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Borders and Angus and Robertson and Protection in the Book Industry

February 17, 2011

In November 2009, the Rudd government refused to accept recommendations from the Productivity Commission to open up the Australian book market. This was done to shore up jobs in so-called Australian publishing (so-called, because the firms are mainly British). Effectively the government told Australian bookshops they could not buy books from cheaper overseas suppliers. As a result, Australians have continued to pay up to one third more than they should.

This old-fashioned protectionism was designed to save McPherson’s, a struggling factory with 300 employees in Maryborough, Victoria, but it disadvantaged book selling businesses across Australia. It limited competition at the wholesale level. It meant that when a best seller like a new Harry Potter came along it could only be supplied by a local publisher (as I said, mainly British owned ones) and the book shops could not import and sell to their customers cheaper overseas produced versions.

Today Borders and Angus and Robertson entered administration. 2500 thousand jobs are at risk and store closures will follow. Bad news for employees in retail. Bad news for book lovers across this country.

But that’s protection for you: you shore up jobs in a clapped out factory that is doomed to close eventually, but you lose them in retail and service.

In the face of internet purchases and the arrival of e-books, the position of Australian bookshops and the jobs associated with them demand the opening up of the market, that is, competition at the wholesale level to give us cheaper books.

The silliest argument advanced for book industry protection is that it subsidises publishers so they can bring more Australian works into print. Bullshit. No publisher has ever been able to nominate a single work that has been printed on non-commercial grounds. And if there has been a flourishing of Australian literature as this protection has been enforced it has escaped me and most Australian readers.

(I serve proudly on the board of the Dymocks group of companies. Oh, and I should declare another interest. I buy a lot of books)

25 Comments
  1. Alicektg permalink
    February 17, 2011 4:19 pm

    I am surprised that you haven’t mentioned the significant operational factors which have contributed to REDgroup’s situation; namely, as the Sydney Morning Herald reports, RedGroup: ‘felt the strain of the debt it took on as it was taken over by private equity and prepared for a sharemarket float’.

    Free market business practices have had as serious, if not more so, effect on REDgroup as policy.

  2. Bernie permalink
    February 17, 2011 4:19 pm

    This is exactly why I buy nearly all of my books online. Cheaper by far. I recently looked at an Australian war time history which had just been released here it was $20 cheaper to buy from the bookdepository.co.uk with free postage than at borders.

    I have on conflict of interest other than an avid reader

    • Bob Carr permalink
      February 17, 2011 6:22 pm

      I tested Book Depository over the holidays. Two of the five books did not arrive. They do not “track” books they send, only confirm that they were despatched. That is pretty bad and there were no excuses. I’m a bit reluctant to test them again. By the way, the books that went missing were the latest bios of Tolstoy and Harold Macmillan. They did promise to reimburse. That is my experience of Book Depository. By the way, how do they protect themselves against fraud – that is, people claiming the books did not arrive and claiming compensation ? And, associated with this, I wonder how robust their business model is ?

      • Sandra permalink
        February 17, 2011 8:07 pm

        I have bought thousands of dollars of books from Book Depository. One did not turn up and they re-sent a new one. Other than that one book, they have been great and posted very fast.

      • Alistair. permalink
        February 18, 2011 12:43 am

        Your whole reply is so old school Bob.

        Ive ordered 100+ books from BD. One I ordered before Xmas hadnt arrived by the first week of Feb. I told them and they offered to resend it or give me a credit. I asked them to resend. Two days later it arrived. I emailed them to not send the replacement.Subsequent orders arrives in 8 days. Sure some people will have them send the 2nd one anyway, but they make up for it in the long run ten fold.

        And why wouldn’t you try them again? Whats the downside?

  3. Evan Williams permalink
    February 17, 2011 4:27 pm

    Wow Angus & Robertson in administration?

    I live in Castle Hill and in the massive Castle Towers Shopping Centre there is only one dedicated book store, which is Angus & Roberston. The Dymocks closed down, and now it sounds like Angus & Robertson’s time is up also.

