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Director’s Desk:
Daring Dreams

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At the November board meeting of PMA, we decided to develop a theme for the year that exemplifies the PMA member spirit and profile–Dare to Dream. So, in this and all future issues of 2002, you’ll see stories of members who have dared to think outside the box and have achieved.

In our industry, achievement is measured too often in terms of number of units sold. While those numbers mean profits for many, for others achievement comes in sending a specific message to a specific group of people–no matter what the number is.

We encourage you all to join us in our Dare to Dream drive. Send us your stories of success and how you went about achieving your goals. Who knows, maybe sometime over the next 12 months, you’ll see your story and your title featured in the pages of this newsletter!

Send your stories or ideas to me at jan@pma-online.org and I’ll send them along to our Editor-at-Large, Judith Appelbaum.

 

Industry Issues

If you don’t already get PW Daily–the daily electronic version of the once-a-week publication Publishers Weekly–I suggest you subscribe today. This e-publication will keep you aware of what’s going on in our industry and help you to understand some of the outside influences affecting the ways our industry moves and changes. If you currently subscribe to Publishers Weekly, you automatically receive PW Daily. If you want to subscribe to PW Daily only, visit http://publishersweekly.reviewsnews.com/. You can do a search for “PW Daily” and then you will be prompted on how to sign up for this once-a-day electronic newsletter.

On December 3, PW Daily contained the following story:

Riggio Wants Level Playing Field; Bezos Lower Prices

 

In separate discussions with analysts last month, Barnes & Noble chairman Len Riggio decried publishers’ discount policies that favor nonbookseller accounts over traditional booksellers, while Amazon.com chairman Jeff Bezos said he remains committed to lowering prices for books.

Riggio said he was “befuddled” as to why publishers give better discounts to nonbooksellers than to booksellers. “Our argument is, if you can give better discounts to Home Depot or whoever than to booksellers, why don’t you give us the same discount?” Riggio said.

According to Riggio, the publishers’ typical response is that they can’t give B&N a better discount because they would have to give “the little guy” a higher discount, too, and “wouldn’t make any money.”

Riggio professed he was “puzzled” as to why publishers charge higher prices to their biggest market than they do to marginal accounts and rejected arguments by publishers that nonbookseller accounts are new accounts and are thus entitled to a better discount. “We’re owed a fair deal,” Riggio said. “Small booksellers are owed a fair deal. All booksellers are owed more.”

Riggio noted that video game and music suppliers recognize that they need to provide some benefits to major retailers in order to keep those retailers in business. “Publishers don’t see it that way,” Riggio stated.

Riggio advised that “at some point, we’re going to take decisive action” to remedy the discount situation. “We will try to persuade suppliers to be fair to us,” he said. Riggio said B&N is not looking to “wring concessions out of people” but will simply state its case that “this discount schedule should apply to us because it applies to others. We’re not asking for more.”

Bezos, meanwhile, emphasized that Amazon’s business plan calls for it to provide products to customers at the lowest price possible. He said Amazon’s estimated 7% share of the book business was “about the right amount for the customer value proposition that we offer.” To increase its market share, Bezos said Amazon intends to improve the customer value proposition by making its technology easier to use and by driving costs out of the business that will allow it to reduce prices.

Bezos explained that Amazon divides the book business into two segments: books that are less than $20 and books that cost more than that. Discounts for books below $20 don’t excite customers much, Bezos maintained, but discounts for more expensive books are a great marketing tool. By driving down its own costs, Amazon plans to “relentlessly reduce prices” on higher-priced books, Bezos promised.–Jim Milliot

What is missing here in your opinion? Is it an understanding of publishing from the publisher’s perspective? I think so. I don’t think that anyone disagrees with the level playing field approach as long as it is really level. Does this mean that B&N will consider purchasing titles on a nonreturnable basis, as do many of the nonbookstore retailers who get a larger discount for doing this? When Mr. Bezos states that he’s going to drive down costs at Amazon.com, does he mean that he will reduce the price of the high-end books without requesting further discounts from publishers? I doubt it.

In today’s market, publishers’ margins are thin as it is. Further discounts and/or reduction in prices will mean a higher suggested retail price for most books since this is the only way we can accomplish what Mr. Riggio and Mr. Bezos want.

Is anyone considering what effect a higher cover price will have on the general public? In other countries around the world, books are really a luxury item because of their prices. In the U.S., we have been extremely fortunate in obtaining books at reasonable prices. We want to attract as many readers as possible and we do this by pricing the books so that any family, no matter what its income level, can afford them. I hope that all people within our industry can develop ways in which we can all be profitable and still provide the public with an affordable way to be informed, educated, and entertained.

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