A View From Corona #15
Jeremy Lassen | March 1st 2004 at 1:05 pm
“The solitary, steep hill called Corona Heights was black as pitch and very silent, like the heart of the unknown. It looked steadily downward and northeast away at the nervous, bright lights of Downtown San Francisco as if it were a great predatory beast of night surveying its territory in patient search of prey.”
- Fritz Leiber, Our Lady Of Darkness
Okay… For this Installment of A View From Corona I will present a get rich quick scheme for everyone still smarting from the stock market scandals and the “dot-bomb” debacle. Where can the middle class safely invest its money and get a reasonable rate of return?
I’ll tell you where – Books! Modern first editions to be precise. Invest your money in collectible first editions. What? Madness? Yes, possibly, but no more mad then day trading or over-inflated dot-com IPO’s. Am I kidding? Only partially. The collectible book market is relatively stable compared to the stock market, and it is far harder to game it (not impossible, but harder). Books that were worth a lot of money before the dot-com boom are STILL worth a lot of money. If, like any other form of investing, you consistently buy low and sell high, you can turn a profit, or at the very least, help support a book collecting habit. This is a quick start guide to investing in books, which is significantly different from collecting books.
First – the obvious – buy low, sell high. Always. 4 years ago was a horrible time to buy a Neuromancer, or Dune or other high priced item. Why? The market was high. A lot of people had a lot of discretionary income, and a small but significant portion of them dumped a lot of money into the collectible book market. Prices went up, and bargains for known quantities like a Dune or Neuromancer were hard to find. Bargains were still around, you just had to work harder to find them.
With the economy now in the toilet, bargains are easier to find… often it is simply a matter of figuring out which is the best bargain to go with. The advent of the Internet also makes finding those bargains much easier then it was even 10 years ago. The tools have matured such that even novices and computer unfriendly people are able to buy, sell, and browse books on http://www.ebay.com, or http://www.abe.com
Knowing the market is key to making money, and one way to know the market is to know the tools. Ebay and ABE are perfect tools for price tracking… you can see what prices dealers are ASKING for books on ABE, and you can see what individuals are actually GETTING for their books, by watching auctions on ebay. Since you can’t know everything about everything, always specialize…. In a specific author, or publisher, or in a specific genre or sub genre. Make a list of authors, and create your own price guides, based on sales histories from the above two sources. What exactly constitutes a good price for a Fritz Lieber book or a signed Roger Zelazny book? You can’t spot a bargain if you don’t know what the market price is. Right now there are a lot of bargains to be had out there, if you know what you are looking for. And with the Internet, its never been easier to find them. (For just $59.99 you can buy Jeremy Lassen’s BUILD A PRICE GUIDE[tm] tracking software for just this purpose… take all the grunt work out of the process described above, and put your specialized knowledge of your favorite authors to work, and MAKE MONEY! BUY NOW!*)
Another way to make money is by predicting the market. You still need to buy low and sell high, but instead of waiting for massive economic cycles to come and go, you can ride the waves of author and genre popularity. All you need to do is pick which books are going to be really popular with readers. This is not easy, but it’s not hard either. Publishers do it all the time, and they don’t have the benefit of reviews and awards lists to help them make their decision. Predicting popular/collectible authors is far less difficult then predicting which companies are going to go bankrupt because of CEO corruption, and which ones are going to reap obscene profits by lobbying senators and presidents.
Here’s how it works. A first time author puts out a novel. Usually, said novel has a relatively low print run because nobody has ever heard of the author. Eventually the first time author puts out a really popular novel. Hundreds of thousands of people are suddenly interested in reading this author. That means that tens of thousands of people are suddenly interested in collecting this author. So the demand suddenly exceeds the supply. You have an instant collectible hyper modern first edition. And it doesn’t actually have to be a first novel – it can be the first book in a series, or a break out novel that redefines that author.
There is an entire subclass of books in the above category that are easy to predict and offer a pretty quick return on investment – British hardcovers. Prior to the advent of the Internet and the global book collecting market place, it used to be that collectors simply followed the flag – if you lived in the United states, a US first edition was good enough, and if you lived in England, a British first edition was good enough. But now, collectors can buy from dealers all over the planet. And they can get rare and exotic editions of books that other collectors might not have… Always keep in mind that the most collectible edition of a book is the first trade hardcover edition of a book. This is the key to understanding why British hardcovers are a good investment.
The market for British hardcovers is MUCH smaller then it is in the US — print runs for are smaller, and first time/unknown authors, if they get hard covers at all, usually get significantly fewer then 5000 copies… Just enough to cover the library market in the UK. And if a book comes out first in the UK, the collectors market salivates over it because it represents the “true first” hardcover. There may be a US hardcover, but it isn’t the “true first”.