    I was thinking to myself the other day how ridiculous it is that in such a huge shopping centre there is only one (relatively small) book store, and even that one is mightily struggling.

    I’m sure if stores were able to sell books at cheaper prices, there might be a few more of ’em in Castle Towers.

    Thanks god I get to go out to the city a bit.

    Best book store in Sydney:

    http://www.gouldsbooks.com.au/

    Evan.

  4. Jesse D permalink
    February 17, 2011 5:03 pm

    True that Bob. But I would also add that Dymocks need to step up their online bookstore to compete with Amazon.

  5. mark ryan permalink
    February 17, 2011 5:13 pm

    Bob

    While I like using the net, I still have agreat love of picking up a new book and reading it at my leisure. Today’s news is worrying, one hopes the Federal Government will seriously address the questions of internet book purchases and the division of worldwide copyright divisions

  6. Sarabeara permalink
    February 17, 2011 7:46 pm

    Regarding bookdepository (I usually use the .com site as it’s cheaper) I have had one incident where the book didn’t arrive within the normal timeframe so they sent a new one.. Yes I ended up with two of the same book in the end.

    I believe this is why they send books individually to save their costs especially when some go missing. Of course there is fraud out there but I wonder if people consistently said they didnt receive the books whether that would be enough to say no more?

    As for stores in Australia, due to the costs I havent bought a book in a store for years! It’s so unfortunate! We need to see bookstores open up where books are cost effective AND have coffee shops that have comparable comfort/food and drinks. It’s an entire service model. However if the books aren’t cheap then why would anyone want to buy in a store when we can get them many tens if not hundreds off?

    This should be a wake up call that the industry in Australia is losing out because of such restrictions! Australia cannot lose such an amazing industry not only just for leisure purposes but educationally. How could we become a country without bookstores at all? It only takes time for them all to slowly disappear.

  7. February 17, 2011 8:12 pm

    It’s a pretty well-documented fact that Aussie publishing houses are more willing to take risks on first-time authors when they’re also working on a sportsperson’s biography, or similar sure-fire money-spinner. They know that enough people will buy the Ron Barassi book to offset a bit of a loss on another project.

    It’s not that they do it for the love and this allows them too, of course, it’s still about making money – it’s just that they’re more willing to take risks on unknown quantities (and I make no guarantees that this is conscious, it may be entirely subconscious – but I’ve had a number of authors tell me this, and to keep an ear out for sports-bio rumours as a result).

    My point is, if this effect – essentially subsidising with easy profits – can make them take on more young Aussie authors, then why wouldn’t another subsidy do the same thing?

  8. Andrew Farrell permalink
    February 17, 2011 8:19 pm

    Protectionism had nothing to do with Borders and A&R’s standard policy of pricing their books up by 10% over and above the recommended retail prices… combine that with their aggressive reduction of range and a complete lack of interest in fulfilling special orders and you have a truly great retail strategy…

    The quality of feedback on most of the reports I’ve read this afternoon only serves to illustrate how uninformed/misinformed the general public is about the real economics of the Australian book industry – all aspects, not just the old lines about cheap tax-free imports versus the ‘price-gouging’ protected publishers and retailers that keep getting trotted out. The industry really needs to consider employing a good PR company. But I fear that even then they probably still wouldn’t convince ‘most Australian readers’ who seem to have already made their minds up that there is no Australian literature worth protecting and that every overseas book is more expensive in Australia than anywhere else in the world.

  9. Kylez permalink
    February 17, 2011 8:32 pm

    I used to work for A&R; now I’m on the distribution side; myself and a lot of other company store managers could see this happening a long time. Internet-based competition has a bit to do with it, but there is also a lot of other factors too, and a lot of it was just the way they ran the business and their philosophies.

    In the long term I think this could be a good thing for the book industry, as it may help to even out the playing field a little and give a boost to other local independent bookstores. I truly believe that if any bookstore wants to survive from this day forward they need to create a really good webstore and complement that with fabulous in-store service and events.

