The Declining Value of Inventory

By Bruce McKinney

In the biblical story of Noah and the ark the emphasis is always placed on the miracle of survival. A male and female of each animal are marched up into the boat to float for forty days [and nights] and to repopulate the earth once the flood has passed. No reference in the story is made to how anyone or anything feels about being left off the boat. Well, these days, in the book business, the ark is being loaded and inevitably Noah is always deciding he still has too much. In the meantime the water is rising. At least that's the way it is in the world of collectible books. For many booksellers there is no room in the ark.

Recently I spoke with a dealer who has hundreds of thousands of items online. He uses triage software to price his material a penny or two cheaper than other listings of the same item. In this way he has shifted from self-determined to market determined pricing. It makes sense if selling books is the absolute goal. The market decides.

Selling collectible and used books are of course not the same thing. Neither is the dividing line between them fixed. It is relentlessly shifting and the shift has been negative because material is flowing onto the net in record numbers and its turning out that what often used to be considered unobtainable is now available in multiple copies.

The math is easy. Here is a balanced market.

Copies --------------- = 1 Collectors

When there are more collectors than copies the value of copies is firm and rising. When the number of copies is greater than collectors the value is weak and falling.

Today there is a relentless flow of fresh material into the market and a sense that there is probably much more to come. This translates into a weak market:

3 or more Copies ------------------ = 3 1 Collector

In a strong market it looks like this

1 copy every 2 to 5 years --------------------------------- = > 1 Multiple Collectors
The anecdotal evidence suggests that for an increasingly large population of titles and editions the number of copies online is always increasing while the number of buyers for them at a minimum is not increasing as fast. Many believe the number of collectors is falling. I doubt that but understand it can feel that way. It's almost certain that collectors and collecting passion are not keeping pace with the tsunami of material flooding the market. The question is whether this is an aberration or evidence of a fundamental change in collecting interest. In other words, is it a recession or depression?

To me the market looks unstable but healthy. Material is flowing to market on listings sites, in shops, at shows, on line, at auction and eBay. And what used to be difficult to see is now hard to miss. There are lots and lots of copies. They have been around but have never been so visible.

Efficient markets adjust price to compensate for over-supply and books are no exception. The trick today is to understand importance, availability and appropriate price and not to over-charge if you are a dealer and not to over-pay if you are a collector.

This will turn out to be the most exciting time in the collecting of books, manuscripts, and ephemera in the past 500 years. It will some day have a name and both buyers and sellers will reminisce about how difficult it was. In the meantime we have to get through it. Both buyers and sellers are adjusting to a world pregnant with information. The revolution is underway, the way forward a thin light in a tunnel that some believe is a train bearing down but which I personally believe is a new world at hand.

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The Declining Value of Inventory

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