Graph which B&N says shows that agency prices have not increased cost of e-books.
- By Michael Stillman
Barnes & Noble has joined many in the publishing industry in the battle against Amazon over electronic book pricing. This battle bears many similarities to that of a generation ago which pitted Wal-Mart against Main Street. However, there are differences as well, and the outcome is not quite so certain this time.
Amazon reprises the role of Wal-Mart a generation ago. Amazon wants to sell e-books for less. It is a business plan as simple as that of Wal-Mart. Sell more merchandise than anyone else by charging less. Crush the competition by selling it so cheaply that no one else can match your price. Consumers may treat you with disdain for being so crass, for providing so little service, but they still flock to your store. Ultimately, we follow the cheapest price. It’s like our feelings toward government. We like good schools, roads and bridges, parks, museums, all kinds if public services, but we prefer tax cuts.
Now, as previously noted, there are differences from the Wal-Mart vs. Main Street battle. When Amazon entered the e-book business, it was not trampling on someone else’s turf. There was no Main Street. No one was there. Amazon wanted to make sure it stayed that way. Even without competition, they sold e-books cheaply, at low margins, at times even at a loss. The plan was to so dominate the e-book business that no one else would ever get a foothold. It worked like a charm.
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