Book Prices and the Public

THE statistics of book publishing have always proved of special interest to the public, which has so large a stake in this small but socially important industry. One must know some of the facts about book distribution to understand the bitterness of the price wars now centring around those books which in one year after another rise to the top of the best-seller lists. Such titles supply prime material for what the retail trade terms a ‘loss-leader.’ Competition is developed, whether between the large department stores or the chain drug stores, each anxious to demonstrate, by selling without profit or lower, that it is the real friend of the people. That small bookshops, with no other merchandise on which to recoup losses, cannot afford to engage in this price cutting is generally overlooked.

The natural response of the public to such price wars is in favor of broader fights with all honors to the ’social benefactor’ who starts them. The consumer thinks first of the cheap price, and anyone who would suggest that a book price war is not wholly beneficent starts under a considerable handicap. However, the policing of business practice developed by the NRA, the recent fair-trade legislation in many states, and the notable decision of the Supreme Court in November 1936, have shown that there is a good deal more to the problem than first meets the eye.

In studying fair-trade practices in the field of books we should remind ourselves that the policy of fixed prices, uniform in all shops, has been steadily increasing as a business habit for many years. Most of our reading matter — perhaps 90 per cent of it would be a fair estimate — is to-day sold to purchasers at standard prices set by the publisher. The large organizations which produce popular reading matter have sufficient control over distribution so that they can maintain whatever price they decide to put upon the merchandise. It is chiefly the new — and popular — titles which are exceptions from uniform practice.

It is conceivable that newspapers, for instance, would make good ‘lossleaders.’ A cut, however small, in the two hundred and some million dollars spent annually on this kind of reading might be welcomed by the public. Take a New York suburb where a morning paper costs three cents. A railroad, by cutting the price on the news stands to two cents, might lure quite a bit of traffic from the competing line. We know, of course, that this does n’t happen. The newspaper publisher and his distributing agent would give such price cutting short shrift.

Our largest expenditure for reading matter goes to newspaper owners. It has been estimated that, of the forty million readers who buy newspapers, thirty million buy magazines. And here again the nickel, dime, and quarter levels are everywhere maintained, even on stands where ‘ nickel ’ candy is three for a dime. A year’s subscription to a magazine is less, to be sure, and a club rate may go lower still, but these levels are set by the publisher, and he can, if he wishes, legally cancel a subscription taken at an unauthorized price. The government itself is convinced of the soundness of maintaining prices: it prevents the price cutting of government publications. It would prohibit the price cutting of stamps.

So we return to books. I want positively to insist on four points — points often overlooked by those who see in a system of maintained prices a possible public loss. First, the majority of books are now sold at uniform, maintained prices; second, there is little reason to fear that, were maintained prices established throughout the country, new books would ever be priced needlessly high by the publisher; third, every other country which produces books provides for the maintenance of uniform prices and would consider any other plan unthinkable; and fourth, only by applying uniform price methods to all books can this country attain the breadth of distribution which our population and literacy demand. Wide distribution is of all factors the most influential in bringing about lower price levels.

I have said that most books are sold at uniform prices to all. The book publisher fixes the prices and maintains them just as do the publishers of newspapers and magazines. Such, for example, is the case with legal, medical, and scientific books; such is the case with encyclopædias, reference books, and the volumes, whether technical or general, sold by canvassers. Such practice applies to most schoolbooks: they are usually sold direct to schools at prices controlled by the publisher. Many states provide by law that books which they have adopted shall be priced at the lowest denominator common to other states. Finally, there are the millions of books sold in the chain stores at a fixed price of ten or twenty cents. These books are never sold at cut prices. And again I would point out that such low-priced reprints — the lowest-priced bound books in the world to-day — are only made possible by a huge distribution.

The present problem, then, centres chiefly with the so-called ‘trade books’ — that is, the new books of the day with which authors, publishers, and booksellers are currently trying to meet the public’s needs and tastes. Perhaps a score of these each year will pass the sale of 100,000 copies. Although few in number, these best sellers will be responsible for some 20 per cent of a bookstore’s annual business. Naturally, these are the candidates selected as ‘loss-leader’ merchandise. The publishers hate to see their leading books cut in price, but they have been prevented from assuring uniform price levels because they do not control their outlets. Ironically enough, our antitrust legislation places its restrictions not on large units which can control both production and distribution, but on the independent producer who must face the competition of open outlets.

This handicap of the independent still persists despite the somewhat prophetic words written over twenty years ago by Justice Brandeis: ‘There is no improper restraint of trade when an independent manufacturer in a competitive business settles the price at which the article he makes shall be sold to the consumer. , . . There is no danger of profits being too large as long as the field of competition is kept open; as long as the incentive to effort is preserved, and the opportunity of individual development is kept untrammeled. And in any branch of trade in which such competitive conditions exist we may safely allow a manufacturer to maintain the price at which his article may be sold to the consumer.’

To counter the fear that the public might suffer were book prices maintained, let me say that no merchandise offered to the public encounters such extended competition as books. If a prospective buyer wants a book, he first can get it free from a local, county, or state library; what other commodity is supplied so universally (and properly) out of tax levies? Or he can borrow from a friend; what other possession is lent so freely? Or he can buy a used copy; what secondhand merchandise is so commonly available? Or he can rent a copy from a lending library. Is it probable that the publisher is going to jeopardize his chances to sell his product by putting an uneconomic price on it? Bear in mind that his new trade books are in direct competition with allithe books of the past now in non-royalty editions, with reprints that bear low royalty and no plant cost!

That the public may trust price levels to publishers is the unanimous opinion of other book-producing countries. European observers of our price wars are aghast at the waste in this method, which takes retailing business back half a century to the days of price haggling. It is assumed in Europe that an industry may come together to encourage distribution by uniform prices whether the industry be a large unit controlling its own outlets or smaller organizations where coordination is necessary. No one in this country seriously believes that European price levels on new books are higher than they ought to be because prices there are maintained.

Great Britain established the net, uniform price system in 1899. The book industry, publishers and booksellers, regard this agreement as the Magna Charta of the industry and as the basis of all recent progress in the business of books. It is worth noting that when, during the war, the British Government investigated the retail margins of merchandising, the fixedprice, identifiable merchandise was shown to have been handled on narrower profit margins than unidentifiable merchandise on which there could be no uniformity of price. Surely if the periodic price slashing which now prevails in the United States were the only road to the lower price level of current books, other countries would have taken the trail long before this.

It is pretense to suggest that the cutting of book prices is done in the interest of the public welfare. The policy of the ‘loss-leader’ is intended to suggest that the price levels of the store’s other merchandise — by far the largest percentage of its stock — are equally low. This is an effective method, because price comparisons of unbranded merchandise are difficult. This principle of the ‘loss-leader’ is better understood by the public now than it was a few years ago. Readers would do well to recall the words of Justice Holmes, a generation since: ‘I cannot believe that in the long run the public will profit by the Court permitting knaves to cut reasonable prices for some ulterior purpose of their own and thus to impair, if not destroy, the production and sale of articles which it is assumed to be desirable that the public should be able to get.’

Let the facts of the book business be laid on the table as fully as possible, the rewards of authorship, the costs of publishing, and the expense of distributing books. From the facts the public will better understand that public interest lies in a wider availability of books. This will only be made a reality through fair-trade practice with contracts to enforce uniform prices,to all and in all parts of the country. Wider distribution in a business as competitive as books will mean that the resources of the printing press can be used to produce more books at low price levels and even better books at the higher levels.