Death & Taxes: The IRS, Amazon, my dad's library, and Book Pricing

Book pricing is in the news again. The US Dept of Justice has filed antitrust lawsuits against the Big Six publishers and Apple for allegedly colluding to fix prices on e-Books (which would be illegal). The complaint stems from something we've talked about a lot: Amazon's efforts to unilaterally define the value of e-Books at rock-bottom prices in order to sell more Kindles.

There's a lot of inside baseball here, and if you want to see it from the publisher's point of view, you can read the open letter from Macmillian president John Sargent over on Tor.com. Book pricing is a complex issue and I've been searching for a real-world analogy, something I can point to that will prove my thesis on the perils of training the world to expect literature to cost $.99 (or to be free).  Turns out I didn't need to look farther than the outstretched hand of the tax man.

Believe it or not, the United States Internal Revenue Service has a lot to say on the subject of book pricing. And what they have to say has had a profound effect on the perceived value of books in the marketplace.  It's one of the few places where the market for used books has lessons to teach us about the market for new ones.

Bear with me a moment as I put on my storytelling hat...

My dad and I have always been fond of the idea behind Henry Ward Beecher's marching orders: “A little library, growing every year, is an honorable part of a man’s history. It is a man’s duty to have books. I library is not a luxury, but one of the necessities of life.”

That's a lovely sentiment from Mr. Beecher but what happens to those books when you are gone?

I've been sorting the final stacks of boxes that were once my dad's library. He passed away three years ago and I'm still shifting through the boxes and looking for places to donate the ones I don't have room for. Every time I think I'm done, mom says "Have you looked in those boxes in the attic?"

For the most part, these are books I already own or simple aren't interested in. Those precious to me or the family or those in which I have a particular interest I've already sent to live on my own shelves back in Washington. The rest must find other homes, preferably homes that will continue to nurture the love of literacy that my dad spent his life kindling in me.

What does this have to do with book pricing?

Death and taxes being life's two constants, it seems inevitable that they would somehow collide in a way that impacts pretty much every other aspect of life -- including buying and selling books. Hopefully, everyone in the United States knows that donating an item to charity allows you to deduct that item's "Fair Market Value" from your taxes for that year as if you had made a monetary donation in that amount.

This is how the IRS defines fair market value:

Fair market value.   Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

                                                         http://www.irs.gov/publications/p561/ar02.html#d0e139

Sounds simple enough, right? I mean, books have the market price printed on the cover. Publishers sell them for that price, so it seems simple enough, right?

Not so fast.

The chore of determining the fair market value of most items falls to the tax payer seeking the deduction and woe betide the person who gets it wrong. The penalties for over-estimating the value of donations are prohibitively steep. And I'm sad to say that no matter what the publisher prints on the cover, the FMV for books has little or nothing to do with what they cost at Barnes & Noble.

Donate your books to Goodwill, and you can expect to claim Goodwill's value for those books. They will usually sell them for somewhere between $1.00 and $3.00 each regardless of their rarity or condition. You can't claim more than they are worth on the open market, and no market is more open than Goodwill.

Fair enough. But what if I donate them to a library? Or my church? Or a prison literacy program?  Having done exactly that -- literally by the truckload and with the receipts to prove it -- I wondered what my family might claim as a deduction for those books.

The answer: From $1.00 to $3.00 for hardbacks. Because that's what those libraries, churches, and prisons could theoretically buy them for if they bought them from Goodwill or the Salvation Army.  It doesn't matter that for the most part, the libraries of the world wouldn't be caught dead buying books from those sellers, that's their "Fair" market value, defined by the free market.

In IRS Publication 561, the tax agency has defined the 'Fair Market Value' of most goods as the price two honest people can be expected to arrive at if one sells it to the other. For cars, it's the Kelly Blue Book value. But for books as the amount charged not by used bookstores in your area, but as the amount charged by Goodwill and the Salvation Army.

It's the Law of Unintended Consequences in full force.

Even if Half Price Books operates in your area, selling Stephen King hardbacks by the truckload at 1/2 their face value, the IRS wants you to declare their value as $3.00 per copy or explain why. And that explanation had better come in the form of a professional appraisal.

The cover price of the average new hardback novel is about $26.00. And to be fair to our friends at thre IRS, unless you are buying a signed first edition no one really expects that valuation to hold once you've taken the item home. It's like driving a car off the lot depreciates the car -- this is the way of things.

By charging too little for books for too long, these national thrift store chains have had a profound effect on the perceived value of used books. A perception that has taken the force and effect of law unless you care to pay for a professional appraisal.

