BETWEEN THE LINES

Book Talk by Joe Neri


Best Seller Loses Money!

This summer witnessed the biggest event in the book business for 2005 - the publication and release of Harry Potter and the Half-Blood Prince, the sixth book in a seven-book series by J. K. Rowling.

Whether or not you are a Harry Potter fan, any time a book sells over 6 million copies in its first week of release, it is worthy of attention.
Even bigger news, however, is that, according to Publishers Weekly, Amazon.com cornered about 25% of the initial market for Harry Potter and the Half-Blood Prince - and lost money in doing so.

Amazon.com decided to sell the Harry Potter book at cost, the same price that it paid the publisher. It also decided to give a $1 rebate to every customer who bought the book. Amazon.com's policy of offering free shipping on most transactions reduced the bottom line even more. All in all, its business plan for this book couldn't do anything but lose money.

Using a “loss leader” to bring in new customers and/or to entice existing customers to buy more and other products is standard operating procedure for many retailers, especially the large chains. Amazon.com was simply counting on generating other, non-discounted, purchases from the same customers who bought the Harry Potter book. Unfortunately for Amazon.com, that didn't happen.

The bottom line is that the world's largest internet book retailer lost money on the biggest publishing event of the year.

As of this writing, data was not available for how Borders and Barnes & Noble faired with Harry Potter and the Half-Blood Prince. Their respective discounts on this book were similar to that of Amazon.com, so it's very likely that they also lost money on it.Before you start feeling sorry for these three behemoths of bookselling, just remember that these losses will ultimately be passed on through the pricing of other books and services. Someone has to pay for the business practice of discounting at or below cost, and, unfortunately, that someone is the consumer.