Wal-Mart's online division announced yesterday that they will sell ten top November hardcover books for $10 apiece, including Sarah Palin's memoir Going Rogue and the new Stephen King novel Under the Dome. Those ten books will also have free shipping, and Wal-Mart will also sell 200 hardcover bestsellers at 50% off cover price.
Amazon quickly countered, matching the $10 price on those ten books...and then Wal-Mart dropped their price on those books to $9.
Wal-Mart's CEO was quoted as saying "If there is going to be a 'Wal-Mart of the Web,' it is going to be Walmart.com." In other words: here, as in other categories, Wal-Mart is willing to lose huge sums of money to buy market share and muscle out the competition. The question is whether their muscle is sufficient to beat Amazon, which has been dominant in the online retail space for ten years.
Obviously, this is good for consumers in the short run -- lower prices are always good for consumers. But it's bad for publishers, and will be bad for the ecology of books in general; a world in which Wal-Mart sets priorities for bookselling is not a healthy one. As everyone in the business knows, prices that low either mean the retailer is selling at a loss (likely in this case, for now) or that the retailer is pressuring the publisher for ridiculously high discounts (which I expect to see soon, as has happened in the UK).
It's probably vain to hope that consumers will deliberately pay more for books, particularly in this economy, but that's what we're left with. Wal-Mart, among other things, doesn't report to bestseller lists or BookScan, so it will be difficult for publishers to even gauge how effective this promotion is -- they'll be able to tell how well their books did, if they are lucky enough to have a book at $9 from Wal-Mart, but they won't know how that compares to the other titles, or how it fits into the overall sales picture.
No good will come of this, mark my words. We'll be in as bad shape as the Brits within three years. It might be time to move to a saner, more stable industry, like sheep-farming or riverboat piloting.
Update, Oct. 20: Since the above, Wal-Mart lowered its price on those books by a penny to $8.99, to remain the lowest price.
And then yesterday Target entered the picture; they will sell seven of the ten books in question for $8.99, with the other three following "in the next few days." Wal-Mart again countered by dropping their price a penny.
The leaderboard as it now stands:
Wal-Mart: $8.98I wouldn't expect to see B&N or Borders/Walden try to compete in this area, but we seem to have entered a new silly season, so I may be wrong.
Publishing opinion generally believes that these three accounts are buying the ten books in question at regular discounts -- probably the highest available under their discount structure, on the order of 60% off suggested retail price -- but are not getting British-style 70-90% discounts. Since the books in question are priced in the $24-$35 range , the general assumption is that these accounts are getting the books for between $9.60 and $14, and thus losing money on every sale.
But if this becomes more than a one-time pissing contest, these accounts obviously will start demanding higher discounts for programs like this, and will be able to play publishers against each other in their attempts to get those discounts. Wal-Mart in particular has long experience in those kinds of negotiations.
 Why on earth is the new Stephen King novel Under the Dome priced at $35? I know it has "A Novel" after the title, which is usually good for another two or three bucks, but that seems exceptionally high for a popular novel.
[update via a new Wall Street Journal article]