Highest-ever discounting on books – who’d have thought that?Posted: January 31, 2011
Last Friday, Nielsen released some unsurprising new data. You can read about it at the Bookseller, http://www.thebookseller.com/news/2010-retailer-discounts-total-%C2%A3600m.html.
The average discount off the printed RRP on trade books last year was 26%. Ten years ago, in 2001, discounts averaged 17%. So – applying a broad and analytically flawed brush to the data – the average price of your £8.99 paperback was £6.65; your £25 hardcover came in at £18.50.
In fact (of course), if you buy books the way I tend to – ie in a foolhardy and outmoded manner – the average selling prices were £8.99 and £25. That’ll teach me to buy non-mainstream or older titles from independent bookstores! Whereas, if you buy your paperbacks from the supermarkets, you can expect to pay under a fiver, and Simon Sebag Montefiori’s Jerusalem is available online for £12.50.
The stats remind of us of two great truths:
1. The trade book market in the UK has now been permanently and irreparably skewed towards supermarkets (primary selling tool: cheap and convenient) and the internet (cheap, convenient-ish, endlessly long tail). The consumer has been carefully taught that higher prices constitute a “rip-off”, and that high street bookshops are “rip-off merchants”, compared to the altruistic supermarket and online companies.
2. This in turn has created a situation wherein publishers appear to price books in order to discount them. So, the RRP exists to support the promotional price, rather than as an objective measure of the book’s real value. Cookbook and memoir RRPs are set, not at the right price for the market, but at a level that enables the publisher and the retailer to contrive a half-price promotion without ending up out-of-pocket.
I recall previous iterations of Nielsen reporting which indicated that, notwithstanding all of this generous discounting, the actual price paid by the consumer for their books has stayed pretty static in recent years. Maybe that wasn’t the case in straitened 2010, but I don’t believe the customer is getting the sort of value that the discounts perhaps imply.
This isn’t sensible retail practice, it’s madness. And the madness is rooted in the trade’s clinging to a printed RRP, 15 years after price maintenance was abolished, and many more years after other products lost their printed prices.
Try to imagine the same strategy being pursued in other fields. Top Shop’s new spring season fashions will be big in the stores for about as long as the average celebrity memoir. But their newest black skinny jeans are priced at £46, which I imagine is the right price for the target shopper. No suggestion that the “RRP” might be £92, but while the product is hot, you can get it for half price.
Similarly, the basic iPad is £439 (not “50% off £878”); a ticket for The King’s Speech at my local Odeon is £10.80 (not “knocked down from £21.60”). When the market tires of these products, they’ll fall in price, fade away, or be replaced by something newer and better – but nobody is misleadingly suggesting I am getting a bargain.
CDs and DVDs are often cited as comparable to books – all three are copyright products with rights owned by a single source, and all three have seen discounting on new titles as a primary sales driver for as long as the practice has been legitimate. However, CDs/DVDs don’t have a printed RRP, and are purchased by the retailer on the basis of “dealer price plus”. Furthermore, such is the robust health of these categories that in a great many cases, the price now falls after the product has exited the charts, so that the fair price for old albums or movies is typically seen as £2-3 less than the chart price.
By way of contrast, the world of publishing is constructed around the RRP – margin deals with retailers are calculated as a discount off RRP, and royalty payments to authors (and thus the income for agents) are calculated as a percentage of RRP. It would not be difficult to change this model to “dealer-plus” and still ensure that the appropriate royalties are paid to the creatives – how many different people and entities take home a slice of each DVD sale? – but inertia is a powerful driver, and attempts by forward-looking publishers to open up the RRP debate have tended to stall, backtrack and get buried.
Given the further downward pressure on retail prices that eBooks will encourage (notwithstanding agency pricing?), it may be too late to repair the damage. Entertainment pricing has always been pretty commoditised, and the implication of ever-higher discounting – the message to the public – is that the commodity is no longer worth as much as it was.