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December 16, 2001

BOOKS

Buyers Reading Cover Price, and Opting Not to Read the Rest

By DAVID D. KIRKPATRICK

Taking a break from Christmas shopping last week, Bernadine Fagan stopped by the Borders near her home in Bohemia, on Long Island, to buy some books for herself Merriam-Webster's Encyclopedia of Literature and a paperback by Susan Johnson, the romance novel "Tempting."

But then she saw that the hardcover encyclopedia was $45 and the paperback was $15.

"Granted the encyclopedia is a big book," Ms. Fagan, 60, said, "but that is a lot of money for a book. And they wanted $15 for the paperback, so I put it down I couldn't be bothered."

Across the country this holiday season, recession-minded book buyers are suffering a wave of sticker shock. Cover prices have crossed thresholds over the last two years, and the big bookstore chains and online retailers have pulled back from previously widespread discounts. More shoppers face prices like $35 for hardcover nonfiction, $26 or more for a hardcover novel, $15 or more for upscale paperbacks.

Customers show signs of resistance. Publishers say that, along with the rest of the economy, book sales have fallen off this fall. Some in the industry say publishers should reconsider their prices, especially in view of the many cheap alternatives to reading a book.

Publishers say that book prices have risen only about as fast as inflation over the last decade, and that their profit margins have not improved. But books still seem expensive compared with other, proliferating forms of entertainment, said Paco Underhill, a retail consultant and the author of "Why We Buy" (Simon & Schuster, 1999, $25).

"Everyone screams about how the number of books selling is flat or going down," Mr. Underhill said, "and yet the relative price of books keeps going up and the relative price of everything else keeps coming down." Movies, though more expensive at theaters, he said, are also available on videotape and DVD and cable.

Just last week, Leonard Riggio, chairman of Barnes & Noble, interrupted a meeting with several major publishers to urge them to reconsider prices. He told them that publishers and retailers would both make more money if books cost less. In a speech to publishers last year, Mr. Riggio told them that they chose prices "foolishly" and that some prices were "abominations."

"I am just exhorting them to do what is good for themselves," Mr. Riggio said in an interview. Publishers paid too much attention to their own costs, he said, and too little to consumer expectations. As a result, prices are not only high but also unappealing. A typical price of $22.50 should be below $20 or it might as well be $25, he said.

Booksellers customarily insist that all their wares are bargains, but some small bookstore operators agree with Mr. Riggio.

"I think they would sell more books and make more money if they lowered the prices," said Paul Ingram, a buyer at Prairie Lights Bookstore in Iowa City, "but whenever I tell that to someone in publishing they go completely gaga about all the costs."

Still, other store owners trust publishers to pick the right price. Many consumers continue to pay up, albeit not as many as publishers would like.

The retailers' complaints have provoked disagreements among publishers over how to respond. Publishers acknowledge that they pick prices more by instinct than by market research. But many say that consumers would pay even more for the unique experience of reading a book.

Stephen Rubin, publisher of the Doubleday Broadway group at the Random House division of Bertelsmann, said, "I am just convinced that there is no difference between $22 and $23. Let's face it, price is not a factor if it is a book that you really want."

But Laurence Kirshbaum, chairman of the books division of AOL Time Warner, said he got Mr. Riggio's message.

"There is no question that, at the low end, with respect to mass market paperbacks, for example, we have hurt ourselves by going to $7.99," Mr. Kirshbaum said. "That is not an attractive price for the consumer.

"I don't agree that prices are too high across the board, but we will certainly reassess at the end of the year," he added. "When our retailers feel our prices are too high, then we have to take a hard look."

Carolyn Reidy, president of adult publishing at the Simon & Schuster division of Viacom, said she planned to be more conservative about prices, mainly because the biggest bookstore chains were no longer marking down as many books.

"Publishers have come to rely on that discounting at the major accounts to help us market the books, and as they started doing less discounting it became worrisome," Ms. Reidy said. She says customers have been shopping around more for the best price.

Still, she said, such worries have not stopped Simon & Schuster from pushing the limits with some books, like David McCullough's biography "John Adams." Simon & Schuster published it this year for the lofty cover price of $35 $5 more than for his last book, "Truman," in 1992.

"We priced `Adams' at $35 with a hope and a prayer and a gulp, because that is a high price for a popular book," Ms. Reidy recalled.

It became a best seller. Now it has set the pace for other publishers this year who have imposed prices $35 and above on a range of hardcover nonfiction, including some non-best sellers, like a collection of essays by the novelist Martin Amis. Farrar, Straus & Giroux priced Roy Jenkins's biography of Winston Churchill at $40, and Doubleday priced Peter Ackroyd's "London: The Biography" at $45.

Publishers and bookstore owners emphasize that movie tickets have gone up, too.

"Compared to a movie," said Richard Heffernan, president of hardcover sales at the Penguin Putnam division of Pearson, "you get quite a few hours of entertainment for the price, you can give it to somebody when you are done, and 9 times out of 10 the book is better than the movie anyway."

But Lorraine Shanley, a principal in the book industry consulting company Market Partners, noted that many books went unread. "It doesn't matter that you could get 15 hours of pleasure out of it," Ms. Shanley said.

Continued
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