From the Oct. 17 NYTimes:

October 17, 2009
Price War Over Books Worries Industry
By MOTOKO RICH

A tit-for-tat price war between Wal-Mart and Amazon accelerated late on Friday afternoon when Wal-Mart shaved another cent off its already rock-bottom prices for hardcover editions of some of the coming holiday season’s biggest potential best sellers, offering them online for $8.99 apiece.

The price cutting began on Thursday when Wal-Mart announced that it would take pre-orders for 10 yet-to-be-published hardcovers for $10 apiece on its Web site, Walmart.com. Later that day Amazon quietly began cutting the prices of those same titles to the very same $10, prompting Wal-Mart to lower its price to $9, a markdown of 59 to 74 percent off the list price of the books. Amazon had matched the $9 price by Friday morning, and Wal-Mart had lowered its price again, to $8.99, by late afternoon.
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Independent booksellers have long struggled to compete with discounts offered by Barnes & Noble, Amazon and Wal-Mart. William Petrocelli, an owner of Book Passage, an independent company that has stores in San Francisco and suburban Corte Madera, Calif., said that for now he was relying on the loyalty of customers who valued staff recommendations and author events as much as prices. But, he said, if the low prices siphoned off too many customers and put independent stores out of business, it would ultimately affect what would get published.

“What this does is accentuate the trend towards best sellers dominating the market,” Mr. Petrocelli said. Without independents, decisions about what books to put on store shelves would reside in the hands of a few corporate executives rather than hundreds of idiosyncratic booksellers, he said.

“You have a choke point where millions of writers are trying to reach millions of readers,” Mr. Petrocelli said, “but if it all has to go through a narrow funnel where there are only four or five buyers deciding what’s going to get published, the business is in trouble.”
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Indeed, [author James] Patterson, who said that while he was glad to be included in the top 10 most popular preordered books at Walmart.com, he could not think of any other industry accepting such dramatic discounts.

“Imagine if somebody was selling DVDs of this week’s new movies for $5,” Mr. Patterson said. “You wouldn’t be able to make movies.” He added, “I can guarantee you that the movie studios would not take this kind of thing sitting down.”