RE: Reading Between the Lines of Used Book Sales

["Neri, Rita" <Rita.Neri@chsli.org>]

I purchased a used copy of Gray's Anatomy from Amazon a few years ago and
was completely dismayed by the condition of the book. The spine was loose,
the previous owner had put their name on the outside pages of the book in
black magic marker, there was underlining galore, etc. The online
description of the book's condition was deceptive, and the price was much
too high considering the condition. I wrote to Amazon but they were not
very helpful Unfortunately I did not have time to return the book since I
needed it for a course I was taking. However, I no longer purchase used
books sight unseen, which means I do not order them through the Internet.
Ordering used books online is as good as the honesty of the seller! And I
don't like to take chances.

Rita Neri
Manager, Medical Library
St. Francis Hospital
Medical Library
100 Port Washington Blvd.
Roslyn, NY 11576-1348
Ph: 516 562-6673
Fax: 516 562-6695
Rita.Neri@chsli.org

-----Original Message-----
[mailto:owner-liblicense-l@lists.yale.edu]On Behalf Of Hamaker, Chuck
Sent: Thursday, July 28, 2005 6:31 PM
To: liblicense-l@lists.yale.edu
Subject: Reading Between the Lines of Used Book Sales

Reading Between the Lines of Used Book Sales
By HAL R. VARIAN
Published: July 28, 2005
NYTIMES
http://www.nytimes.com/2005/07/28/technology/28scene.html?ei=5070
(register to view)

THE Internet is a bargain hunter's paradise. Ebay is an easy example, but
there are many places for deals on used goods, including Amazon.com.

While Amazon is best known for selling new products, an estimated 23
percent of its sales are from used goods, many of them secondhand books.
Used bookstores have been around for centuries, but the Internet has
allowed such markets to become larger and more efficient. And that has
upset a number of publishers and authors.

... booksellers rarely mention the resale value of a new book.
Nevertheless, the value can be quite significant. 

Consider a recent paper, "Internet Exchanges for Used Books," by Anindya
Ghose of New York University and Michael D. Smith and Rahul Telang of
Carnegie-Mellon. (The text of the paper is available at
http://ssrn.com/abstract=584401

The starting point for their analysis is the double-edged impact of a used
book market on the market for new books. When used books are substituted
for new ones, the seller faces competition from the secondhand market,
reducing the price it can set for new books. But there's another effect:
the presence of a market for used books makes consumers more willing to
buy new books, because they can easily dispose of them later.
...

..textbook markets, where many books cost well over $100. Judith
Chevalier of the Yale School of Management and Austan Goolsbee at the
Chicago Business School recently examined this market and found that
college bookstores typically buy used books at 50 percent of cover price
and resell them at 75 percent of cover price. Hence the price to "rent"
a book for a semester is about $50 for a $100 book.
...

The study, "Are Durable Goods Consumers Forward Looking? Evidence from
College Textbooks," is available at Mr. Goolsbee's Web site,
gsbwww.uchicago.edu/fac/austan.goolsbee/website/.)

...

According to the researchers' calculations, Amazon earns, on average,
$5.29 for a new book and about $2.94 on a used book. If each used sale
displaced one new sale, this would be a less profitable proposition for
Amazon.

But Mr. Bezos is not foolish. Used books, the economists found, are not
strong substitutes for new books. An increase of 10 percent in new book
prices would raise used sales by less than 1 percent. In economics jargon,
the cross-price elasticity of demand is small.

One plausible explanation of this finding is that there are two distinct
types of buyers: some purchase only new books, while others are quite
happy to buy used books. As a result, the used market does not have a big
impact in terms of lost sales in the new market.

Chuck Hamaker
Associate University Librarian Collections and Technical Services
University of North Carolina Charlotte