commerce – Steamboats Are Ruining Everything

On disappearing bookstores

One of my favorite telling details, in the ongoing story of the vanishing of New York’s bookstores, is from a 1926 review by Edmund Wilson of the then-new uptown location of the bookstore Brentano’s:

One finds in the new Brentano’s the same admirable features as in the old: the varied and enormous stock, the easily accessible galleries, the comprehensive foreign departments, with clerks who are at home in the languages of the literatures to which they are accredited, and the fascinating display, in the basement, of the tables of periodicals from all over the Western world.

Working in a bookstore will always be cool, but in Wilson’s day, it was apparently reasonable to expect the staff of a top-of-the-line bookstore to be conversant in multiple languages. No doubt there are a few such staff still in New York today—McNally Jackson has very smart-looking foreign-language sections—but I’m pretty sure that such standards long ago ceased to be de rigueur. An article in The Guardian today by Oliver Conroy charts the decline, more plainly, in numbers:

In 1950, Manhattan had 386 bookstores, according to Gothamist; by 2015, the number was down to 106. Now, according to a count by the city’s best-known bookstore, the Strand, there are fewer than 80.

“Why are New York’s bookstores disappearing?” Conroy wonders. As possible explanations he cites competition from Amazon, a secular decline in the habit of reading (which I’ve written about before), and spikes in retailers’ rents, which are sometimes caused by real estate speculators. All of these are likely contributing—indeed, McNally Jackson’s Soho store is seeing its rent hiked from $350,000 a year to $650,000—but there’s another cause that I suspect is more powerful.

The economist Steven E. Landsburg spells it out in Can You Outsmart an Economist, a new book that hides key economic ideas inside the Trojan horse of dad-friendly mind-benders. After challenging readers to explain such mysteries as why people stand still on escalators, Landsburg offers a puzzle relevant to bookstores: “Why doesn’t Sony wants its TVs sold at a discount?”

Sony is far from the only company that insists on what’s known as “resale price maintenance” or, less charitably, “vertical price-fixing.” Most big-ticket consumer electronics items in America can’t be bought cheaper from one retailer versus another. Want an Apple I-phone? Want a Fujifilm digital rangefinder? Try to shop around, and you’ll quickly discover that the prices offered by all retailers uncannily coincide. The practice is completely legal. Antitrust law won’t allow a manufacturer like Canon to coordinate its pricing decisions with a rival like Fujifilm, but Canon is free to dictate independently the prices of all its brand-new Canon goods. All it has to do is require retailers to sign pricing agreements and refuse to supply stock to any who fail to follow instructions.

As Landsburg points out, it isn’t obvious why a company like Sony should “care about the retail price of its TVs.” Sony, as a manufacturer, only gets paid the wholesale price of its TVs, after all. If a retailer is willing to lower the retail price, cutting into its own profit share, why should the manufacturer mind? In general, a manufacturer expects to sell more units when the retail price is lower, or so the simple math of the supply-and-demand curve predicts. Why then do so many of the most successful companies selling in America think different on this question?

Landsburg explains:

If retailers are free to set their own prices, you’ll walk into Best Buy, latch onto a salesperson, ask questions for an hour, spend another hour playing your favorite You Tube videos on all the different display models, ask a bunch more questions, and then go home and order from Amazon, where the price is lower. Best Buy will soon enough get tired of this and either stop carrying Sonys altogether or stop displaying them.

Or go out of business, one might add, though Landsburg doesn’t mention that alternative. If price is invariable, on the other hand, retailers, instead of competing on price, have to compete by offering better service. If, as a manufacturer, you take pride in the quality of what you make, you want customers to have a chance to become more knowledgeable. In the corporate world, in other words, it’s widely understood—it’s a commonplace—that the only way to create a network of pleasant, thriving retailers is to control pricing.

So if the economic principle is so obvious, you’re no doubt asking, then why haven’t the publishers of America instituted vertical price-fixing?

Maybe books are different? They don’t seem to be. For a quick proof, consider that “Germany, France, the Netherlands, Italy, and Spain allow the vertical price-fixing of books,” as I wrote in this 2012 blog post, reporting on a conference about the future of books and copyright, and bookstores in those countries are prospering. If you’re a reader and you’ve visited one of those countries recently, you’ve probably seen them and wept. Maybe, as I constantly worry, reading itself is in decline, but it seems that bookstores needn’t be in a decline quite as steep as that in America and the United Kingdom.