I checked with my tax preparer, and it's not worth fighting them over it. Either pony up for a professional appraisal (which will also be affected by the degradation of market value) or take your medicine and collect your books for their content, not their value.

If you've ever discovered a rare gem in a thrift store and paid a song for it, you really have no right to complain.

Here's where we pick up the thread of the multi-faceted dispute between the publishers, Amazon, and the US government. The publishers have, for most of their existence, defined the retail price of their product. As they used to tell us at Borders, you can't very well threaten to go down the street to some other publisher and buy Stephen King's new book. If you want to sell King's books, you have to buy them from King's publisher at their asking price.  If you discount them, that's up to you.

Enter Amazon.com and the uncertainty of the brave new world of e-books. Amazon came out of the gate insisting that the fair market value for e-books (regardless of what they may cost to produce) is $9.99 or less.  They trained the market to expect e-books to be less than ten bucks, and to expect most of them to be a dollar or even free.  And in spite of voices raised in protest (including mine) the publishers mostly went along with it.  Even when they started to realize that they were eroding the fair market value of their product as surely as Goodwill has incidentally eroded the value of used books, Amazon was still the only game in town... until Steve Jobs reversed his previous assertion that books were dead and offered publishers a better deal: the "Agency Model".  It was a better deal that publishers were able to leverage into a (somewhat) better deal with Amazon.

All well and good.  But if they cooperated in any way, that's market collusion and it's illegal. Enter the US Attorney General and the current lawsuit against publishers for price-fixing.

What a mess.

The big publishers aren't going to come out well in this. The DOJ thinks they've got a good case, and they probably do.  But even if they defeat the suit by DOJ, (and there's a settlement already in the offing) they already can't afford the protracted battle.

Big Publishing may or may not be an outdated model. They might crumble under the weight of this thing, or they may consolidate further and get even bigger -- either way, there will always be publishers of some kind, whatever size they may be or whatever name might appear on their letterhead. Self-publishing is well and good, but there will always be writers who don't want or aren't able to do it themselves and there will always be people who will stand up and say "Give it to us and we'll be the middle-men for a cut of the take."  It won't look like it did in Salinger's day, but it already doesn't. Those days are gone.

Here's all I care about: the written word has to have a market value that allows writers to make a living writing it. If the agency model falls, if the seller-side model of pricing wins and booksellers set the price too low for the real professionals to stay in the market, we will all suffer for it. Even if it is more legal than what we've already got.

The bulwark of our literary canon is and always will be the professional writer devoted to holding up the literary mirror against all efforts to cover it. Without that professionalism and dedication to craft, we might get more books shoveled at us over the transom in the anarchic e-book free-for-all but we will get less and less of the real quality that already seems too rare.

This is the challenge of writers and publishers going forward: This is a tough thing to describe in a way that is interesting, sounds rational, is devoid of alarmist warnings but isn't laden with statistics, but it's paramount to our future literary legacy that we preserve the value of books.

If we don't, we will one day be gone and we will have left our heirs with a legacy that they can't even give away.

Is it a First Edition?

Because anyone who is around me for more than a minute or two realizes that I'm a book hound, I often get asked how I know something is a first edition.  I've been contemplating writing a post about it, but then I discovered to my delight that Abe Books beat me to it in style...

The Buggywhip Defense League

I'm a big fan of buggy whips, and you just can't find anywhere to buy them anymore.  Sad, really.

In recent weeks I've been accused of being a Luddite, a snob, a hipster, and a Luddite hipster snob.  Just because I prefer printed books to the digital ones.  Or was it for whining too much about Daylight Saving Time?

Might have been both.

Earlier today, someone sent me a link which implies I'm a "Book Fetishist", which has implications I don't care to delve into here.  Though here's a hint to the guys who wrote that: you're not going to win a booklover's heart by handing them a gutted book unless it was used to smuggle another book into the former Soviet Union or something.

Preferably with the smuggled book still inside.

I do love books.  I love the sensory experience of them and feel that I retain more of the text reading paper rather than the screen, but contrary to what is apparently a popular belief, I'm not anti e-book. Being anti e-book would be like being anti paperback. In point of fact, I'm fully in favor of someone making this digital marginalia idea from the New York Times a reality with all due haste.

If they do that, I will be first in line for my ticket.  Please make it available for the Kobo.


I am blessed with a personal library that runs into the thousands of books, some of which I inherited, some of which were gifts and some of which I bought when I was a bookseller and could get them at a steep discount.  I grew up surrounded by them and cannot imagine a house that feels homey without them.  Not everyone has that luxury and not everyone has the space to store them properly even if they can acquire such a collection.  Electronic formats allow someone to acquire such a collection at a significantly lower cost in terms of both money and space.

