Friday, July 29, 2005

An apt description

Today's Times prints a letter from Terry Maher, chairman of Maher Booksellers Ltd. In it, he discusses the discounting of the latest instalment in the Harry Potter saga.

What has happened, as you are doubtless aware, is that almost no bookshop on the entire planet has sold the new Harry Potter book at the price 'fixed' or suggested by the publisher. Instead, everyone and his brother have been selling it at a massive discount.

In the UK the nominal price is £16.99, but Amazon, for instance, offer it at £8.99.

Maher describes this process as 'a form of commercial suicide.' And of course he is dead right. That's exactly what it is. It is also a form of lunacy.

Maher expresses the hope that this mistake will not be repeated. But it's exactly what happened with HP5 (and the others, once they became famous), so why on earth should the next, and last, one be any different?

And when, one might ask, was the book trade ever a sensible business to be in, from a commercial point of view? Businessmen with experience in other markets, who blunder briefly into publishing and bookselling, soon realise what a nonsense it is and retire hastily.

Luke Johnson, for instance currently Chairman of UK Channel 4 TV, once owned a book publisher and found it ‘a painful experience.’ Generally, he said, publishing is a ‘terrible business… a barely rational industry.’ The cash-flow characteristics are unattractive. ‘You ship finished volumes to booksellers who only accept them on a sale or return basis, and demand at least 55 per cent trade discount, and pay 120 days later.’

In the circumstances, to describe the HP discounting as a form of commercial suicide seems quite restrained.


paulv said...

Verily, to sell at a discount a product for which there is ferocious demand makes little economic sense. There must be a rationale for it somewhere, but it's hard to understand what it might be. With Harry Potter, the publisher would be in a position, theoretically, to auction a limited number of books to sellers, and get their cash up front.

In the movie industry, ticket prices have always been constant (with exception of "cheap Tuesdays"--now defunct here). It's hard to imagine the release of a known blockbuster movie, such as, say, Harry Potter, being promoted with reduced ticket prices.

So what is up with that? A suitable topic for elucidation by the GOB!

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dsimom said...

Actually, it's not so crazy to me as a parent. There is an economic characteristic called Good Will that this publisher seems to be taking full advantage of. If HP 6 becomes hard to find, they reduce their reader base by those who won't be bothered. That is, the percentage of the population who will simply wait their turn on the public library reservation list. No royalties are made off of library reservation lists.

Rather, develop good will with a growing population of parents who appreciate a value and wouldn't pay hard-cover price for a children's novel. Not only do they retain their current purchasing base, but also increase it by more readers who choose to jump on the HP bandwagon, buy this book along with 1-5.

Later, when HP 7 comes out, you have an increased number of readers awaiting the next installment. You can quote even higher sales numbers for not only HP 7, but also for any other series you publish as a publisher or any other series JK Rowling writes.

7 books is a pretty long run for a hardcover children's series. Seems like they are protecting their shelf space for HP7.

The publisher has done an excellent job with keeping the shelves stocked. And always, the more copies you sell, the higher the profit on each.

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the true is that I'm not a great fan of this saga, actually I don't like Harry Potter, however I can't denied the great success obtain it by this movies.

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