Can consumption really put businesses out of business?

Well, surely not. But that is what you might think after reading this story by David Streitfeld in the New York Times. What business is he driving away? Bricks and mortar bookstores. And how is he doing it? By reading.

Here’s one example of how I casually wreak destruction. I was reading “Sylvia,” an account by the late short-story master Leonard Michaels of his unstable first wife. Looking for material about Mr. Michaels, I saw his friend Wendy Lesser had written a long essay about him in a book published last year by Pantheon. I could buy a new paperback edition of that book, “Room for Doubt,” for $13.95 plus tax in a bookstore. But there were dozens of copies from resellers available online for as little as one cent, plus shipping.

A penny felt a little chintzy, even for me, so I bought a hardcover copy for 25 cents from someone who called herself Heather Blue, plus a few bucks for shipping. Neither my local bookstore nor Pantheon — whose parent, Random House, announced this month it would cut costs by reducing five divisions to three — nor the author got a share. The book looked good as new.

Now apparently what would have been better would be if he had paid full price for that book in a bookstore. The author, publisher and bookstore would have got another sale but at what cost? The alternative — for society — was for Streitfeld to read a book that has already been printed and was not being currently read by anyone else. So from a social perspective, sharing is better. This is the whole rationale behind libraries which, if you believe this story, are a greater evil than second-hand bookstores where books are easy to find.

There is even more to this. The reseller was selling the book for 25 cents. That is not the cost of printing the book, it was already printed. Moreover, it was likely that the cost was $0 with a little cost of cataloging and making it findable online. The point here is that the book was not worth anything to anyone else. There were enough old copies lying around that there were fewer potential readers — even into the future — than copies. So the re-sale price was at cost and also a reflection of the book’s current worthlessness. Can we really say the author deserves more when they actually sold more books than there were willing readers far into the future?

Near as I can tell, the issue is guilt — the magnitude of which I am in not position to judge. But there must be better ways of alleviating it. For instance, if the author or publisher were concerned about guilt and wanted to commercially exploit it, all they need to do is provide a means of voluntary payment to offset that guilt. Then Streitfeld has his guilt alleviated and we all save on the resource cost of printing another copy of the book. But they don’t have that.

One of the curses of being an economist is that I am constantly surprised about what people feel guilty about. The idea that an individual should feel guilty for hastening by micro-seconds the death of an antiquated form of business built apparently on high search costs is extraordinary to me.