Wednesday, January 7, 2015

Dance Of The Just Plain Folks

Die Mauer ist weg!, 2014, Mark Power
A few weeks back, Alec Soth posted a note on LBM's Tumblr touting the new Mark Power book, Die Mauer ist weg! as his favorite of the year. I happened upon the plug shortly after it was posted -it had only received a few notes at that point- and I immediately sized up the situation. Soth's post meant that this book would likely sell out. I had a choice. I could buy it now at a reasonable price. Or I could wait, in which case there was a good chance the book would soon become inflated beyond my means.

I pulled up a few spreads on my computer. I read some background on the book, which documented the day the Berlin Wall fell. The cover was catchy. It seemed interesting. But so do a lot of books. I've got a list of them a mile long and I can't have everything. In the end I decided to pass. 

It's now a few weeks later and I'm fine with my decision -I haven't thought much about the Power book since then- but with all the year end book lists and surrounding craziness I've been brooding on the photobook market and its quirks. If you consider photobooks as pure investment commodities the market sometimes behaves in crazy ways. The most bizarre aspect may be that this craziness repeats itself, again and again.
i, 2014, Eamonn Doyle

Last Spring, for example, a similar situation to Soth/Power presented itself when Martin Parr posted on HCSP that he'd found "the best new street photo book I have seen for a decade." This turned out to be Eamonn Doyle's book i

"Beautiful printing, and great images. I am sure it will sell out pretty quickly," wrote Parr. Of course he was right. Parr could write similar words about almost any book and his prediction would be realized, because a positive Parr review is a self-fullfilling prophecy. Everyone reading his post on HCSP knew it. The smart call was to buy up as many copies as possible. I considered it but I just couldn't pull the trigger. The book did not appeal to me at all. So I passed. Eight months later it's going for $300 on Amazon and Eamonn Doyle is featured in Aperture 

The Soth and Parr reviews were the equivalent of insider tips on a hot stock. They were like learning that Warren Buffett has a fondness for railroads. But before he buys Burlington Northern, he's letting a few people know his feelings. In the financial world, that would not happen because Buffet would be foolish to show his hand. In fact many investors would trade their left nut for that type of information, because it can lead to huge differences in investment outcome. If you buy before Buffet a stock may be one price. Buy after him and it's almost certainly higher. 

Clever stock traders can leverage these small differences in information and timing into fortunes. The book Flash Boys does a pretty good job describing a world in which investors push around billions of dollars between various accounts in search of advantages measured in microseconds or fractions of a penny. The margins are minuscule but they become sizable when multiplied by large amounts. Any edge can be advantageous. That's why the SEC has very strict rules governing the distribution of information and timing of purchase orders.
Hidden Islam, 2014, Nicolo DeGiorgis
But in the photobook world there are no such rules. Alec Soth or Martin Parr can announce "I'm going in!" If the market behaved rationally, all would follow immediately. Remember, these guys are the book world's Warren Buffett. Buy before Parr at one price. Buy after for more. My nine year old can do that math. The pundits sometimes pave the way and prepare the perfect investment, with relatively small risk, potentially large returns, and all of it juiced by a healthy dose of unregulated insider information. 

If you track certain forums online it's pretty easy to discern which titles are hot. Heck, the annual Photo-Eye lists do a serviceable job of identifying desirable books. Any book listed in the top ten is likely to be a good longterm investment. Unfortunately, by the time the lists are made public many of the books have been snatched up. Hidden Islam, for example, sold out long before it topped many 2014 lists (it's now in its second printing on the way to the third). Anything in Parr/Badger is an investment lock but it's the same story; the information is already too old. 

But all is not lost. There is often buzz beforehand, for example the two cases mentioned above. Facebook's Photobook group is a good place to prowl. If you're paying attention it's possible to spot likely jackpots. It seems easier than picking stocks. And it's all strangely legal. So why isn't Wall Street interested?

Let's say Eammon Doyle's book was published in an edition of 750 priced at $50 apiece (I don't know the exact numbers but these are close). For $37,500 an investor could buy the whole run and sit on it, gaining monopoly control. He or she could then sell at the price and schedule of their choosing. If the above math panned out, the investment might be worth $200,000 just a few months later. 

OK, to a typical starving photographer $37K is a lot of money. But in the investment world it's a pittance. People spend that much on Wall Street every nanosecond. What's another 750 photobooks? For a real player that's chump change.
Minutes to Midnight, 2014, Trent Parke

Of course there is some risk. One counterexample is Minutes to Midnight. When rumors of its reprinting began surfacing in 2012, it appeared to have all the makings of a stellar investment. The book had been out of print for years. Demand was high, and it was further stoked by continual delays. A publication date would be announced by Steidl. It would pass. Another date would be announced. It would pass. Another date, and so on. Meanwhile, rumors flew. Have you seen the book? Does anyone know what's going on? Will it happen this year? Next year? Will there be enough copies? This went on for years. By the time it came out in November 2013 the level of pent up demand and frustration was explosive. The book should've sold out immediately. 

But it didn't. You can go on Amazon today and buy a copy for roughly what you would've paid then. Someone who invested $37K in Minutes to Midnight last year would today be even, which on Wall Street is another name for shit outta luck. But hey, welcome to investing. 