Note an important difference in the kind of argument used to justify the laws that allow (and in France, require) publishers to set retail prices. Laws are passed for the common good, not to ensure that the customers of a manufacturer have a pleasant retail experience. The rationale for laws allowing publishers to control their books’ prices, therefore, is public-spirited rather than hard-headed. As I wrote in 2012,

The nations that allow for “resale price maintenance” . . . in publishing justify the legal exception for three reasons. They believe that it brings a bookstore to every village, that it makes possible a wide selection of books in those bookstores, and that it enables less-popular books to be subsidized by more-popular ones. In other words, the argument for resale price maintenance rests largely on the contribution that local, independent bookstores make to cultural life.

Online bookstores like Amazon might seem to undermine these rationales, because an online bookstore can bring a wider variety of books to a broader geographic range of citizens than any network of brick-and-mortar bookstores can. There’s an objection to this objection, however—an asymmetry. If a combination of uncontrolled pricing and online bookselling drives a brick-and-mortar bookstore out of existence, the special benefit to consumer-citizens that was provided by that well-managed brick-and-mortar bookstore is destroyed. The reverse, however, is not true. That is, if publishers were to control control prices, thereby supporting brick-and-mortar stores, the market share of online booksellers might well shrink, but it’s improbable that all online booksellers would for that reason go out of business, and as long as even one reputable online bookseller remained, the boons of wide variety and wide geographic distribution would remain available. If you believe that these boons are worth preserving, you needn’t necessarily oppose allowing publishers to set the retail prices of their books. Amazon remains in business in France even though it’s against the law there for online booksellers to undersell their brick-and-mortar rivals.

It isn’t exactly a surprise that a number of social democratic European nations have held onto the belief that bookstores contribute to cultural life and deserve protection, while in America and the United Kingdom, where the legal and political elites tend to be more market-fundamentalist, the consensus seems to be that cheaper book prices are worth more than the affordances of a nice bookstore. None of these ideological preferences alters the underlying economics of price-setting, however. Publishers needn’t wait wait for politicians, or for abstract moral argumentation, if they believe that well-run brick-and-mortar stores are the most congenial environments for introducing their books to readers. And in my experience, especially if one is looking to discover new books of high literary quality, nothing surpasses handling, sniffing, and leafing through ink-on-paper volumes in a well-curated brick-and-mortar store.

If Penguin Random House (to name the mega-conglomerate that happens to be publishing me this August) wanted to adopt Sony’s corporate strategy on the pricing of its TVs, it could do so tomorrow. Alas, there would be enormous risks. Federal antitrust regulators would be watching skeptically, because American publishers did adopt that strategy with e-books, as a roundabout way of supporting the price of ink-on-paper books, and got caught colluding with one another, in violation of antitrust law, when they did so. In the end, the publishers did get their way in the pricing of e-books, as Mike Shatzkin and Robert Paris Riger explain in The Book Business, a new primer on the behind-the-scenes economics of publishing. The results were mixed. Amazon decided to “let the big publishers be hoisted with their own petard,” Shatzkin and Riger write. While publishers kept the retail price of their e-books high, Amazon cultivated an alternative supply of e-books that were in the public domain or by authors who were self-published or who had taken their copyrights back from their original publishers. “The big publisher share of the e-book market appears to have steadily diminished since agency pricing began,” Shatzkin and Riger report, but “publishers take some comfort in the fact that print book sales have stabilized.”

I’m skating perilously close to turning this into an endless blog post about economics and the future of literature, so I’ll cut it short: Brick-and-mortar bookstores remain invaluable for publishers hoping to reach consumers who discriminate for literary quality and are interested in new titles, and as best I can figure it, vertical price-fixing is the only way to support an ecosystem of brick-and-mortar bookstores in the long term. The first publisher to attempt vertical price-fixing, however, will risk being undersold by rivals who delay adopting the strategy and being attacked in some way by Amazon, who will see it as a threat to market share. There will also be a more general risk, if prices are set too high, of spurring consumers to defect to cheaper alternatives.

Walking the plank one last time

Over at Slate, I’ve written a response to Matt Yglesias’s reply to my criticism of his ideas about piracy and copyright.

