2021 will go down, among other things, as the year with a lot of people having a lot more money than they know what to do with. Aggressively escalating rare book prices set the tone for future market conditions: scarcity wrapped in higher prices. Is $471,000 too much to pay for a J. K. Rowling, “Harry Potter and the Philosopher’s Stone.” [London]: Bloomsbury, [1997], first edition in hardcover? I am not sure. In a world where people launch cryptocurrencies as goofs to see how high they can  pump the prices, I do not even know how to price a book which was published as recent as 1997. But I am pretty sure that all these rare books selling for $100,000 and above are not necessarily another indication of irrational exuberance.

As the year is coming to an end, our Rare Book Sale Monitor is focusing on the 4th quarter, and has gathered some interesting data for us to analyze:

Heritage Auctions at their December 9 – 10 Rare Books Signature® Auction, sold the J. K. Rowling, “Harry Potter and the Philosopher’s Stone,” first edition hardcover for $471,000 including buyer premium. Even though both the paperback and the hardcover were published on the same date, neither has bibliographical priority. The paperback with a total edition of 5,650 copies sells for a little over $10,000 while the hardcover edition with only 500 copies produced primarily for distribution to public libraries, is as scarce as it gets. Could it be worth close to half a million US dollars?

During the same event, more down to earth sales were achieved. For example, the F. Scott Fitzgerald, “The Great Gatsby,” New York: Charles Scribner’s Sons, 1925, first edition, first printing with price intact ($2.00) and considerable professional restorations, sold for $100,000.  This is below market price for a first printing and condition may have been a factor.

At the Swann Auction Galleries event, “Early Printed Books,” held Oct 14, 2021, a sleeper hit made its appearance. A two volume manuscript on paper, titled “Costumes et Plantes de L’Hindoustan,” watermark dated 1769, with 112 full-page illustrations interspersed with text and 115 hand-painted miniatures of Hindu traditions, sold for $100,000 including buyer’s premium. Get this, the estimate assessed by Swann a mere $3,000 – $5,000.

 

At the Christie’s “Fine Printed Books and Manuscripts including Americana,” held Oct 1-15, “Astronomia nova,”  by Johannes Kepler, published in 1609 sold for $687,500. The estimate was set at $200,000 – $300,000. The first edition of Kepler’s masterpiece is one of the most significant books in the history of astronomy, containing the first presentation of the first two laws of planetary motion and heliocentrism. The book contains the first mention of the planets’ elliptical paths and the change of their movement  the closer they are to the sun.

 

At Sotheby’s and the “Livres et Manuscrits” auction held Nov 30 – Dec 8,  12 volumes titled “Relation de ce qui s’est passé en la Nouvelle France en l’année 1639 [et 1640, 1642, 1643, 1650, 1651, 1653, 1654, 1655, 1656, 1657, 1658, 1659, 1660, 1661, 1662, 1670, 1671 et 1672].” Paris, Cramoisy, et Mabre-Cramoisy, 1641-1673, sold for €226,800. The estimate was €20,000 – €30,000. These annual reports, published between 1632 and 1672, are the work of the Jesuit missionaries in Canada and are regarded to be an essential source of Canadian history.

Magician and book collector Ricky Jay picked a good year to sell his collection in October in New York, fetching a total of $3,835,694 through the Sotheby’s event. The first edition of Scot, Reginald’s explosive treatise on witchcraft “A serious debunking witchcraft and demonology” London: [Henry Denham for] William Brome, 1584, estimated at $50,000 – $70,000 sold for $100,800 including buyer’s premium.

The highlight of the year, sold at another Sotheby’s event: “Making Our Nation: Constitutions and Related Documents,” which was held on November 23rd.  Three pages  (8″ x 13″) of the first separate printing of the amendments that became the Bill of Rights,  sold for $1,532,500. The estimate was set at $700,000 – $1,000,000. It is the earliest printed version to enumerate the proposed amendments as clearly defined articles by the House of Representatives, on Monday, 24th August, 1789.