I'm explaining all of this as if it makes sense but honestly the economics of photobooks are mostly a mystery to me. The market commonly misbehaves. In economic terms, luxury goods are supposed to act elastically. Because they aren't essential, a higher price weakens demand, and people supposedly alter their buying behavior accordingly. For example, if a bottle of beer costs $50, very few will buy it. It's a luxury good (although essential for some). The opposite of that is something like gasoline. No matter what it costs people need to drive. So price has less effect on demand, at least up to a point. It's inelastic. (But a photobook about gasoline? That might behave differently.)

By any standard photobooks are a luxury good. So demand should be elastic, right?But the market doesn't always behave that way. Sometimes a higher price creates more demand for a book. In economic terms, these are veblen goods

The Afronauts: Caught in a speculative bubble?
A first edition copy of The Afronauts, for example, is more desirable now at $1,200 than when it was first sold at whatever the initial price was. Not only is it perceived as a good investment, even at the inflated price, but the premium pricing creates a snob effect, since only certain people can afford it. At least that's one theory. Inelastic. Weird. 

Of course with luxury goods there's always the risk of buying into a speculative bubble. You're counting on group-think, not material worth. If the group think shifts, you may be stuck.

One factor which compounds all of the above is the distribution of photobooks through used bookstores spread across the globe, each with its own market, knowledge, and pricing dynamics. For many out-of-print photobooks, buying a book is decidedly not like buying Burlington Northern. When you buy a stock you go on a common exchange which regulates the market and serves as the intermediary between all buyers and sellers. Price is the same regardless of location or identity. That is roughly the way new photobooks work too, although there are many complicating factors which alter price.

For used and out-of-print photobooks though, it's different. Each bookshop is its own private exchange. Pricing can be haphazard. Maybe a book was given a certain price, then put on the shelf for a decade, where it still sits today. Physical condition is a judgement call subject to huge variations. Maybe the owner doesn't have a good sense of current book prices, or maybe they're looking to unload or negotiate. Maybe it's in another country or another era or the wrong section or who knows. In short it's not like buying a stock on a common exchange. It's more like looking for a four leaf clover.
Wild Flowers, 1983, Joel Meyerowitz

All of the hidden X factors help make book hunting fun. If you have a good sense of what things are worth you can often find steals. I was with David Solomons in Stockholm a few years ago when he found a used copy of Wild Flowers on a dusty old shelf in the back of a downtown bookshop, mispriced. Who knows how long it had been sitting there, just waiting for David to come along. Steal! That stuff happens more often than you might think

That's one reason I rue the demise of small used bookstores. (Here comes the old fogey rant beginning "Why, back in my day..." Don't act surprised. You knew it was coming.) Not only are they fun to browse but they add an element of unpredictability to the marketplace. In contrast, large stores like Amazon act more like a central stock exchange. Whether you're in Chicago or Miami, price and availability are generally the same on Amazon. 

But poking around the used bookshops of these cities at ground level, you'll likely encounter very different inventories from place to place. Maybe the books take on some of the character of the city like a regional accent or a local radio station. Who knows. I like to imagine they're a window into a past world, less NYSE, more funky uncertain clusterfuck. 

Yeah, crazy world. So what are the just plain photobook loving folk to do? Borrow $37K to monopolize the next buzzworthy edition? Buy the complete Photo-Eye top ten? Steal Parr's to-do list? 

Nah. Relax. Ignore the pundits. Just buy what you like. You're gonna die eventually and chances are your kids won't keep that shit around afterward. So your collection will likely wind up in a used bookshop anyway. Maybe it'll be alongside Power or Doyle or some other vaunted title. Mispriced. Steal. Welcome to investing.


Hernan Zenteno said...

Another thing that I don't understand is the need to be exclusive not printing new editions. I am one of those that are waiting the reprint of Images a la Sauvette or The Decisive Moment of Cartier Bresson. The book wasn't reprinted for decades. Other book that I would love to have is Dream/Life of Trent Parke but is ridiculous costly now for people that use it like jewel. Common, photos are for show them, Isn't? Oh, well, we have the case of Vivian Maier. Well, we can call it the Maier syndrome, an exception. I don't understand why there are not reprints. Surely there will be a lot of purchases to pay the new edition. But no, maybe we will have to wait decades too in this case or wait until everybody forgets this book.
Most of the people I know not have a lot of money to expend in a book. We have to choose it very precisely. But most people I know that purchase books are photographers. I remember went to do a portrait of an argentinian politician and found in his offices the giant book Sumo, of Helmut Newton, with the Phillipe Stark designed table included. Maybe the secret plot of this market craziness is that the real speculators are politicians and CEOs that are playing or doing experiments with financial games in photo book market.
The chances to find photo books at low price are more in the places with a lot of transit of this kind of books. Here in Buenos Aires, I only found crappy edited books, not the good ones, at less for me.
Good article, thanks

Anonymous said...

If you ever do decide to buy the complete press run of a book as an investment, be sure to allow at least a few copies of it to reach the marketplace.

Otherwise, how will you generate the buzz about it that will allow you to sell the rest of them at a premium?

Blake Andrews said...

I recently came across a good example of a reprint. The second edition of Jason Fulford's The Mushroom Collector came out last fall. The first edition has long been sold out so this was welcome news. The new version was published by the same publisher, The Soon Institute, and featured the same photos. But it was in paperback, shrunken to 1/4 of the original, and available in a large press run at discounted cost. This seems like a good way to satisfy high end collectors as well as the masses. The investors can buy the first edition. The rest can buy the low-cost second edition. I wish more publishers adopted this strategy.

As for the Anonymous question, I don't think you could ever buy the entire press run of a book. There are always a few circulating among the pundits.

Hernan Zenteno said...