In the last paragraph of my new post, I qualify my assessment of piracy’s impact on copyright by wondering “if I’m drawing the graphs correctly.” Should anyone want to inspect those graphs, here are a couple! As I’ve said repeatedly, I’m no economist, so they could be riddled with errors. I didn’t draw the supply curve as a straight, upward-sloping line because I’ve always understood that in the book-publishing world, publishers are willing to sell books cheaper if they can sell more of them, and editors spend much time and energy trying to guess whether demand will be sufficient to justify a low price, or insufficient and require them to charge a high one. This may be an elementary error for all I know; if it is, please accept my apologies and straighten out my supply curve. If I’m right about the shape, though, it means that the surplus that a producer can rely on, even if he doesn’t have copyright protection, is just a tiny horizontal slice, lying like a pancreas under a liver, hard to see unless you click on the graph and view it full size. I drew the demand curve with a hump in it because it’s my impression that the audience for a given art work has a natural size, who won’t be deterred by a slight increase in price or much encouraged by a slight decrease. I could be wrong there, too, of course. The inset that I drew in the upper right corner, by the way, is intended to show how unimpeded piracy apportions the economic value of a work of art. As I write in my latest Slate piece, unimpeded piracy “cedes almost the whole triangle under the demand curve to consumers—transferring just a sliver along the bottom to the pirates themselves and leaving virtually nothing for legitimate publishers.”

I wondered about that claim after filing my article, and found myself doodling another graph yesterday afternoon to speculate more methodically about what happens when pirated work competes with copyrighted work. It seems to me that what you need to do is see where the demand curve meets the total supply curve, which is the sum of the legitimate supply curve and the pirate supply curve. Those curves have to be added along the axis of quantity, not price, so if nothing is impeding piracy, don’t bother going any further—the little inset that I drew in the graph above is fine. If piracy is “taxed,” however, by social disapproval, legal jeopardy, or some other inconvenience, the pirate supply curve gets shifted upward along the price axis, and when you add together a taxed pirate supply curve and a legitimate supply curve, you get something that looks a little like a sideways tuning-fork prong, in darkish pencil in the graph below. A tax on pirates makes it possible for legitimate publishers to stay in the marketplace. If the tax is high enough to raise the effective price of a pirated work above the copyrighted price, the legitimate publishers lose nothing, comparatively speaking. If the effective price doesn’t rise that far but does rise above the equilibrium price that would obtain in the absence of copyright and in the absence of piracy (a somewhat notional distinction, IMHO), producers can’t get as large a surplus as they would under copyright, but they can get something. If the tax doesn’t raise the effective price of a pirated work above the notional equilibrium, however, it looks as if producers get no surplus at all.

Advisory: These graphs should be accorded no authority other than as samples of what happens when a humanities-type person tries to puzzle out an economics problem.

Glut and deflation

"We are undergoing what they call in California 'a paradigm shift,'" writes Nigel Burwood at Bookride, his brilliant blog about bookselling. "An older more bookish generation is dying off or downsizing," he explains. And as a result, booksellers like Burwood "are being offered far too many books."

I've been wondering about this. I'm a buyer of secondhand books rather than a seller, so I'm not as acutely aware of market vicissitudes, but there is an indicator that I've been curious about. At the used-book search site Abebooks.com, if you aren't ready to buy, you can "Save for later" the books you've found. Since my reach usually exceeds my financial grasp, and since searching for copies of books in and of itself satisfies a certain obsessive-compulsive craving, I often have dozens of books in my "Save for later" list. Over the years, I have learned that the list is not stable. From time to time, either I or Abebooks upgrades software and inadvertently deletes all the titles. Sometimes individual books vanish from the list without explanation, perhaps because a software cookie has expired, but if you notice that such a book is gone, you can easily search for it again. Even less distressingly, if a bookseller goes on vacation, his book remains in your "save for later" list but the price is replaced by the notation "Temporarily unavailable." It comes back of its own accord when the bookseller does.

Excruciatingly, however, the price next to a title in your "Save for later" list is sometimes replaced with the notation "Book sold!" That exclamation point always cuts like salt dashed into a wound. How long did the very good set of all eleven volumes of the Bodley Head Henry James in very good dust jackets remain in my "Save for later" list, priced at $150, without my finding the necessary funds and courage? I do not know, but I remember the day that the numerals disappeared, the title went from clickable blue to unclickable black, and I was forced to concede that "Book" had "sold!"

As recently as a few years ago, I felt such pangs more or less monthly. As much as the pangs pained me, I recognized them as a sign of general economic health and my own good judgment about prices. After all, I put a book in my "Save for later" list because I thought it was the cheapest available copy in good condition of an edition that I wanted. If anybody else wanted the same edition, the copy in my cart was exactly the one they would buy, if they had any sense.

The pangs became less frequent in 2008, with the advent of the Great Recession. Oddly, though, they didn't return with the so-called recovery. In fact, over the past year, almost no books in my cart have been sold out from under me—so few, in fact, that I erroneously concluded that Abebooks must have changed its methodology and must now be silently vanishing sold books from "Save for later" lists, perhaps on the advice of some marketing psychologist who had revealed to the site's managers how traumatic those words and that mark of punctuation were to fragile personalities like mine. But then, a month ago, I was once more stabbed in the heart: "Book sold!" It was a shock. Once I recovered from the particular loss, though, I became perplexed. So Abebooks hadn't changed its methods. That meant that only one book I wanted had been bought by someone else in the course of almost a year.

