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Book discounting - danger or opportunity?

26 January 2009

Book discounting has come back into the news with the announcement that, despite falling sales in 2008 and all the turbulence in the world economy, the level of discounting in book sales in the UK actually increased last year. The value of sales declined from £1.80bn ($2.48bn) to £1.78bn ($2.46bn). If all books had been sold at the recommended retail price, publishers would have earned £2.27bn ($3.13bn) in 2008.

Simon Juden, CEO of the UK Publishers' Association, condemned the level of discounting: 'What we sell the most of we charge the least amount for. Books are a valuable and cultural good and should be sold as such.'

Lest you should think that heavy discounting is a problem affecting only the UK, it's worth reflecting on the fact that across the world booksellers want to know if discounting in the UK has worked and whether it has led to a democratisation of reading. A benchmarking study published by the UK Booksellers' Association last November looked at discounting in the UK, Ireland, the USA, Finland, Sweden and Holland, and concluded that UK bookshops are making fewer profits and seeing less growth than those in any of the other countries studied, although the United States had the lowest average selling price for books.

Until the Net Book Agreement ended in 1997, the UK still had fixed prices. Many countries still have them, including France, where they are currently under attack. The argument in 1997 was that enabling booksellers to discount prices would free them to price promote and lead to more sales.

So, has this worked? It's hard to be clear on this, particularly since the two new kinds of booksellers most successfully using price as a selling tool did not do so or did not exist in the 1990s. It's arguable that supermarkets would not have bothered to sell books on any scale unless they could discount them and in some famous cases, such as the Harry Potter titles, use them as loss leaders. The same is true of price warehouses in the States and big discounters who sell books everywhere. Amazon and other online book retailers would undoubtedly not have flourished and grown as they have without the ability to offer large discounts.

Last week's Bookseller editorial points out that that the £500m that UK publishers might have earned last year if there was no discounting is a totally notional figure, as fewer books would have been sold. The thing about discounting is to discover the right level for prices and to deal with the absurdity of the bestsellers - the books readers want the most - being the most highly discounted.

Kate Mosse, bestselling author and founder of the Orange Prize, thinks that in the end discounted prices have benefited readers. Most importantly, her view is that that they have not adversely affected the perceived value of books. Speaking for writers she says: 'For the most part writers do not need their novels to look special to be read. Most of us would rather our books were borrowed or loaned or shared than not read at all. It's not the physical object itself that matters but the content of it.'