To make this category even juicier, there are many authors who’s books have UK hardcover editions, but have paperback editions in the US. THIS is where the real sweet spot is. What are some REALLY expensive British first edition hardcovers? Lets see. William Gibson’s Neromancer was a PBO in the United States, but the first trade hardcover edition was the British edition. This hardcover is now a very pricey little book. The Reality Dysfunction by Peter F. Hamiltion. Perdido Street Station by China Mieville. Ash, by Mary Gentle. Altered Carbon by Richard Morgan. The list could go on and on — Books that never had trade hardcover editions in the US but had relatively small hardcover print runs in the UK. The prices on these shot up very quickly once the US editions came out. In addition, ALL of these books were easy to spot, if you knew what to look for, and here’s why.
In addition to meeting the above criteria (UK hardcover, US paperback), they all had been receiving excellent reviews and award nominations, often times even before the US edition came out. If you can find a good British dealer, or reliable source in the US that stocks imports, you can do pretty well. At the very least, true first editions that are UK editions will hold their value BETTER then equivalent true firsts that are US editions, simply because the print runs are inevitably smaller. Speculate like mad with little to no risk!
Another good thing to keep an eye out for is remaindered copies of books that received excellent reviews, and awards/nominations, particularly if they are first novels. If the print runs were high, generally, remaindered items will NOT end up being worth cover price. But if print runs were low, you might end up with a good investment. Crossover authors that end up on the remainder table are also worth picking up. By this, I mean authors who have a significant following from another medium. Early Neil Gaiman books were remaindered often, and had small print runs. Subsequently, prices shot up, because his cross over audience began collecting his fiction.
Another oddball category of books to watch out for is “split run” hardcover and trade paperbacks in the US. It’s not very common for US publishers to do this, but it does indicate there is enough buzz and critical attention given to the book that it MIGHT take off and become popular. Two examples of hyper moderns that meet this description are Snowcrash by Neil Stephenson, and House of Leaves by Mark Z. Danielewski. Because of the split run, the hardcover portion of the run was much lower then it would have been if it were a hardcover only title.
Essentially, in order to make money investing in books, you need to predict what goes up in price. You need to understand the mechanics of print runs, and promotion. You need to know how and why authors become popular, and when they decline in popularity. An author may not be a flavor of the month, but collectors are a fickle lot, and their attention and money often go elsewhere quickly.
Knowing the mechanics of this fickleness is just as important as knowing the how an author becomes popular. Peter F. Hamilton’s Reality Dysfunction, and Robert Jordan’s first editions are good examples. Five years ago, you couldn’t get into the first two books of his Wheel of Time series for less then your first born. Today, they are popping up all over the place, at much lower prices. His popularity has waned due to “never-ending-sequal-itis”. Peter F. Hamiliton’s Reality Dysfunction was through the roof three years ago (mainly while the series was ongoing.) The inevitable decline in interest when a series finishes, or stagnates should not be underestimated. If you have bought books solely for the purpose of investment, it is good to be realistic about when a book has reached its peak value – the quicker it goes up in price, the more likely it is to go down. If the book that is less then five years old is going for more then $800, sell it. It probably won’t go up much more then that, and may in fact go down. A $775 return on a $25 investment is a great and should not be ignored because you might make a couple hundred bucks if you hang on to it another 3-5 years.
Of course, the opposite is often true. As you can tell from the above statement, investing in books is an investment for the long term. Expect many of our your investments to not fully appreciate for at least 5 years. You might hit a quickie during that time, but give your investments time to age. If you don’t, you may end up kicking yourself. For example: One of the hottest fantasy series right now is George R. R. Martin’s Song of Ice and Fire. When the first book came out in hardcover, it had a very non-traditional cover for a fantasy book and did not sell well. It was heavily remaindered. The second book came out and the series began attracting a bit more attention. But the series exploded when the first book came out in paperback (with a different cover, I might add). I picked up about 20-30 copies of A Game of Thrones from various remainder tables, and sold most of them for 4-5 times what I paid for them – an okay return on investment. And I turned this profit in less then 2 years, so what the hell. It was money in my pocket. BUT, I did hang on to a couple of them. They now go for 20 times what I paid for them on the remainder table. I wish I had kept a few more.
A note on “signed limited editions” and other “instant collectibles”. There is significant market for pre-signed limited editions… that is, books that have the print run specified, and kept artificially low. They price is can be anywhere between $40 and $400, depending on the book. These are often very good books to collect, but are rarely good editions to invest in. The reason is that the price, and supply (print run) is already set to match the sweet spot in the collectors market. The supply and demand estimations have already been made by someone who is looking at the collectors market specifically. Unless the demand for the author increases dramatically, these editions usually appreciate slowly, or not at all.