    Being on the distribution side, I think one of the biggest problems is the way the publishers price their books. We import most of our stock from US and UK publishers, and we base our prices strictly on the exchange rate, so most of our US books at the moment are only maybe a dollar more than the US price, and the UK ones have come down too. It’s why a lot of bookstores are still loyal to us. I’ve looked at some of the prices of the books the big publishers import (and even some of the smaller distributors) and they haven’t changed their prices one inch. They’re still charging almost double the US price. It’s no wonder people are going online.

    I myself don’t buy much paperback fiction in physical form anymore, it’s just way too over-priced, so I get it on my e-reader. Saves me a loooot of money and space in my house. I still buy my favourite authors and nice hardbacks in physical form, but when I’m looking for something new I go digital, it’s a great way to find new authors to follow.

  10. February 17, 2011 8:34 pm

    Sorry Bob, but I think the days of large chain book stores are numbered. Angus & Robertson and Dymocks both lost me when they decided to go all “top 10” – any book you like, as long as it’s by Dan Brown. I always wondered when Borders would go. You can’t be all things to all people, and the overhead of running a book warehouse in an expensive shopping mall must have been ridiculous.

    We have a very successful small independent book seller where I live in Gosford NSW. They will never be a multi-national force, nor will they open chains in every Westfields in the country – because they don’t want to. They are happy to be a local retailer, catering for local needs, and responsive to their local customers.

  11. jane permalink
    February 17, 2011 9:17 pm

    Just had a look at the REDgroup website (10pm, 17 2 11) & was struck that their last news update was May 19, 2010. That alone suggests that their ‘relationship’ to the internet is very abstract, and perhaps they just didn’t see the big train coming.

  12. February 17, 2011 10:17 pm

    John Birmingham’s piece was of a similar vein.

    I’m with Jesse D. I wonder what Dymocks is going to do to stay afloat under the Amazon tidal wave?

  13. February 18, 2011 7:40 am

    “Bad news for employees in retail. Bad news for book lovers across this country.”

    The sign of systemic failures in government policy and law in order to “keep up with the times”.
    If this does not change, then other retail industries are doomed to fail too all in the name of protecting Australian jobs and so forth. In a global internet economy, you cant have your cake and eat it too.

  14. Sharon permalink
    February 18, 2011 11:15 am

    I buy books regularly both for myself and my children. I am not aligned with any bookstore etc I go to http://www.booko.com.au for the best price including shipping, including school books!

  15. Matthew permalink
    February 18, 2011 11:22 am

    I have heard publishers saying that the real issue is the high dollar and that this form of protectionism has nothing to do with it. This is drivel. I purchase around $1,000 on books online each year and prices have been lower overseas on many books for years. While high dollar is a factor even a casual look at Amazon or the Book Depository shows just how cheap some books are. Last year when the dollar was nowhere near as high as it is now, I purchased a guide book on Japan at a third of the local price and it was a latter edition than available in Australia and the book was delivered without charge.

    By stopping bookstores from importing cheaper editions this form of protectionism is just leading to the demise of Australian bookstores. After the decision was made I considerably increased the share of books I purchase overseas on principle

  16. Bruce Blackwell permalink
    February 18, 2011 11:56 am

    A lot of the problem with booksellers both here and overseas is the service model. A few years ago I special-ordered a (very expensive) book from Borders Books in Adelaide. I was quoted a price from the catalog and paid a deposit. Several weeks later when the book arrived I was told in the store that the price had increased – over 15%! The original quoted price was history. I refused to buy the book and after some argument they agreed to refund the deposit. I told them if this incident was representative of their service model, they were doomed to fold. Two years later they have folded.