A number of explanations suggest themselves. First: perhaps there is no economic recovery, not really, at least not among people who buy the sort of books I like. Second: perhaps e-readers, by changing habits, have thinned the ranks of collectors and made physical books a drug on the market, as Burwood has suggested. Third: perhaps it's a sign of deflation. (Number three isn't so much an alternative to number two as an alternative way of thinking of it.) General deflation would be a worldwide economic nightmare, to the extent that I understand it, but it's possible that there might only be deflation in the market for used books. New booksellers, especially online, constantly vary their prices, but used booksellers usually price their books just once. That practice works well in an era of mild inflation; the real cost of a book drops the longer it sits on the shelf, as a reasonable seller would want it to. But if, because of changing tastes or general economic malaise, the demand for used books is dropping, then most old prices are now too high, and as time goes by, the real value of these books to buyers will fall ever further below the price written on the front flyleaf. But few booksellers are likely to want to endure the tedium of repricing their whole stock.

Deflation would explain why I often nowadays buy books through another feature offered by Abebooks, the "Wants" list. If you enter search criteria for a "Want" and add it to your "Wants" list, Abebooks will email you any new books entered into its database that match. Often the newly added copies are priced substantially lower than the ones currently sitting around, perhaps on account of the factors sketched out above.

To look on the bright side, if the trend persists, I might someday be able to afford a library much ampler and substantial than I ever thought possible. (Where to put it is another question. And if the market for used books collapses altogether, of course, I won't be able to find the books that I will theoretically be able to afford.) Among the drawbacks of this state of affairs, however, is the sense of an era ending. One kind of book that I like to have is a reasonably attractive hardcover scholarly edition of a literary classic; recently, for example, I got a bargain on the second edition of Eugene Vinaver's three-volume Sir Thomas Malory. In that vein, when Jenny Davidson's blog Light Reading alerted me last week to a TLS review of a new edition of the poems of John Wilmot, earl of Rochester, I devoured the review at once, because I don't have an edition of Rochester, and I've never been able to figure out which one to get, if I were to get one. Bad news: the new Wiley-Blackwell edition costs $99, but according to the TLS, the edition you probably want is Harold Love's 1999 Oxford English Texts edition, which costs $350 new, and only about a C-note less used. The price of scholarly hardcovers of classic literary texts has been rising for decades, and in many cases, they're now out of the reach of everyone except research libraries and a few of the academics who specialize in that specific author, if said academics are well funded. Indeed, when columnists at the Chronicle of Higher Education recently recommended that new graduate students "build a personal library," they weren't referring to the purchase of books at all. They were merely advising that grad students store in a software program the titles of articles and books they read, preferably along with a few keywords. (Happily, Penguin often republishes the texts I covet, but they're stripped of much of the scholarly apparatus, and a paperback isn't as durable, nor is it quite the same aesthetic object.)

Flotsam

As I was coasting down the Manhattan Bridge’s final slope into Chinatown this afternoon, I realized that the orange-line train to the left of my bike, descending the same slope, was tracking my speed exactly, and when I turned I saw the conductor grinning at me. He must have been waiting to see if I would notice. He waved, and I waved back with a wave that nearly knocked off my own bike cap, so when I recovered I waved again for good measure.

