Thursday, October 22, 2009

Wasn't this the Plot of "You've Got Mail"?

Last week, Walmart announced that it would pre-sell ten hardcover books (expected to be best sellers) at the rock bottom price of $9.99. Within hours, Amazon matched; Walmart responded by lowering its price to $8.99; Amazon followed suit; and Target woke up from its afternoon nap and matched. Walmart, not to be outdone, lowered its price to $8.98. (Yesterday, Sears unveiled its Keep America Reading Program to take advantage of the price war, a piece of pure marketing genius.)

Thoughtful readers may think they can just wait another week or so and let one of the big boxes pay them to buy these titles. But, it looks like the race to the bottom might hit a road block.

Today, the American Booksellers Association sent the Justice Department a letter, asking the Antitrust Division to investigate this price war, which it called "illegal predatory pricing that is damaging to the book industry and harmful to consumers."

It'll be interesting to see what comes of this. According to this NYT
piece, the publishing industry as a whole is concerned about the possible ramifications; but it seems to us that most of the impact is sure to be felt by independent bookstores.

Would the Antitrust Division actually define the marketplace in such a way that Walmart and Politics and Prose (for example) would be deemed competitors?

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