It appears that Amazon is doing something right this time, although for self-interested reasons. There have been moves afoot for a while, spearheaded by Borders (the most-influential brick-and-mortar bookstore chain), to get publishers to remove cover prices from books. Allegedly, printing the cover price on books makes it harder to engage in differential discounting—that is, discount bestsellers more and nonbestsellers less (or, perhaps, not at all or even charge a premium). <SARCASM> Obviously, the people at Borders aren't as smart as car dealers: They've managed to discount based on demand, both locally and nationally, for fifty years in the face of a "Manufacturer's Suggested Retail Price" that is public knowledge. </SARCASM>

Leaving aside the practical and consumer-protection issues involved, there's a much more important reason to squelch this move: it interferes with existing contracts between authors and publishers. The vast majority of all publishing contracts—and even more in the past—base their royalty rates and advances on the "cover price" of a book. To comply with the Borders proposal, the publishers must either renegotiate the entire royalty basis—which, as it would be an excuse to lower royalty rates, would be vigorously and properly resisted by authors and probably deserve extensive antitrust scrutiny—or change a definition in the contract. However, changing that definition probably requires modifying the contract anyway; and, under UCC 2-207, that requires a written agreement between the parties, because it relates to a critical term in the contract (the price in the transaction between the author and the publisher). One might argue that as a "term of art," it will evolve as industry practice evolves. Perhaps that is true for new contracts; it is not true for older ones, particularly contracts entered into before 1989. Changing the definition sub rosa would destroy compliance with the "meeting of minds" between the parties, which is measured by the parties' expectations at the time the contract was signed. In other words, it would be a breach of the contracts.

The underlying problem is that in the mid-1990s, Borders was owned by K-Mart; it appears that some of those executives have gained power in the company. K-Mart has attempted to engage in differential discounting for decades. Of course, given that K-Mart is in bankruptcy, the likelihood of success in an inherently noncommodity market, such as that for books, seems rather slim. It sure sounds good when making presentations to market analysts and bankers, though, because it points out that (by the illusory methods used by market analysts and bankers) Borders, or whomever, retains substantial ability to improve profitability via price adjustments. All of this assumes a high degree of demand elasticity in the trade-book market; and, if sales figures over the last decade have shown nothing else, it is that there is essentially no such elasticity.

On the one hand, we have bad economics and bad logic leading to bad business practices. On the other, a monopolist (or at best oligopolist). You figure out the probable result.