Books are not very liquid forms of investment. Often you have to wait for the right collector to stumble on your Ebay or ABE listing. Because that is where you are going to make most of your money. Selling books to used book stores, or dealers is not a very good way to get a return on a high value investment. It’s a good way to jettison investments that aren’t going to ever pay off, but if you really want the best rate, you have to figure out how to sell it yourself, and ebay is the easiest way to do this.
A dealer or used bookstore will generally give you 50% of the expected resale value, and that dealer may be planning on selling it for less then you think it is worth. A dealer pays a lot of overhead to keep regular customers coming in looking for bargains, and that 50% is barely enough to cover that overhead. Don’t begrudge a dealer for taking their percentage – they are the ones taking the risk, with their money – they are buying a high dollar item, paying for it up front, and hoping it sells before the value of the damn thing goes down, or someone steals it from their shelf, or it gets damaged, or any other number of things. If a dealer offers you a better rate, or is willing to take a book on consignment, treat that dealer with the kind of respect and awe you normally reserve for tribal elders, because they are doing you a HUGE favor.
Okay. That’s the mechanics of it, and some general strategies. But where do you find all this information that allows you to choose the right books? Online sources are good. Genre magazines that run reviews and industry news are great, Particularly British ones that can help get you a line on the above sweet spots. Award lists – not the winners, but the short lists, can often help you spot things.
OR, you can subscribe to any number of “hot tip” services that are wiling to pass on information to you for a low monthly fee. I myself offer an email list – Jeremy’s Hot Picks For The Book Investor*. My standard monthly subscription fee is $19.95 but I give pre-payment discounts if you are willing to by a year in advance. You can get rich off my 10+ yeas in the industry… I have the knowledge and you have the capital that needs a safe investment.
As a bonus to the regular readers of A View From Corona, I will share with you my three picks from my February 2004 news letter: Each month I provide 3 picks… a low-risk sure thing, a medium-risk book with a better possible rate of return, and a high risk long shot that could pay out very handsomely. I offer these different risk assessments so that you, the book speculator, can determine the amount of risk you want to expose yourself to:
[Excerpted from “Jeremy’s Hot Picks For The Book Investor”*, February 2004]
The “Low Risk” pick this month is the British edition of Alastair Reynolds’ new novel, Absolution Gap. You probably won’t see the skyrocketing value of his first novel, as his British print runs continue to rise, but he has demonstrated that he is no flavor of the month. Reynolds will be popular in the field for some time, and since this is a series title, there will always be collectors trying to put a full set of his books together. As per his other titles, the British hardcover precedes the US hardcover.
The “Medium Risk” pick this month is Mary Gentle’s 1610: A Sundial in a Grave. This book is bound to hold its value (even with the dollar doing really poorly against the pound right now), but whether it will rise as rapidly or as high as her previous book, Ash, is a good question. No US edition has been announced – a US harcover would hurt the value of the British edition in the long run, as would poor sales of any US edition. But a few good reviews, and it could reach an even bigger fan base then did her previous book Ash, providing a substantial return on investment.
The “High Risk” book this month is a “re-pick”. I suggested this book over a year ago, but its prospects have improved dramatically enough that you should pick it up any and all copies that you can find. Here’s why: Over a year ago, the Forth Book of Steven Erickson’s Malazan Series, House of Chains came out in England as a split run hard cover and trade paperback. It was the first book of the series to have a hardcover, but because it was a split run, and British, the total numbers were low. Since this time, word of mouth of this series has been growing. In addition, Tor bought the rights to print the series in the US. Tor will most likely do hardcovers of this, and the true first edition hardcover the first three books in the series will be the Tor editions. However, the British edition of House of Chains will be the true first, and demand for this incredible series is bound to exceed the print run of the British hardcovers, once the Tor marketing machine gets behind the it. This book will become the most expensive (four digits, most likely) book from this series, IMO. Currently there are no copies available on ABE. Dealers are already hoarding it. If you see a copy of this hardcover at any price under $150, buy it. It’s a big risk but the payoff could be extraordinary.
*Please note that any offers for products or services in this column are purely satirical and imaginary, as is the newsletter Jeremy’s Hot Picks For The Book Investor. If you really want to get inside information, become a regular reader of the many fine genre periodicals that are available, such as Locus, Interzone, The Third Alternative, and SF Chronicle. The other source of priceless information is a genre specialty dealer. Go to any of the dealers on the Night Shade links page, and strike up a relationship with the one you like the most — they take care of loyal customers, know the industry well, and are eager to share their expertise.
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