Believe it or not, I am not surprised with Walmart, Amazon, and Target's action to devalue best sellers - called 'lost leaders' and books are the perfect choice.
Amazon surely knows how the publishing industry works, but the other two are probably clueless, like most people on the outside of the industry. I understand that Amazon reacted to what Walmart did. That's business. It isn't my philosophy, but most people aren't like me. (Thank God?) I like to make my own business decisions, rather than let others define me.
This is a quick publishing industry overview, certainly I can't write how the industry works in one blog post - nor would I be fool enough to try.
There is a long and complicated process involved in acquiring books. But let's say that has been done. There is THE LIST. At the top of the list are the best selling author's new works. They usually pay handsomely for those books, but the books earn their keep. What else they do is cover the cost of the books that aren't great earners. Some of the mid-list and bottom list are fillers; stuff you have to have to make a well rounded list. Some are slow, but steady earners.
The list pays the salary of all the people it takes to make a book, royalties to the author, contracted services, like printing, shipping, and warehousing. Besides the people any business would have, there are book industry specific people: Acquisition editors, line editors, cover artists, marketing, advertising...blah, blah, blah, who are paid by the earnings of the best seller books.
Money spent on advertising, marketing, and PR is proportionate to the expected earnings of the book. Sometimes the publisher is pleasantly surprised. Sometimes they lose their shirt.
So when Walmart (are we not surprised this company did that?) sells expected best sellers at a loss, the worry is that 1) the public will devalue books and come to expect books to be that price at their local bookstores; 2) that publishers will be forced to reduce their list price (the price on the book cover) because of the changed perception of value by readers; 3) small bookstores will be hurt the hardest and many long standing family businesses will close (Watch the movie "You've Got Mail" with Tom Hanks and Meg Ryan).
The worry about the small family owned bookstores is the one that I think is the most likely to happen, if this pricing war continues. These stores (Walmart, Amazon, Target) can afford to sell the 10 or so best sellers at LESS than they paid for them because they hope in the process other purchases (marked up per usual) will be made at the same time. The small bookstore, or Indie bookstore, is banking on those best sellers to do what they do for the publishers -- cover the cost of less selling books.
If you read my newsletter then you know my trilogy is on Amazon.com. When those three books sell I will make minus $3.13. Yes, I will lose $3.13. As you can see, I can't really afford to do that for long before I write more books that cost me less to print and ship. I do have a plan to fix that bleed and I could suck it in and compromise quality by putting the books on amazon another way than the way I am.
I don't think readers will believe that best selling books can be had or should be had for $9.00. Besides readers trade books with each other and read them for free. Same with borrowing them from a library - free. Same with garage or boot sales - nearly free. It isn't like the author is getting royalties on anything past the first sale.
So what is the bottom line? Well, it is likely not going to last. Sure some people will go for the deal, others won't. Most likely people in the industry like me won't shop those places for those books simply on principle. But I do shop those stores regularily.
There is still lots I omitted: coops, sell through numbers, and remainders for example. You can google those. If you want to know more about this, google something like: book pricing war. I had links, but you're capable of researching this, if it interests you. If you are a writer, this should interest you.