I don't think that any booklover in his right mind would begrudge someone that joy over a simple matter of silicon & pixels versus paper & ink.

Just mind those user's agreements.  Read it before you click "I agree".  Know what you're signing away in terms of rights and privileges, because you're not getting them back.

The part of the digital domain that does bother me is the part that eliminates bookstores.  And mayhap that does make me a Luddite or one of the other things I've been called.  Nevertheless, I posit that the ecosystem that grew up in support of the written word is not the Cult of the Buggywhip as it is often portrayed.  It was the support system that gave rise to our literary culture. A support system which at present, no one has presented a replacement for it that seems to have the chops to go the distance.

I'm not actually talking about publishing.  Publishing will evolve and the publishers will evolve or not as their survival instincts dictate.  Publishing will find a way to survive, they always do.  I'm talking about bookstores.  Indies, Barnes & Noble, Borders, the lot of them.

Only recently has the Googlebooks launch made it possible to buy e-books from my local bookstore (and this time I am talking about the indie bookstores such as our beloved local independant Elliot Bay)
There's nothing wrong with reading books on an e-reader any more than there's anything wrong with listening to music on an MP-3 player, but I'm not a fan of leasing any of my media.  And while the comparison between music and books is tenuous at times, I mention music specifically because of the death of the independent music store that used to be a part of the culture of every city.

To throw that away in the name of convenience is a crying shame.  When you throw out the bathwater, don't be surprised if you look down and the baby's no longer there.

And if that makes me a Luddite, a hipster, or a snob, then so be it.

Survival of the fittest...

The other day, I mentioned an interview with Amazon's founder and CEO, Jeff Bezos in Newsweek. At the time, I was focusing on the battle between single-use devices (dedicated e-Readers) and so-called "convergence devices" (tablets, laptops, netbooks, smartphones, et al) that do everything even if they don't do any one thing particularly well. He said something else there that's been raising hackles in the parts of the book community that are wed to the tangible paste and paper artifact.

"...we love stories and we love narrative; we love to get lost in an author's world. That's not going to go away; that's going to thrive. But the physical book really has had a 500-year run. It's probably the most successful technology ever. It's hard to come up with things that have had a longer run. If Gutenberg were alive today, he would recognize the physical book and know how to operate it immediately. Given how much change there has been everywhere else, what's remarkable is how stable the book has been for so long. But no technology, not even one as elegant as the book, lasts forever." - Jeff Bezos Quoted in Newsweek, 21 December 2009

By far the most articulate argument for the permanence of the physical specimen comes from Seattle author Knute Berger. The op/ed is called "Will Books Survive?" and I encourage you to read it. It's an interesting take from someone in the heart of one of America's most literate cities and home of Amazon.com. Berger is mostly reacting to that part of the interview which would threaten or eliminate the creaky floorboards of the Elliot Bay Book Co or the glass and steel cathedral of the written word that is the Seattle Public Library (which Berger refers to as the "Rem Koolhas temple" in deference to its famous architect -- I have to admit I'm not a fan of the latter, the architect seems to have forgotten that libraries should be pleasant places to read as well as look at.) Knute Berger is a frequent contributor to my local NPR station, so I'm familiar with his views and I know that he and I don't necessarily see eye-to-eye on many issues. On this at least, I agree with him wholeheartedly. I have similarly eclectic buying habits despite my best intentions and my omnivorous tastes have led me from the digital docs to the dusty stacks of the Puget Sound's used bookworld. And my home too is a constant battle between finding space to build more bookshelves and the people who have to live there too. So too do I hope that the bookworld can find a kind of equilibrium that allows for the existance of all varieties of books from the terra cotta to the terabyte and beyond.

Scott Walker Perkins writes literary thrillers and blogs on the interface between technology and literary culture. His current novel is The Palimpsest and he is working on another tentatively titled 42 Lines.

Voting in a hidden election...

Seattle's legendary independent bookstore Elliot Bay is moving from the location in Pioneer Square it has occupied for almost forty years.

This is perhaps not so momentous for those bookhounds who live beyond the Puget Sound, but for those of us close-by it's a bit like hearing that the Space Needle is going to be relocated. The legendarily creaky plank floors of the Elliot Bay book store really are that much of an icon to the literate denizens of Western Washington.

Thankfully, they're just moving up Capitol Hill (which puts them closer to my brother-in-law's place, come to think of it) rather than closing as previously feared. But the economic necessity that drove them to seek less-expensive digs is an eye-opener on the state of bookselling in America. If even the most iconic bookstore in a city that has been the most literate city in America for many years is endangered, what does that say about our buying habits?