  17. February 18, 2011 1:01 pm

    Very interesting to read your article Bob, but more importantly to read everyone’s comments, ie. the book buying public. I was recently involved in a Book Industry Strategy Group on the future of the book industry, and when I asked the facilitator whether they were going to include the book buyers as part of the process he replied by saying he wasn’t asked to include them by the government department that was running it. Amazing! Nonetheless, we at Booktopia, have continued to grow and will continue to do so. The online stores overseas do have very competitive pricing and on price it is hard to compete, especially when the RRP of the books over there are disproportionate to RRP of the books here given the current exchange rates. I like, Bob, also trialled BD to see what they were like and I was disappointed that they arrived damaged. I ordered expensive coffee table books. The packaging was wafer thin and that was why they arrived damaged, when I contacted them, they emailed back to say I could send them back at my cost and I would get a refund. I am sure Australian book distributors and publishers will be reducing their prices, (we know many that have already slashed their prices to try and match overseas pricing, kylez already mentions that in above comment). In saying that, Booktopia have been flying in most of our books from overseas for our customers within 3 to 6 days at fairly competitive pricing and that would probably account for our growth and increasing market share over the years. In closing, I return to my opening sentence, and remind everyone something that we knew from 2004 when we started our business on a budget of $10 per day… is that with the internet the consumer holds the power and not the publisher and for decades it was reverse and they could get away with it… but THAT era is coming to an end. Tony Nash, CEO, Booktopia.com.au

  18. February 18, 2011 4:34 pm

    It isn’t about protectionism. Bob. It’s about the way private equity chose to run the business – and in tough times it fell. Henry Rosenblloom expressed it well on Crikey this morning http://www.crikey.com.au/2011/02/18/last-page-for-book-buying-carr-cunningham-rosenbloom-on-redgroup/ Book retailers are facing the same problems as all of our bricks-and-mortar retailers. Online offshore retailers can sell for less – they pay lower wages, lower rents, less duty and service a larger home population that is more concentrated. Sure we can buy in culture for cheap from overseas but soon we’ll have none of our own left – but we probably won’t even notice then, and some of us won’t have jobs.

  19. Australian Author/Reader permalink
    February 18, 2011 8:40 pm

    The 8 track gave way to the cassette tape, vinyl gave way to CD’s and on and on. It’s not like Dymocks or any other major retailer didn’t see the changes coming down the track, the introduction of overpriced e-readers, (guaranteed to be outmoded shortly), was proof of that.

    In the last year I’ve read my usual 40-50 books, all of them on my ipad using a Kindle app. There’s nothing wrong with this because even if hunted through every last book on the shelf at Dymocks or A&R I would not have found one of the books I wanted to read on your shelves. Not all of us read mainstream, top ten titles.

    It’s egotistical to think that the tastes of your buyers and the slick presentation of your business model should appeal to everyone just because you put it out there. You expect us to support you because you’re Australian and you’re here – and yet stores like yours only support a handful of select Australian authors and the ones you do stock rarely ever get a dump bin or a window display.

    From the perspective of an Aussie author and avid reader, (who used to have trouble finding books to devour), the digital revolution has not come fast enough. As I type, my original novels, (published in the U.S), are now being converted to Kindle format and I look forward to garnering new readers because of it.

  20. Paul R permalink
    February 18, 2011 9:45 pm

    The publishers won their fight. Rudd, as usual, showed no spine 0 and now the industry is reaping the consequences.

    Protectionism is a disaster – consumers are working around the protection and buying directly.

    Its Rudd’s fault.

  21. Brandon permalink
    February 19, 2011 12:12 am

    A lot of retail stores are blaming the internet for their problems, and although it is having an effect, there are other reasons aside from price that people are turning to the internet to shop.
    I stopped going into shops 3 years ago and here is why….Shops have taken away the enjoyment of shopping and turned their stores into maximum security prisons, thousands of security cameras tracking your every move, aggressive security staff that stare at customers, aggressive police patrols in shopping centres, number plate scanning, cell phone tracking, shop staff that treat customers more like criminals then people spending money in their store, security cameras that are so detailed they can read the text on your phone and record what number your dialing, bag searches, and on and on and on.
    If shopping centres and shops dont put an end to all this aggressive security they will all be closed within 5 years as people turn to the internet to get away from this.

  22. February 19, 2011 8:16 am

    It’s been over 10 years since internet shops arrived. Businesses need to realise their context has changed and respond.

    Blaming anyone but the management is both silly and pointless.

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