By DAN NOSOWITZ
OCT. 26, 2015
Ever since a university gave me a literature degree certifying that I have read Chaucer in the original Middle English, my taste in books has reverted to very specific, lowbrow stuff. I like murder mysteries, heist books and spy books, preferably from the 1950s through the 1980s. These titles can be hard to find; many of them are out of print, unavailable on Kindle, and their presence in the New York Public Library is hit or miss.
But in recent years, my bookshelves have swelled. Old John le Carré and Donald E. Westlake and Lawrence Block titles are easier than ever to find online, along with pretty much every other book published in the last century. They’re all on Amazon, priced incredibly low, and sold by third-party booksellers nobody has ever heard of.
Better-known titles with more robust print circulation quickly obey the seesaw of supply and demand; after time, their prices can sink even lower, because of the increased number of copies floating around. Take Jennifer Egan’s “A Visit From the Goon Squad”: You can buy a new hardcover or paperback copy for $18.82 or $9.19, from Amazon itself, or download the Kindle version for $8.56. Or, as with hundreds of thousands of other books on Amazon, you can click through to the “used” section and buy the 2011 Pulitzer Prize winner for fiction for a penny.
Despite the naysaying about the death of publishing, the industry’s most vital numbers — sales and revenue — aren’t actually all that gloomy. In 2014, publishers sold just over 2.7 billion books domestically, for a total net revenue of just under $28 billion, a larger profit than in the preceding two years, according to the Association of American Publishers. There were just over 300,000 new titles (including re-releases) published in the United States in 2013. The book industry may not be as strong as it once was, but it’s still enormous, and generates a considerable amount of surplus product each year.
Enter the penny booksellers. There are dozens of sellers — Silver Arch Books, Owls Books, Yellow Hammer Books and Sierra Nevada Books — offering scores of relatively sought-after books in varying conditions for a cent. Even including the standard $3.99 shipping, the total sum comes out to several dollars cheaper than what you’d pay at most brick-and-mortar used-book stores.
“At some point in the next two to three years, I predict that ‘Go Set a Watchman’ will be selling for a penny,” says Mike Ward, president of the Seattle-based used-book seller Thriftbooks. Ward would know; though it isn’t considered in the same league as Barnes & Noble or Books-A-Million, Thriftbooks sells about 12 million books a year, mostly on Amazon, and many for a penny. (In comparison, Barnes & Noble, the country’s largest book retailer, sells somewhere around 300 million books a year, but has the added weight of hundreds of enormous, expensive megastores to run and thousands of employees.)
“We are taking garbage [and] running it through a very sophisticated salvage process in our warehouses, to create or find or discover products people want, and then we sell them at a very, very cheap price,” Ward explains. Garbage isn’t a value judgment: His company, along with several other enormous used-book-selling operations that have popped up online in the past decade, is literally buying garbage. Thrift stores like Goodwill receive many more donations than they can physically accommodate. Employees rifle through donations, pick out the stuff that is most likely to sell and send the rest to a landfill. The same thing happens at public libraries; they can take only as many donations as their space and storage will allow, so eventually they have to dispose of books, too. (For libraries, the process is a little more complicated; they can’t legally sell books, so they essentially launder them through groups with names like Friends of the Library, which sell the discards and donate the proceeds to the library.)
Operations like Thriftbooks step in and buy these landfill-bound books, sight unseen, for around 10 cents a pound. Thriftbooks has 10 warehouses across the country, each with its own name. Ward says each of them is “about the size of your typical Walmart,” somewhere between 70,000 and 90,000 square feet. The enterprise is still largely a human operation: Between 15 and 18 people at each warehouse sift through the truckloads of books, sending more than 80 percent of the material immediately to the recycling plant. (Hey, it’s better than the dump.) That 80 percent may include stuff that’s obviously garbage: old three-ring binders, notebooks, half of a Bible. Anything that might possibly be sellable is scanned into the company’s database.
Discover Books, another major used bookseller on Amazon, is also based in the Seattle area. Unlike Thriftbooks, Discover Books relies on automated scanners to enter books into its system, which can handle more than 60 books per minute. “If there’s any history of that book online, our system will pick it up,” says Tyler Hincy, Discover Books’ vice president of marketing.
Each company takes pains to pick out any rare books that might be difficult to scan automatically. The systems rely on barcodes and International Standard Book Numbers (ISBNs), relatively recent innovations in the history of book publishing. Thriftbooks has a special “vintage” team dedicated to picking out rare, older books, trained to recognized first editions. Discover Books relies on its regular scanning system to pick out potentially valuable vintage books.
