high, according to a separate study. In the Open eBook Forum’s “Consumer Survey on Electronic Books,” which was conducted at New York Is Book Country last fall and aimed to test ebook perceptions among the paper-friendly crowd, 61% of the 263 respondents said ebooks “should be priced the same as paperback books.” The upshot: “There appears to be little price elasticity by consumers for what they will pay for eBooks.” The OeBF’s antennae were all akimbo over a different result, however: “Contrary to a commonly held industry belief, results indicate no correlation between computer skills or daily Internet use and downloading an eBook,” the OeBF reported, hammering home the idea that heightened awareness of ebooks would be the format’s prime mover. And 70% of respondents said they’d buy an ebook “if it could be read on any computer.” As the study noted: “The consumers want to read the eBook they bought on their home computer, their handheld organizer, their laptop, their personal digital assistant, and their dedicated eBook reader.” And again, regarding general book prices, the largest share of respondents said they shopped at discount bookstores.
Dodging the ‘Death Spiral’
Yet it may turn out that backpedaling on list prices is no surefire remedy for sluggish sales. There are zillions of bargain books out there to placate the price-sensitive, contends industry consultant Mike Shatzkin. “Because the act of reading a book requires a bigger commitment than money — which is many solitary hours of a person’s time — it is doubtful that price-cutting will draw too many non-readers to become readers,” he argues. Shatzkin also implicates book returns as a key driver of price inflation. “Returns have been rising,” he pointed out in a recent online debate on pricing issues, “and those books manufactured and not bought have to be paid for by the books that are bought.”
That may be so, but it doesn’t mean publishers can simply tweak the supply chain and go back to business as usual, responds Publishers Lunch founder Michael Cader, who has sounded an alarm over modern-day publishing’s “mathematical death spiral”: the toxic convergence of stagnant book dollars being spent, increasing book prices, and increasing numbers of both new and used titles on the market. In Cader’s view, boosting book sales means going back to the beginning. “To prosper, the business needs to grow. And to grow it needs new buyers,” he notes. “We spend the very early years reading to children and encouraging them to enjoy the practice and see it as a window on their world. And then we turn them over to the textbook publishers, a medicine-flavored scholastic ‘canon,’ and a marketplace with little that appeals to ‘tweens’ and, yes, one that they see as expensive.” As for adults, Cader sees hope and an instructive lesson in the significant growth in deep-discounted frontlist sold at warehouse clubs and other non-book discounters. “People who aren’t supposed to be core book buyers are grabbing what they see as an attractive deal on impulse. To me that alone says something powerful about how price can correlate to growth.”
