Rare Book Monthly

Articles - July - 2014 Issue

The Bookseller's Dilemma: the world is changing

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Collectors: a committed older audience

The Bookseller’s dilemma: the world is changing

 

Problems in bookselling have long been understood.  Shops closing, books going online, loss of face-to-face contact, rising quantities, aging dealers, fewer new dealers and changing collecting perspectives are all factors in a once sedentary field that now evolves in real time.  In effect, the old world has become old hat and a disappearing hat at that.

 

Some fifteen years ago, a few dealers, sensing that the long-term impact of exponentially rising online book listings would eventually alter valuations negatively, began to adjust and reduce inventories.  Online listings and prices nevertheless continued to increase, with prices declining significantly only after the financial collapse of 2008.  As late as 2007, these concerns seemed overblown among the many who believed declining prices were a cyclical problem that would disappear with the next economic recovery.  But then came 2008, the watershed year that saw dealer cash flows and personal net worth broadly reduced by the Wall Street meltdown.

 

This decline coincided with the realization that the flow of material onto the net would continue even in the face of increasing competition and declining prices.  The cause?  Diminishing alternatives for selling and the easy ability to list.  Anyone could offer and, in time, it seemed almost everyone did.

 

For the prospective buyer, the rising volume and flexibility of emerging mega-databases such as Amazon and Abe Books provided fair approximations of the long sought “world wide search,” that is the single search that sees almost every copy everywhere.  These databases also provided new opportunities to see that some old books are very common, others rare, and some very overpriced.

 

Easily identified, illogical pricing lead to comparisons with auction realizations, and from these comparisons trends emerged.  Valuable and important material, according to the auction records, continued to be strong, but not outlandish, while the less wanted and less rare material generally weakened.  For the best material, as would be expected, online listings firmed while for the less expensive material that underperformed at auction, prices generally held to their pre-2008 asking prices.  The consequence of the increasing divergence between the best and the more mundane was that the serious book buying audience became more open to buying at auctions, from an estimated 10% of the rare book buying audience ten years ago to roughly 30% today, building an audience large enough to support increases in the number of auction houses, the number of sales and the number of lots – to the point where today auction volume is constant enough to support daily searches with the expectation of regularly finding appealing material.

 

For listing sites, the increasingly illogically high listing prices for mid- and lower-level material raised significant issues about listing site credibility.  If, on the one hand, you have moderating prices in the auction rooms and much higher prices for the same material online, it becomes easier, even incumbent, on prospective buyers to try the auction route.  Interestingly, most buyers have for years expressed a preference to buy from dealers, but there is an apparent limit to the listing site – auction price spread, and during the past 5 years, it was temporarily breached.  The challenge for dealers and listing sites then has become reducing that difference given a large spread makes the auctions look attractive.  Logically, this shouldn’t be difficult.  Auction prices, which for years fell, recovered 7% last year and, if such increases continue, they’ll once again make the listing sites competitive.

 

Dealers, of course, are also free to reduce prices, but in practice, if they cut prices only to have others cut theirs, they gain no comparative advantage and may earn the animosity of other sellers.  Alternatively, they can price consistently with other online sellers and potentially find their prices high compared to auction realizations.   For buyers who don’t follow auctions, of course, this is not a problem.  For those that do, and they tend to be the largest buyers, high prices tend to leave a bad impression.  And such impressions matter, for second chances are rare because among buyers it is assumed that dealers employ a consistent logic.  If prices are high in one context there is a tendency to think the dealer’s prices are generally high.  Sellers, it turns out, are auditioning every day and, in my experience, too often think it is only the material that is important.  That is not my experience.

 

For those who sell, telling a book’s story in a compelling way is very important because prospective buyers read descriptions as a way to understand both the material specifically and the dealer generally.  Dealers who do it well over a career develop a gravitas that adds value to the material, a fact we know because their connection to the material will be mentioned in subsequent descriptions and, I believe, aid in the sale.  We are used to regarding collector provenance as important.  Dealer provenance is equally significant. 

 

Getting the price right is obviously crucial.  Some sellers tend to airbrush flaws, better dealers tend to avoid flawed material altogether, but no one buys and sells only perfect copies.  Repair history is not always disclosed, but if asked, the serious seller will usually explain the issues they have dealt with and price the material consistent with its condition.  For the buyer, asking the right questions is important.

