ABA Strikes Back

The American Booksellers Association is attacking Amazon.com, Wal-Mart, and Target, claiming in a letter to the U.S. Department of Justice that the companies are exacting predatory pricing. The ABA claims that the companies are selling newly-released hardcover best-sellers below cost in an attempt to gain market control:

Publishers sell these books to retailers at 45% - 50% off the suggested list price. For example, a $35 book, such as Mr. King's Under the Dome, costs a retailer $17.50 or more. News reports suggest that publishers are not offering special terms to these big box retailers, and that the retailers are, in fact, taking orders for these books at prices far below cost. (In the case of Mr. King's book, these retailers are losing as much as $8.50 on each unit sold.) We believe that Amazon.com, Wal-Mart, and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers.

The letter also notes that Amazon previously engaged in below-cost pricing on electronic copies of new hardcover books, although it is not as quick to cite costs on eBooks. It seems logical that since the production costs of electronic copies are nominal, a company could be able to produce electronic versions of new release best-sellers for much cheaper than the hardcover versions.