A successful auction is destined to generate the highest possible price, but what about the performance of some of the other channels, such as book fairs and on-line marketplaces? Abebooks lists “Storia naturale degli uccelli trattata con metodo e adornata di figure intagliate in rame e miniate al natural” by Saverio Manetti as the top seller of 2021 for $191,000. The Abebooks top 10 sales of 2021 totaled $741,000. Ten years ago the Abebooks top 10 for 2011 totaled a mere $220,000. When compared to last year’s top 10 sales, Abebooks had almost tripled its revenue.

The Antiquarian Booksellers’ Association of America (ABAA) had its share of challenges in 2021. What was originally scheduled to be an in-person book fair event in Boston, ended up as another ABAA Virtual Book Fair. Our Rare Book Sale Monitor had captured some key statistics from the most important ABAA events held during the last two years. The sell-through rate statistic gives a nice comparison between performances experienced by most dealers at these events. It measures the amount of books that were sold from what was available for sale during the events’ time span. Based on this statistic, the California fair in 2020 was the most successful one so far while the 2021 Boston event did better than the corresponding 2020 fair. Interesting to note, the two events held in 2021, New York and Boston, were significantly different despite having most of the same dealers participating. While total number of books for sale was not far off 6,427 vs. 5,735, the average price of a book for sale in New York was more than double that in Boston. Was that a factor in New York’s poor performance? Maybe in a metaverse event there is a difference between New York and Boston, but in a virtual event it is all the same.

 

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Rare Book Optimal Pricing

by jim on November 9, 2021

How can rare book sellers determine the optimal price for their items brought to market? If the price is set too high, the buyers may not bid to buy, if the price is set too low, the stock may be sold below optimal pricing. The information that is needed to set the right price for any rare book is typically distributed among the many sellers and buyers who, for the most part, maintain such information private. Only the seller dealers know how much profit they are willing to sacrifice by offering a discount to potential buyers. Only prospective buyers know how much they are willing to pay for items they are collecting. It is thus quite obvious that market prices are not, by themselves, sufficient to guide sellers on optimal pricing.

Marketplaces in which prices alone can guide efficient trade of rare books are highly theoretical. Adam Smith first described the concept of the invisible hand, which guides markets and renders external interference unnecessary, in his 1776 classic, The Wealth of Nations. But how buyers or sellers come to agree on a price that is mutually satisfactory is far more complicated than Adam Smith’s famous concept. Buyers want to pay as little as possible, while sellers seek to sell books at the highest possible price. In economics theory, competitive equilibrium is attained when the price, for the quantity available for sale is equal to the price for the quantity demanded. Note that the competitive equilibrium price is not necessarily the same as the optimal price, at which the total profit of the seller is maximized.

Rare books are heterogeneous, for the most part. Each book has unique attributes which vary from one to the next, such as; condition, imprint, provenance, autographs, marginalia, etc. As a result, sellers have the flexibility to inflate pricing for items that are perceived to be collectible. While this practice discourages bargain hunters, it can lead to overestimating the market’s inelasticity of demand. Despite the uniqueness inherent in rare books, there also exists a certain level of substitution. Two books are near-substitutes if an increase in the price of one book increases the demand for the other. All rare books can generally be considered to have near substitutes, with some variation in genre, authorship, imprint, physical properties, etc. The extent to which a price change in one, affects the demand for another, is dependent on how close they come to being perfect substitutes.

The figure below depicts a hypothetical world, in which 3 competitive equilibriums for two sets of near-substitutes A and B are attainable. The area below the curve for Rare Books A is occupied by the excess demand for its near-substitute – Rare Books B, while the area above the curve is occupied by the excess supply for its near-substitute. As prices for the limited quantities of A & B rise, the curves converge, first at area 1, which is the lowest market-clearing price, where there will be zero excess demand and where prices stop increasing, at least temporarily.  If prices start high with scarcer quantities, prices converge monotonically down to the highest market-clearing, at area 3. At these points, where the curves cross, a pair of prices and quantities with neither excess supply nor excess demand for either A or B, is where competitive price equilibrium is reached.

