Saturday, December 13, 2008

"there’s nothing wrong with competition"

When Roderick Long made mention of my recent post on bookselling, a bit of back-and-forth ensued in the comments on his post. The point was raised that, if the big box bookstores benefit from state intervention, so do their customers, who get cheap books. The problem is that I'm not sure that the big box stores actually deliver there. I asked:
What *evidence* is there that a bookselling monoculture with lots of coupons and discount stickers prominently displayed actually represents lots of cheap choices for consumers?

Mass-market bookselling is notoriously wasteful of resources (to the point of destroying gazillions of mass-market paperbacks “necessary” for saturation point-of-purchase displays, but too expensive to actually ship back to a warehouse.) When the price of a major new release mass-market paperback is roughly ten bucks, you have to ask yourself how many copies you are actually paying for.

And then, in response to a question by Roderick, continued:

The industry was really transformed by changes in the inventory tax laws. All those fly-by-night remainder sales and outlet mall stores in the ’80s and ’90s were the result of inventory being sold off pennies on the pound to avoid taxation. Mass market paperback books and most magazines are all still cover-stripped and destroyed, rather than returned. And de-inking for recycling is still an expensive process, so we’re talking about a lot of waste of resources as well.

All of this influences what gets published, and the size of print runs. The model can accommodate more diversity, but only by colonizing the work of independent marketplace sellers, who can provide marginal product that Amazon’s main distributors would never touch. If independents actually went away then the big boxes and net stores would lose a substantial amount of flexibility. Instead, they have to bank on our willingness to sell through their central interface, to work for them while paying them for the privilege, for whatever we can dig out of the buyers' market they have helped to create.

My point was that the big box bookstores have to focus on particular sorts of inventory, and as their needs tend to drive the publishers and distributors (since taxes on inventory make it worse than pointless to have stock with no clear, and relatively quick, retail outlet), the whole industry tends to focus. And we end up with 6457 different vampire series and scores of lolcat books, until we have the next fad. Because online booksellers don't have to play the merchandising game, they can be considerably more flexible, but even Amazon is unable or unwilling to take on the business of dealing with small presses, so it is left to the remaining independent booksellers and a hoard of amateurs with barcode scanners to provide the depth for the online stores.

It would be interesting to see what a concerted boycott of the used book marketplaces on Amazon, et al., would do. Services like include some sellers who simply drop-ship through Amazon, but if customers learned that the real bargains were someplace else, at ABE or Bookfinder, the online market might change considerably. Loss of customer confidence, thanks to some serious mishandling, seems to have permanently limited eBay's site, although it was originally (prior to the eBay purchase) one of the most promising models around.

Anyway, when I spoke about "us" working for Amazon, et al, I was really talking about booksellers, but one of the commenters on Roderick's blog, Gabriel, took the comment in a wider sense, and objected that as a customer, providing feedback on purchases, he didn't feel he was "working for Amazon." To which I replied:

Well, customer-reviewers are what Amazon has instead of booksellers, even if it is thousands of customer-reviewers doing the work of a few sellers. By shopping at a “self-service” bookstore, you just trade lower price for lower standard of service. By volunteering expertise, you really enter the labor market in competition with conventional booksellers. There are lots of reasons not to shop at Amazon. They treat small presses pretty shabbily. For instance, if you are told by any of the big box stores or large online operations that a book is out of print, make sure you double-check, since the distinction between “out of print” and “not stocked by us” seems to be a little hard for the big corporate operations to wrap their heads around. Customer service is notoriously nonexistent at Amazon

All of this naturally looks different to a career bookseller than it does to someone looking for a good deal, and I’m not interested in condemning anyone, but just as the big box model seems to depend on particular kinds of public infrastructure, the online store model seems to depend on user participation.

And, although that wasn't where I had intended to go with my comments, there's a hard truth there that is unavoidable. If Amazon really does provide lots of good books at cheap prices, part of the way it does that is to trade the labor costs associated with booksellers for lower prices to its customers, who are also its source of expertise. You can't really opt out of helping Amazon, since the "people who bought this book also bought" stuff is generated simply by the act of purchasing. But if you volunteer information and expertise, then you're doing the same job that I do, but for (alas, only slightly) less pay.

Gabriel's response to that was: ". . . so be it. . . Ultimately there’s nothing wrong with competition - it’s the backbone of any market." And that is either untrue, or true but unhelpful, all depending, of course, on what you mean by "competition."

Why do we value competition? Is it the striving among competitors? That's certainly some of it. It hasn't been so long since I was presenting Proudhon's enthusiasm for "the clash of ideas" and Bellegarrigue's "flux of interests" as essentially revolutionary, right here on this blog. And it won't be long before I do so again. We value the information that comes from success and failure in the marketplace, since it allows individuals to allocate time, energy and resources more efficiently. But most of us probably don't value all instances of competition, under all circumstances, equally. Free competition seems to depend on the ability of new competitors to enter the market. And some of what we value when we say we value competition is probably actually variety.

A big box bookstore sets up shop across the street from an established independent, as has happened so many times, and undersells them aggressively until they can't compete any more. Is this an example of that competition about which there is "ultimately nothing wrong"? At the end of the process, do we have more choices or fewer? Is there more competition, more chance of more competition, or less? In the bookselling world, as in much of retail, the trend has been towards the reduction of active competition. In some industries, such as the grocery business, intense competition in marginal markets has not ended in monopoly or near-monopoly, but in "
food deserts," after the "winners," who had no particular local loyalties, found their winnings were too costly to hold onto. There are spreading "book deserts" as well, but we won't feel the loss as acutely in that business for awhile.

What would another sort of competition look like? We've almost forgotten, most places in the country, even in Portland, where ten years ago the thought of a book desert would have been unthinkable, how we got along before the big boxes. Portland's Hawthorne district had twice as many bookstores ten years ago as it does today, and they all benefited from their proximity to one another, although they also competed, and there was a constant flux. All of those bookstores could probably have fit in the space occupied by the big box I work in, and you could probably throw in my old Ohio store without crowding things too much. So what is the more efficient mechanism for providing books that customers want at a price customers can afford? Given all that has been done to the book market generally in the last thirty years, it might be the big box, but if the various limits created by government were removed, and publishers and distributors had a chance to reshape their operations accordingly, I'm pretty certain that the case would be very different. Hungry, competitive sellers, buying for the customers on their own street, rather than central buyers calculating national sales campaigns to fight off the other two mega-bookstore chains: that would seem to me a fair fight, and one I wouldn't hesitate to enter. And that is no light endorsement from an independent still living with the economic consequences of the last bookstore's failure.

In any event, it seems a dubious move to invoke competition as a virtue of the big boxes and online megastores, since it seems to be precisely a failure in the conditions necessary for a broader, more active competition that has made their rise possible and their ascendency, for now, inevitable.

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