I hope they install some creaks and squeaks in their new location.

I've been a manager for both of the major chains and my brother in law used to work for Amazon. I have a better appreciation than most for what large bookstores bring to the party, and for all the complaints people have about them, they have been largely responsible for the integration of reading into modern American culture. Many books and authors may never have found an audience without the big-box chains needing to fill shelf space and selecting them out of the dustbin of the backlist. Many publishers would not have survived into the new millenium without their broad avenue of distribution.

But the independent bookstores embody the culture of their cities, and to cavalierly throw that away is a travesty. This is a hard sell in tough economic times, believe me, I know there are genuine economic reasons to shop the chain stores or online for your books. Not every city or town has - or ever had - a thriving independent bookstore. But the price wars like the recent one between Amazon and WalMart are unsustainable.

The dollars you throw into the kitty of one or the other of those rivals won't be a vote to preserve those prices. Price wars are fleeting, but the damage they do to those who cannot participate (and to some who do) is permanent. And once closed, an independent bookstore in your area is gone, likely never to return.

Witness the towns across America who now lack a grocery store because they threw their business to WalMart until that was all they had left. Every dollar you spend on books this holiday season is a vote in a hidden election. And like any election, the consideration cannot be wholly economic. Because while money cannot buy culture, it can preserve it.

Bookselling is a peculiar world, a meeting place of art and culture and commerce. A place where the boundless thoughts and ideas and dreams of our culture are exchanged, and as consumers we get to vote on the venue we think best suits that exchange. I posit that this sort of activity thrives best in a marketplace with as many competing voices as possible given as much room to run as we have to offer. Don't know your local Indie bookseller? Find them online using this handy tool provided by IndieBound.

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Update:  The new Elliot Bay is in a beautiful new location, in the sort of permanently up & coming neighborhoods Seattle is famous for. Sadly, they didn't bring the creaky floors with them, but they did salvage their iconic stained glass...

A confession of sorts...

Hello. My name is Scott and I... I am a book nerd.

It started with a prescription from Doctor Seuss and before I knew it, I needed it every day. I couldn't help it. I didn't realize I had a problem until the day I found my father's New American Collegiate Dictionary and read it cover to cover.

Before I knew it I was waking up with strange books in bed next to me. I prowled libraries and bookstores, looking for my next fix. Eventually it wasn't enough and I started doing the hard stuff... I started... yes, I started writing my own books.

Watch out, America. I'm out there somewhere, in the back alleys and bookstore basements, mainlining words until my mind can't hold any more. I'm reading dictionaries and encyclopedias looking for the next story, the next bigger better word.

Beware parents, Sam I Am is a dealer, pushing more than his suspiciously-tinted eggs and pork products.

They start out free, a gift from someone else, but soon you're buying them, working just to afford them. Doing unspeakable tasks like... like running a bookstore, just to get to your next fix.

Books are dangerous, they lead to thinking and learning and the ever-increasing desire for more. I am a junkie. Stories are my compulsion, an addictive ride on the spines of a dragon of paper and ink.

There will be no interventions and I'm afraid there is no cure.

 

A Journey Through Bookland (redux)

I'm not sure I can quantify what it is that I like about books. It's rather like explaining the merits of a root beer float to someone who has never had one... or doesn't like them. (Gasp! Tell me those people don't really exist!) There are some things that you either feel or you do not.

Much like the nuance and subtle nose of a fine not-too-sweet, but full-bodied root beer, Bookhunting is one of those things that cannot be fully appreciated by or explained to those for whom a book is something you read and then throw in the pile for your next garage sale or trip to the local Goodwill.

Not that there's anything wrong with that sort of behavior. If no one ever got rid of their books, there would be nothing for me to hunt for and I... well, I would be sad. Just don't actually throw them away and we're good.

There are certain things that I particularly love about books. The frustrated thrum of the pages as they reach the apex of their arc and fall upon the page before it, staccato reminders that these ideas are contained but not tamed; they constantly seek to escape. The faded glory of spent gilding, hidden deep in the heat-stamped recesses of aged leather. The scent that wafts past my nose as the pages of an old cookbook flee my thumb, faded memories of a thousand thousand dinners (many of them obviously unsuccessful). Old typefaces laid long ago with handset lead type, tarnished gilt edges and worn marbled endpages... I could go on, but the single thing I love most about books must certainly be: the hunt.

You'll note that not very many of the things I mentioned are true of new books. That's not to say I turn up my nose at new books; I've purchased rather a lot of them and spent rather more than my fair share of hours in both Borders and Barnes & Noble. It's just that in the days of Internet bookselling the hunt for a new book simply isn't much of an adventure.

