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Business Strategy

Publishers, and particularly academic publishers, The New York Times reports (July 4th), are worried that Amazon is cutting the discounts it offers customers on their books, thus increasing the prices and hurting sales; also, in some cases, simply delisting them, leaving publishers and authors high and dry.

Asked why it is raising prices, the company responds with an example of what I think teachers of the science of business communication would call “best practice” (though we might call it something else). “We are actually lowering prices,” said Sarah Gelman, an Amazon spokeswoman. “We pay for these price decreases with relentless focus on improving our execution — and this commitment to low prices is one of the reasons our print books business continues to grow.” Offered a list of random titles whose discounts had dropped, she said she would not talk about specific books.

Amazon’s remarkable success (in destroying bookshops), the report states, has been “built on superior customer service, a vast range of titles and, most of all, rock-bottom prices that no physical store could hope to match. Even as Amazon became one of the largest retailers in the country, it never seemed interested in charging enough to make a profit. Customers celebrated and the competition languished.

“Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices.

“Stephen Blake Mettee, chairman of the board of the Independent Book Publishers Association, said that Amazon was simply following in the tradition of any large company that gains control of a market. ‘You lower your prices until the competition is out of the picture, and then you raise your prices and get your money back,’ he said.”

We should scarcely be surprised by this. Isn’t our very own Ryanair at the same game? Some of those who objected to Michael Cronin’s recent essay on the airline’s business practices and routine oppression of the customer sought to make the point that Mr O’Leary had been a great benefactor of mankind and that in the bad old days before Ryanair it was a case of gifting Aer Lingus (booh!) £500 for a trip to London or forget it. Funny, that’s not how I remember it: more a case of 46A out to Dun Laoghaire, five nice pints on the ferry, dozing off around Llandudno, plenty of cold water over the face and head in the splendid lavatory at Euston station at seven, bacon, egg and sausage (keep egg stain off the tie), packet of Polo mints to take care of the previous night’s Guinness and there, fresh as a daisy, for your interview at Oxford Circus at nine: “Tell me Mr ... sorry I can’t pronounce Irish names ... why do you want to work as a London Underground booking clerk?”

If you persist in believing Michael O’Leary to be a philanthropist, ask the Poles how much it costs them to get home and back at Christmas and how long they have to save to raise the fare. “Ah yeah, but you have to hand it to him all the same ...” No you don’t.

New York Times on Amazon: http://nyti.ms/1a0RJjr

Michael Cronin on Ryanair: http://bit.ly/11BiRys