New Harry Potter book doesn't thrill booksellers

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By JON ORTIZ
Sacramento Bee

You'd think that the excitement surrounding the July 21 release of "Harry Potter and the Deathly Hallows" would thrill booksellers. After all, J.K. Rowling's seventh and final installment of the teen wizard and his struggle against the forces of evil began setting sales records almost from the minute pre-orders started pouring in months ago.

But rampant discounting on the $34.99 "Deathly Hallows" has drained the book of its magic for retailers. Few, from the biggest chains and Internet companies down to the smallest independents, will make much money on it, experts say. Some will take a loss. "I'm ordering 10 copies, that's it," said Charlotte Wager, who for 20 years has owned the Book Barn, a Folsom, Calif. store selling new and used books. "I'll have a few on hand at a small discount for my regular customers. It's not going to be a big deal for me."

"Potter 7," as industry insiders refer to it, is a high-profile symbol of the change in how books are sold.

Discount mass marketers like Wal-Mart Stores Inc., Target Corp. and Costco Wholesale Corp. often use books as a loss leader, especially the hottest titles.

Amazon.com Inc., the Internet giant that started as an online bookseller 12 years ago, routinely slashes book prices. On May 8 the company announced that it had taken 1 million orders for "Deathly Hallows," which it is selling for $17.99. A month and a half before its release, "Potter 7" is the top-selling book at Amazon.com.

And national book chains Barnes & Noble Inc. and Borders Group Inc. are offering the book at $21, a 40 percent discount.

"The book industry is different from other media," said Albert N. Greco, an industry consultant and professor of business at Fordham University. "When 'Spiderman 3' came out, for example, theaters didn't slash ticket prices. But the book business has been discounting new releases for more than 20 years."

The obvious upsides are that low prices make books more accessible to readers, get customers into stores and draw them to retail Web sites. The downsides, according to Greco: "Discounting marginalizes the quality image of the product -- and independents can't match it."

That angers many mom and pop bookstore owners, said Hut Landon, executive director of the Northern California Independent Booksellers Association in San Francisco.

"I've heard of some independents going to the local Costco for stock because the price there is less than they can get it direct," Landon said. "With 'Potter,' the discounting is over the top, driven, in my opinion, by Amazon."

Seattle-based Amazon is the nation's top book and video retailer. Its sales reached $5.5 billion last year, according to company finance tracker Disclosure Online Database, eclipsing Barnes & Noble ($5.1 billion) and Borders ($4.07 billion).

Landon also criticized Scholastic Corp., U.S. publisher of the "Harry Potter" series, for increasing the cover price by $5 over book six. The "Potter" books have sold more than 325 million copies worldwide.

"They had to know that the big players would discount it," he said. "Knowing that, they asked a question like, 'If this book is really worth $25, what can we start the price at to get there?' 'Potter' is one of those instances where discounting is raising the price."

In an e-mail, Scholastic spokeswoman Kristen Moran said, "Our price is a suggested retail price and whatever a particular company chooses to sell the book for is up to them."

Experts agree heavy discounting by the industry leaders and the vast inventory they carry has helped put many small bookstores out of business.

The American Booksellers Association, a Tarrytown, N.Y., national trade organization of independent book retailers, reports that its membership has fallen from 3,400 in 1997 -- a year before the first 'Potter' book's U.S. release -- to about 2,000 today.
Those left standing are scrappy operators who have figured out how to survive, said association spokeswoman Meg Zelickson Smith.

"They focus on what they do best _ cater to the community with service and events," Smith said. "Many of our members plan major 'Potter' extravaganzas whenever there is a new book, with parties and events galore."

Scholastic Inc., reports will set a first print record with 12 million copies. Rowling's sixth book, "Harry Potter and the Half-Blood Prince," set the previous record with 10.8 million in 2005.

It's just not worth it, said Book Barn's Wager.

"The publisher and the author will make tons of money, I'm sure," she said. "I wouldn't. I'm surrounded -- Sam's Club, Wal-Mart, Costco are all in town. Plus there's competition from online."