Before I start talking about the race to the bottom in online book pricing, I want to plug the latest book from Steve Weber. I read the draft when it was tentatively titled Internet Book Publicity and read the finished version, Plug Your Book ($18.99 at Amazon), last week in two sittings. Steve does a terrific job presenting the case for community based Internet marketing and laying out a strategy to for authors to follow. I'm not much of an online community guy myself, but I decided to take his book's advice about occasionally looking outside my own room for post material.
A week or two ago, a Marketplace Seller on Amazon mistakenly listed a couple of my titles as new for cheaper than he could have obtained them. I ordered one to make sure there wasn't some sort of shenanigans involved, then contacted the seller and explained that he must have gotten incorrect pricing info somewhere to think he could order new from Ingram and not lose money on the transaction. He confirmed it was a mistake, thanked me, and a few weeks later I got a refund credited. What I found interesting is what happened in the immediate aftermath to the marketplace pricing of my two titles which he had listed as available some 30% off the list price.
Since I use Lightning Source for for print-0n-demand fulfillment and there are never any remainders, true second-hand copies don't appear all that often in the marketplace and usually sell within a dollar or two of the cover price. However, when the incorrect low prices were listed by one seller, a race to the bottom ensued, and a few subsequent sellers, real people who resell every book they buy new, were tricked into offering the book for $5 or $6 less than they could have gotten. The whole genesis of the price war only took a few days, then the available used copies were gone and the marketplace prices rebounded to their normal levels.
I saw something similar happen to a book I authored for McGraw-Hill when it was still relatively new. The marketplace prices were usually within 15% or 20% of the cover price, and then a large number of remainders hit the market. I think it was CompUSA reorgainizing their shelves, and for a couple months, you could pick it up for an 80% discount. I should have bought them all on speculation. Eventually, the excess burned off and the prices for the used copies recovered to a more respectable fraction of the cover price.
I thought I'd take a look at Steve's Selling Books blog to see if he had anything to say about the book selling price wars, and oddly enough, he'd written about it just last Friday, with a twist I hadn't thought of. Apparently, some book buyers and some competing sellers take advantage of automatic repricing algos used by many sellers to get better prices or to hurt competitors.
It struck me how similar the online bookselling market is to the trading in low volumes stocks that goes on in the equity markets, especially in the pre-open and after-market sessions. Simply listing a price in an open system can affect what somebody else is willing to pay for something, or price their own something at. I just hope it doesn't lead to a whole new generation of spammers sending out e-mails for pump-and-dump schemes on used book titles!