 

So where to sell?  By this point, dealers have tried most listing options, but few have found substantial success beyond the largest sites.  Those who have succeeded have been both aggressive and patient.  They can’t make buyers buy, but they can keep buyers from crossing them off their lists.  Ultimately, buyers have to contact dealers, and hopefully, when their paths cross, the offers they receive are compelling.  Today, they have to be.

 

For dealers, this is a substantial adjustment because the number of copies available and auction history now influence prices that were once exclusively set by sellers.    Until a few years ago, prices posted online were primarily determined by the prices of other copies of the same book posted on the same site.  Today, it is more complicated because of the rising percentage of buyers bidding at auction.  In effect, dealers have to have strategies for selling to two different constituencies that are prepared to pay different prices, the traditional book buyer and the auction bidder.  Lots of luck bridging the difference - because if you price high you lose the auction buyer, and if you price to be in a logical relationship to auction prices, you leave margin on the table.

 

Auctions have always been part of the field, but they were, for most of the past 250 years, a dealers’ only market that froze out retail bidders.  Since 1980, auctions have moved into the retail sphere and become competitors with dealers, uneasily coexisting with them since.  Understanding what auctions are selling and their bidding protocols requires concentration and dealers, who when asked, will have plenty of disaster stories to temper auction enthusiasm.  Nevertheless, auction houses have smoothed out their processes.  Variables such as reserves, version and condition skew outcomes, but for many titles there are today a series of auction realizations that together confirm value.  Both American Book Prices Current and the Americana Exchange Database provide extensive auction history.  Dealers currently have no comparable validation for their pricing and, in my view, need one.

 

Many fields, arguably most fields, now employ some pricing calculators and comparisons, their principal purpose being to quell doubts and encourage transactions. In our case, we also provide estimated current value.  This information, I believe, facilitates transactions by confirming importance, rarity and value.

 

Were dealer prices and auction realizations the same, the single variable for dealers would be condition, but dealers routinely price higher.  Our discussions with collectors suggest they expect to pay dealers more, and the threshold of upper valuation seems to be 30%.  When dealer prices move beyond that, as happened over the past five years when auction realizations declined and dealer prices generally held steady, we now know buyers shift their attention to auctions.

 

For evidence of this I look to the number of lots reported on AE over the past decade, those offered and those sold as well as total turnover:

 

Year    Total Lots       Lots Sold         Ave. Price       Median P.       Total Sales

2013   358662          257290          $2,422.00       $328               $623,156,380

2012   310489          221248          $2,803.00       $351               $620,158,144

2011   244840          166903          $2,285.00       $378               $381,373,355

2010   218017          149075          $2,257.00       $339               $336,462,275

2009   207521          139,759         $2,955.00       $376               $412,987,845

2008   220798          156,839         $2,589.00       $384               $406,056,171

2007   204898          153179          $3,476.00       $486               $532,450,204

2006   203330          153310          $2,557.00       $423               $392,013,670

2005   161950          119714          $2,745.00       $420               $328,614,930

2004   114262             86717         $2,965            .00       $413               $257,115,905

 

The trends seem strong and convincing, but I have heard the statement that lot volume was always high but simply unreported.  That, to some extent, is true, but in my view does not explain the scale of the year over year increases that are continuing.  Chief among the sellers are the dealers themselves who are aging and facing both regular year over year cash flow needs and end of career issues.  One way or another, thousands of dealers are going to convert their books, manuscripts, maps and ephemera into cash over the next ten years.  Some material will go to auction.  The vast majority will be sold online, potentially at reduced prices.

 

And some are not waiting.  In Australia, many rare and used book dealers conduct auctions themselves.  It’s tolerated, but not universally accepted by other dealers.  In Canada in the rare book trade, you can be a dealer or an auction house but you cannot be both.  Nevertheless, some do both.  In France, many dealers conduct auctions, but in England they don’t.  Bit by bit, auctions, including eBay, are working their way into the mix.  But for the broad mass of material, auctions are not going to be the important venue.  The listing sites are.

 

There, in single clicks, enormous quantities of listings are sorted in tiny fractions of a second.  It is there that the field will prosper or suffer given that is where acquirers regularly look.  The proof of the listing sites’ success is visible in their pricing for the best of them are not cheap.  For the thousands of dealers that use them, they have to be finding success or they wouldn’t be continuing.