Whatever it is that draws me to these aged agglomerations of paper, ink and ideas, beyond the contents or the authors, there is the object that supports all those things. There is gilding and sewing, headbands and backboards, cloth and leather, paper and paste, the tactile certainty of the ineffable thing. And of course, there is the quest to find the thing.

The new guys in the big spaces lack several small-but-crucial features I cannot do without. For one, they don't have the bell over the door that jangles when I walk in. I love that about second-hand and rare bookstores. They all have that bell. Like it comes with the kit or something. A jangly bell, ten thousand useless backlist titles, a cat and ten genuine nuggets to bury among the dross.

In my wallet at any given moment is a short list of titles that I'm looking out for. In my head is a much longer list of 'target of opportunity' titles. Most of them are on my list simply because I want to read them. Or because they have some sort of personal meaning to me. Most have very little in the way of resale value. Periodically, I get to throw the list away and make a new one. Because I generally find what I set out to find.

My dad taught me that. Never a day went by when he didn't have a list of books in his wallet. It was as mandatory as his driver's license. When we were cleaning out the house after he died, we found a small pile of booklists, squirreled away in drawers and between the pages of books. And he had thousands and thousands of books, rooms, and boxes, and lockers, and an entire attic full of books. Because patience and persistence and a willingness to shift the stacks at auctions will eventually bear fruit.

If it exists in the Pacific Northwest and someone is willing to part with it, I will eventually run across it. 

But that's not what keeps me hunting... it's the things I find beyond the musty book exchanges with cats and jangly bells. Things I find when I'm not looking or that I didn't know I was looking for in the first place.

At the Goodwill in Port Orchard, Washington I struck just such a vein of gold. Journeys Through Bookland was published in 1909 and edited by Charles H. Sylvester. It's a 10-volume reading plan for children and their parents to wade through the classics of western literature. Each book is bound in grey-green cloth with a beautiful art nouveau design gilded and embossed into the covers and spine. Each story begins with an illuminated capital and is lovingly illustrated with fanciful engravings and halftone plates.

They've been given pride of place in my collection (and an honor guard of Iron Bunnies as you can see).

There's something about holding an old kid's book that you don't necessarily get when you're holding a copy of Joyce or Proust. It takes very little effort to envision the bright young minds that were inspired by these books, youngsters in pre-modern kit, knee-pants or ruffles. Young minds leafing through the pages while sitting on velvet chairs stuffed with horsehair. Youngsters who went on to become moms and dads in their own right. And farmers and pharmacists, barristers and bootleggers. (Yes, bootleggers, it was printed in 1909 after all!)

Were they bought for a boy by his father ere he took ship for foreign climes, off to fight in the trenches of a War alleged to End All Wars? Was it then passed along in turn as the boy became a man and took his turn against the Germans in '42? Was it the first glimpse of print for a girl in an age when women weren't supposed to read such things? Or were they an item of furtive erudition in a time when it was ill-advised for a person of color to seem too educated, hoarded in hope of a better tomorrow?

So much has happened since these books were published, so many stories lie between the lightly-yellowed pages. Stories I can never know but only imagine.

Whatever their tale, the books I found were obviously treasured by someone for over a hundred years before the finally ended up in the donation pile. Short of holding a family Bible in your hands, you cannot ask for a more poignant cross-section of a life. Every old book has a story to tell. Beyond the story it contains, there is the story that it supported, the life that it led before it came to me.

I'm not sure why I love and collect children's books but I do. Probably because that's when I discovered the simple joys of a book.

Without an effort, I can drum up memories of the dim stacks of the Sedalia Public Library, staring up through the wavy glass at the outline of my dad's feet as he browsed the adult sections above my head. There was something comforting about the basement space in that monolithic old Carnegie building on Third Street, at the foot of that grand old staircase. I spent innumerable happy hours there as a kid, looking at pictures of tanks and helicopters, occasionally glancing up to see if dad had shifted to a new section. (Yes, there was an astonishing number of children's books dedicated to weapons of mass destruction in those days and I think I probably read enough of them to become a UN weapons inspector.)

As all children must do, I grew up and transferred to the upper floors with my dad. Bought my own books, started my own private library to match his. And as I sit here staring around me at the books on my shelves, I wonder what stories the antiques have to tell, and I ponder the stories that those new books of mine will one day acquire. But that's a thought for a future bookhunter.

I have some childhood reading to catch up on that has nothing to do with helicopters... or tanks.

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What were your favorite books as a child? What books do you collect (if any) and if you don't collect the books you read, I'm curious as to why? Leave your answers in comments!