From that point on, it’s all about software. Say a new copy of “A Visit From the Goon Squad” is scanned into the database. The software races to figure out how many copies are in stock, how many copies have been sold, how the price has changed over time, what the current average, high and low prices are on Amazon, Barnes & Noble, Half.com, AbeBooks, eBay and Alibris, and decides: Do we want this book? If the software’s algorithm decides that this is a book that can be sold and is worth selling, it will be stocked and automatically listed in the online marketplace where it has the best chance to be sold. This all happens tens of thousands of times per day.
This is a game of pennies and lightning-quick readjustment. Buyers have no particular loyalty to any of these sellers; it’s all about what’s cheapest and what’s listed first. Each company, seeking an edge, builds and zealously guards its own software. Ward was the lead developer on Thriftbooks’ software before he became president. He has 12 developers, a full-time data scientist and two financial analysts on his staff. Discover Books’ software is known in-house as Trim2. “We have software that we’ve spent years and a lot of money on,” Hincy says, “tweaking to be as optimal as possible to give that book the best opportunity to be sold.”
I asked Ward to track a few books for me, and within seconds he had generated a chart showing their prices over time. For recent books, supply is low, because the book hasn’t been on the market that long, and demand is generally high. Accordingly, Thriftbooks doesn’t sell many copies of new, hot books like “The Life-Changing Magic of Tidying Up,” by Marie Kondo, and when it does, they may go for as much as $15. Donna Tartt’s “The Goldfinch,” a literary hit from 2013, is in its second stage of life; its price, says Ward, has stabilized at around $5. But that book sold over three million copies (including eBooks), which means more and more of them will find their way to Goodwills and thrift stores — and, eventually, to Ward’s warehouses. And so the price will sink lower and lower, eventually bottoming out at a penny.
A “penny book” is something of a misnomer. Used books sold on Amazon typically carry a $3.99 shipping fee. But that isn’t a reflection of the actual cost of shipping them — it’s a function of the company’s rules, which mandate a consistent shipping cost for every category of the product in the Marketplace. Amazon takes a standard cut of every book sold — $1.35 — which leaves each of the penny sellers of “A Visit From the Goon Squad” with a whopping $2.65 to cover the cost of the item, shipping and handling, labor, rent on warehouses and all the other costs that come up along the way.
The sellers wouldn’t tell me exactly how much profit they make on penny books. Shipping costs vary depending on the kinds of deals you can cut with delivery services. “We make more than it costs us on the postage to ship it, but not much,” Ward says. “A couple of cents, to be honest.” But the sellers aren’t selling only penny books — Ward says that less than half of his stock sells for that price. And because processing costs don’t increase with book price, while Thriftbooks may only make a few cents on a penny book, it will make $2, plus a few cents, from a book priced at $2. Not bad, when you sell 12 million books a year. (For what it’s worth, books like “A Visit From the Goon Squad” are usually sold wholesale to Barnes & Noble at somewhere between 40 percent and 50 percent off the list price. List price for the paperback version is $15.95, and Barnes & Noble currently sells it for $9.49, giving it a profit of ... very, very little.)
If the penny booksellers haven’t noticeably cut into the publishing industry’s margins, their arrival has been more ominous for traditional used-book retailers. “It’s really a race to the bottom at this point,” says Carson Moss, the store buyer at the Strand, the 88-year-old Manhattan book emporium. “Everybody ends up fighting over 5 cents, 10 cents, a penny.” Moss says the penny booksellers are an occasional topic of conversation at the Strand, which also sells books on Amazon and elsewhere online. “I would say it has affected our ability to sell as many used books online,” he says. The penny booksellers are sometimes seen as forcing books into a new, disturbingly quick life cycle in which prices drop from full price to a few dollars in months, and then further to a penny in just a couple of years.
But Thriftbooks’s Ward and Discover Books’s Hincy are quick to paint themselves as book lovers, and savers. “We feel we give books the best and maximum opportunity to be sold or redistributed or recycled,” Hincy says. “When I started with this company, it was all about keeping books from landfill demise.” Or, as Ward puts it, “10 years ago, before companies like mine existed, those books were seen as having no value at all.” And even Moss concedes that his store’s used-book sales have been fairly steady over the past 10 to 15 years.
Penny booksellers are exactly the sort of weedy company that springs up in the cracks of the waste that the Internet has laid to creative industries. They aren’t a cause; they’re a small, understandable result. Penny booksellers expose the deep downside to efficiency capitalism, which is that everything, even literal garbage and rare high art, is now as easy to find and roughly as personal as a spare iPhone charging cable.
“You look at books, and you hope there’s an intrinsic value to the content, you know?” Moss told me. “And you hate to see things that are down to that amount when someone works so hard at it. But that’s the reality of this business.”
Dan Nosowitz is a freelance writer and editor based in Brooklyn. He has written for Popular Science, The Awl, Atlas Obscura, BuzzFeed and Modern Farmer, among others.
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