 

Their fees, in some cases, approach traditional auction rates.  Whatever the fees, if business is good, such fees will be less an issue, but for many, the business is difficult.  Sales are sparse, prices low and commissions high.  It would help if listing fees were lower, but to lower them, dealers will need to support an alternative approach, a low cost, high traffic specialist listing site for those who sell printed collectibles.  Such a site could make it easier for collectors to find material and facilitate interaction between buyers and sellers.  Theoretically, the seller would keep close to 100% of the proceeds.  This is a big order, but can be achieved.  The display features also need to be consistently first class, the speed fast, and the ongoing buyer/seller interaction captured in the site records.  In principle, this makes sense; in practice, organizing dealers is like herding cats, except that dealers are more independent.

 

In approaching listings, for dealers, the goal should be to provide entirely transparent offers.  By this I mean a complete history of each listing from first day posted, alternations to price along the way, inquiries and offers made and turned down.  Subsequent transaction prices and later re-listings will add to the unfolding story, in time becoming engrossing reading and compelling information that will clarify why dealer involvement is often very important. 

 

As a case in point, I sold at auction in 2009 and 2010 two collections, one early-printed materials and the other western Americana, and included source, date and price information.  I was rewarded with a wide following and a surfeit of bidders.  Most material was sold without meaningful reserves, and, in my view, provided proof that clear information is a substantial aphrodisiac.  Those two sales raised $7.4 million.  Such history is attractive to buyers and no doubt will help revitalize the field. 

 

But many dealers will be reluctant to be so clear, particularly those long used to obscuring their material’s history, I suspect, to hide markups and sources.  During the modern era, skilled dealers made plenty of money, but today, wading into the age of transparency, I believe they face the need to reintroduce the book history they set aside years ago because its inclusion will enhance salability.  It will also be painful and the more honest, rendering the less organized unable to do it.

 

While we wait for significant long-term changes, there are strategies that are effective in the short term.  Dealers should list on more sites and include more images.  At least some of the listing sites should be structured to send their listings into the search engines.  Dealers should refrain from periodically removing and reloading their inventory because it breaks the links that search engines create to make material searchable on Google and the like.  Those who issue catalogues and are AE members should submit them for review in AE Monthly.

 

And experiment on eBay.  Many have tried and some succeeded.  Buyers run tens of thousands of searches there every day.  Capturing their attention is an art.

 

And be open to blogging.  Few dealers have the stamina to write for years to develop a following.  But it can be worthwhile.

 

In time an alphanumeric identification number that is separately and permanently assigned by a knowledgeable but disinterested third party, possibly a single library, a group of libraries or an association, will be the basis for collectible material to be understood and tracked over time.  An item, once an ID number has been assigned and the item indelibly marked, may disappear from the market and later reappear, its prior history on file to be easily and quickly undated.  Such a system will track material hundreds of years into the future, eliminating much uncertainty and creating a strong intellectual and financial basis for collecting.  The effects will be enormous and continuing.  The transition will require the best minds, the best hearts and probably five years.

 

And can it happen?  Yes, and it should.

 

It will start with a few dealers creating a transparent flow of information.  Some listing sites will cooperate and others won’t.  From the buyer’s perspective, such detailed listings will be magnetic and the books, so enrolled, in time worth appreciably more than comparable unmarked copies, particularly those among the first ten thousand examples to be numbered.  Two or three dealers will not be able to change the world, but fifty very serious dealers and one or more major libraries will.

 

For my part, as a collector, I will support the effort by favoring participating dealers.  As managing partner of AE, we will make our resources available.  Dealers are not an option, they are a necessity.

 

 


Posted On: 2014-07-02 18:44
User Name: tenpound

Interesting ideas, Bruce. And a much more balanced article on the trade than your last one. One question, though: Aren't "moderating prices in the auction rooms" offset by increasingly greedy - now up to 25% - buyer's premiums?


Posted On: 2014-07-03 16:19
User Name: Fattrad1

Bruce,

I believe that most booksellers now view the prices posted on the major listing sights just as they few the view the prices on the stock exchanges.....................constantly changing. The auction market offers the occasional value when bidders fail to show up. You also fail to mention the past bankruptcies of famous auction houses and the other legal problems they have faced.

You are correct about the direction of prices of common or scarce books, but that is merely a function of supply and demand, fewer collectors and more titles coming to market. Oh, I could introduce you to numerous young booksellers under the age of forty, the industry is safe and sound.

Jeff Elfont
Swan's Fine Books - an open shop
Walnut Creek, Ca.


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