Economists analyze used book sales
Information economist Hal Varian has a fascinating column in today's New York Times, dicussing the relationship between used book sales on the new book market. Hal used to be dean of UC Berkeley's School of Information Management and Systems, where I first started tinkering with book search engines, way back in 1996. He was one of the faculty members who encouraged me to take a leave of absence from school, to work on BookFinder.com full time.
In his column, Varian discusses two pieces of research that support our arguments against the critics of the online used book industry.
The first paper he cites is "Internet Exchanges for Used Books: An Empirical Analysis of Welfare Implications and Policy Issues", a 2004 paper on the impact of used book marketplaces on new book sales online, using data collected on Amazon.com Marketplace from 2002 to 2004. Some of the conclusions:
- only 15% of used book sales at Amazon directly cannibalize new book purchases
- the remaining 85% of used book sales would never have occurred if the cheap used book option didn't exist
- publishers lose only about 0.2% of total gross profit due to online used book marketplaces
This analysis suggests a very different picture from the anti-used-book, anti-right-of-first-sale, the-sky-is-falling posturing that groups like the Authors Guild have been engaging in.
The second paper he cites is "Are Durable Goods Consumers Forward Looking? Evidence from College Textbooks" (PDF format), which explores how college students base their textbook purchasing behavior based on realistic expectations of their ability to resell the books, an issue we discussed on this blog last month.
Both papers are of interest, and worth perusing.
As a service that connects shoppers with new, used, out of print, and international books, we see the co-mingling of the various types of materials as a major benefit for readers, with little negative (and some positive) impact for publishers and authors. We plan to continue writing about this issue as the situation evolves.
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Comments
Economists have in fact known for years that on theoretical grounds the used book market cannot affect the new book market at all, but it's nice to see somebody has done an empirical study.
The point is that consumers are willing to pay more if they know there's a resell market. If publishers realized their idiotic dreams of
draconian restrictions on book reselling, they will find they have to lower prices heavily, and gain nothing for their efforts.
Posted by: xxx | July 29, 2005 1:47 PM