I’m trying to shift my attention, this week, from one project to another, and all I seem to be able to think of are disconnected anecdotes, some of which I have carried around for more than a year now. For instance, there’s the story of the local church book fair. Attending it a few years ago, I found a first edition in its dust jacket of a not terribly well-known novel from the 1930s, which, I knew from having looked the title up on Bookfinder not long before, some booksellers priced in the thousands of dollars. I bought it for two dollars! I was tiresome about it at dinner parties for months afterward, though of course the profit to be made remained theoretical, because I couldn’t bear to sell it, and it sits on a shelf a few yards from this keyboard as I type. (Moreover, as long perusal of the blog Bookride has taught me, books that are priced on the internet at ridiculous prices do not necessarily sell at such prices.) At next year’s church book fair, I was prepared to score triumph after triumph, but when I arrived, a few hours into its progress on a Saturday morning, I found it filled with college-age people carrying handheld scanners. They picked up book after book—bleeping their bar codes, checking prices on the internet, and plopping all titles worth more than a predetermined threshold into large boxes between their feet. Automated capitalism had destroyed another niche of humanism, I moaned to friends, making myself tiresome in a new way at that year’s dinner parties. A friend pointed out that it could be argued that the injustice was actually in the previous state of affairs, when card counters like me knew that particular 1930s novels harbored literary value, and that the internet-connected scanners merely evened the playing field. (They didn’t even it completely, of course, because 1930s first editions don’t have bar codes. They don’t even have ISBNs.) But it was strange to watch a technology that gave to people who didn’t even necessarily have the habit of reading books the ability to judge their value. At the time I had also been bewailing the disappearance at the local YMCA of the Plexiglas book holders for the elliptical trainers. One by one the book holders had cracked and been discarded, in a process as gradual and inexorable as the upgrading of the elliptical training machines themselves, which were alwyas replaced, when they broke down, by machines with pre-installed television monitors. In the end, every elliptical trainer in the gym had a television monitor, and there were no more Plexiglas book holders. Instead there was a thin ridge beneath each television screen, where it was possible to prop up a glossy magazine, if the magazine wasn’t perfect-bound. Without the restraining lip of something like a Plexiglas book holder, however, perfect-bound magazines and books tend to get jiggled shut by the vibrations of an elliptical trainer in use. I tried for a while artfully folding a towel over the corners of my books’ pages, to keep them open by weighing them down. But the towel had to be refolded every time I turned the page, and there was in addition the social pressure of being the only person in the gym to insist on reading a book when so many nice television screens had been made conveniently available. Somehow the two phenomena—the deployment of the handheld ISBN scanners and the vanishing of the Plexiglas book holders— seemed of a piece, at least in my mind, as if technology and the pursuit of economic efficiency were rationalizing the reading of books out of existence. Not long afterward, I quit the gym, because I was riding my bike all the time anyway.

At this year’s church book fair, which took place not too many weeks ago, there were fewer dealers with handheld scanners, and none of them seemed to have hired college students to help them for the day, as they had the year before. The books themselves seemed to be of lower quality; maybe the church had invited a bookseller to buy the better titles for a higher price beforehand. This time around, the economic metaphor, if there was one, seemed to be that in a recession people were pleased to have an opportunity to buy cheap things in large quantities—to fill a cloth shopping bag with books and pay no more than twenty dollars. I got half a dozen Classiques Garnier paperbacks from the 1950s, in yellow covers with sewn bindings and “vellum” paper—Stendhal, Rousseau, and Voltaire, perhaps someone’s college curriculum.

Reading for a living

Over at the Boston Globe‘s Brainiac blog, Christopher Shea relays the news that NPR has a new slideshow up about jobs that no longer exist, including copy boy, bowling pin setter, and lector, a person paid to read aloud to people rolling cigars by hand.

I knew I’d heard about this job before, though it took me a minute to remember that it was in James Weldon Johnson’s lovely 1912 novel Autobiography of an Ex-Colored Man:

After I had been in the factory a little over a year, I was repaid for all the effort I had put forth to learn Spanish by being selected as “reader.” The “reader” is quite an institution in all cigar factories which employ Spanish-speaking workmen. He sits in the center of the large room in which the cigar makers work and reads to them for a certain number of hours each day all the important news from the papers and whatever else he may consider would be interesting. He often selects an exciting novel, and reads it in daily installments. He must, of course, have a good voice, but he must also have a reputation among the men for intelligence, for being well posted and having in his head a stock of varied information. He is generally the final authority on all arguments which arise; and, in a cigar factory, these arguments are many and frequent, ranging from discussions on the respective and relative merits of rival baseball clubs to the duration of the sun’s light and energy—cigar making is a trade in which talk does not interfere with work. My position as “reader” not only released me from the rather monotonous work of rolling cigars, and gave me something more in accord with my tastes, but also added considerably to my income. I was now earning about twenty-five dollars a week . . .

The narrator is even able to afford to hire a piano.

Update (March 24): Jenny D. just relayed to me the news that on Thursday, March 25, at 7pm, here in New York, the Americas Society is hosting a reading by Araceli Tinajero from her new book El Lector: A History of the Cigar Factory Reader. (Alas, I won’t be able to make it, because I’m chained to my laptop impersonating El Escritor until further notice.)

Further update (later on March 24): The topic reminds my friend Gabe of Felipe Jesus Consalvos, a cigar roller in the early twentieth century who incorporated cigar boxes into his outsider-art collages.

And still more: Irin Carmon tells me via Twitter that there’s also a 2007 short documentary film about cigar lectors, With a Stroke of the Chaveta.