 

 

Even though the mathematical proof to the theory is well-formulated, the practical problem to finding optimal prices can still be daunting. With near substitutes, the best way to find optimal prices aside from trial and error, is through an auction of some kind: on-line, live, reverse, bid-ask negotiations, etc. With auctions in mind, the substitute aspect generates prices that are good guides to pricing decision making. In theory, the equilibrium price attained at the highest market-clearing area, is the optimal price for sellers to price their similar items. It implies that auctions which start the bidding process at the highest price or encourage bidding at the high end, such as Decreasing-Price Auction (Dutch auction), Sealed Tender or Vickrey type auctions (Second highest bid), should offer the best means to reach optimal prices.

In conclusion, seller optimal pricing for rare books with scarce quantities and high demand, should be priced at the highest market-clearing price equilibrium. At such price level, demand will match supply at the highest price possible. The best way to determine such a price is to examine sale prices of near substitutes that were sold at Dutch, Sealed Tender or Vickrey auctions. While Dutch or Sealed Tender type auctions are rarely held by auction houses offering rare books for sale, Ebay’s proxy bidding system, where the winner pays the amount equal to the Second-highest bid plus the increment, is quite popular.

References:
Milgrom, Paul. 2017. Discovering Prices. Auction Design in Markets with Complex Constraints. New York: Columbia University Press.
Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen and Co, Ltd.
Vickrey, William. 1961. “Counterspeculation, Auctions, and Competitive Sealed Tenders.” Journal of Finance 16(I):8-37.

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Rare Book Sale Monitor update – 3rd Quarter, 2021

September 22, 2021
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Sadly, the pandemic is still with us, but so are the Virtual Book Fairs (VBF)! The Antiquarian Booksellers’ Association of America (ABAA), had planned to hold an impromptu, in-person event of its highly successful New York fair this month, but  switched to a VBF instead, complements of the Delta variant. At this time we are […]

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The Good, the Bad and the Rare

August 22, 2021
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Alabama native Asa Carter was a home-grown American fascist and anti-Semite, founder of the Ku Klux Klan of the Confederacy, right-wing radio announcer, publisher of the segregationist newsletter “Southerner”, and secret author of the famous 1963 speech by Gov. George Wallace of Alabama: ‘Segregation now…segregation tomorrow…segregation forever.’ Forrest Carter’s first book The Rebel Outlaw: Josey […]

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The Rare Books of Popular Chemistry

July 19, 2021
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In a popular science book, the English Chemist James Lovelock described his Gaia hypothesis to a lay readership. The hypothesis proposed that living organisms and inorganic material on Earth are part of a dynamic, integrated, self-regulating system that shapes the Earth’s biosphere, and maintains ideal conditions for life to flourish. Initially received with skepticism, the […]

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Copyright Page or “Confusion Page of Anomalies”

May 31, 2021
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The publishing details for a book are usually printed on the back of the half title or, in some cases, the title page. This page is sometimes called the ‘copyright page‘ or the ‘publishing details page’. Through the years, publishers have used a number of copyright designations to specify the edition or the printing of […]

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Rare Book Sale Monitor update – 1st Quarter, 2021

April 19, 2021
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As the pandemic spread and live book fair events shut down around the world, Virtual Book Fairs (VBF) offered a new way to buy and sell books online. At last count, there have been at least a couple dozen virtual fairs organized by IOBA, PBFA, Getman, ABAA, ABA (“Firsts”), SLAM and others. Judging from the […]

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The Most Complicated Machine

April 5, 2021
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A universal notation with symbols employed that are few and simple enough, furnish the most important assistance in the design of the order and succession of the movements in a machine’s engine. This was the most important tool that Mr. Charles Babbage employed in his attempts to construct his celebrated calculating machines. In his own […]

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The Importance of Translation Exemplified by the Four Great Classical Novels of Chinese Literature

February 24, 2021
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The books that sinologists commonly refer to as the Four Great Classics of Chinese literature are: Dream of the Red Chamber, Romance of the Three Kingdoms, The Water Margin and Journey to the West. Their chronology spans from the Chinese Ming dynasty to the Qing Dynasty. The Water Margin and Romance of the Three Kingdoms […]

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Rare Book Sale Monitor update – 2020

January 21, 2021
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While much of the world has come to a stop at times during the pandemic, the rare book trade, confronted with challenges of its own, managed to finish the year without a major loss. It was, however, especially painful for rare book sellers – at least physically – who normally depend on in-store, in-person book […]

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