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The Price of Books

November 14, 2011

There’s little specific reform for the book industry in the report of the Book Industry Strategy Group (BISG) released last week. The BISG was established by the Federal Government in 2010.

In fact, the report is a dud. This is confirmed by its facile suggestion that the government abolish GST on books. This shows the inquiry recognises the problem (that the ban on parallel importation has made books too expensive in Australia) but it fails to settle on the only sensible solution (the abolition of the ban on parallel importation). I make this prediction: there is no way the Federal Government will forego revenue from the GST on books in the tough fiscal climate it now faces.

The report acknowledges that publishers depend on a defective supply chain but it suggests that the government should somehow pick up the bill for improving it. Forget that. And they propose a Collaborative Council to oversee the process. Another industry body, more bureaucracy, more talk.

This is taking an industry to a whole new level of subsidy by Australian taxpayers without improving the supply chain efficiencies.

What a joke.

Here’s the better course. Let the market work. Allow Australian bookshops to purchase books from the cheapest source, an overseas or a local publisher. Liberate them to compete with overseas sites that don’t pay a GST when they sell books into the Australian market.

Australian publishers now recognise that their victory in late 2009 when the Rudd Cabinet voted narrowly to retain the ban on parallel importation was no long-term protection. There was Henry Rosenbloom of Scribe telling The Australian on the weekend the industry was in “a profound slump” because of on-line competition. Well, Henry, you were warned but you argued that opening up the market would hurt Australian culture. Where is the once-audible Louise Adler of MUP who argued that price didn’t matter when the works of Australian authors were involved?

The publishers got what they wanted – continued protection – and the results are in. Happy now, Louise? Delicious outcome, Henry? Bookshops have closed and Australians are buying fewer books. Good for authors? Great for the culture?

To conclude, here are three key points about this report:

• This report will not reduce the price of books and will not improve supply chain efficiencies to the extent required to keep customers coming into Australian bookstores (Prices stay up and releases will be 14 days after the rest of the world).
• The 14/14 day rule (assuming it is adopted by the industry) is internationally and locally uncompetitive. Makes no difference. It is an admission that the publishers have been wrong about this all along.
• Printers to receive even more subsidy. Hand out more money; it is policy bankruptcy when in the end all you do is ask for handouts.

A better solution: admit you were wrong and open the market.

10 Comments
  1. Ric Sissons permalink
    November 14, 2011 1:51 pm

    GST on books – that old chestnut. Readers have already made a decision on high Australian book prices and restrictive practices – they buy books online via Amazon and Book Depository as hard copies or ebooks. Borders has closed, others will follow. Local bookshops and publishers need to adapt to this new situation not seek solace in protectionism.

  2. Paul Heath permalink
    November 14, 2011 2:14 pm

    Indeed

    This year I have bought more new books than ever before, including many by Australian authors,.

    Why?

    Because many are available as e-books for approx $10-15. This means I can often buy three books instead of one.

    Frank Sartor’s book ‘Fog on the Hill’ has just popped as a $9.99 e-book on Amazon. But don’t rush because with e-books they never sell out.

    It took a while to get accustomed to reading on either my phone, ipad or kindle and to let go of the desire to own a solid chunk of tree when acquiring information/knowledge.

    All I need now is a longer commute to keep the digital pile of unread books from getting out of control.

    The market for books will explode as more and more people acquire devices that allow them to carry their library with them at all times.

    Very hard to do that with a pile of wood pulp.

    I still buy old tech books from time to time but mostly only when the author is available to sign them.

  3. Ken nielsen permalink
    November 14, 2011 2:27 pm

    Well put. The next crunch point will come when publishers begin to reflect the cost difference between print and ebooks in prices. Or when authors dispense with publishers and hire their own editors freelance.
    Those of us who enjoy holding a real book will be faced with paying a lot more for than than the ebook.
    If I was a publisher or a bookseller I’d be trying to find ways of adding value to a book that the ebook can’t match.
    Interesting times.

  4. November 14, 2011 11:42 pm

    Yep, can’t argue with any of that.

  5. November 15, 2011 1:36 am

    It is also illegal to sell DVD’s produced in other countries in Australian retails stores. The government needs to get out of the way an let a free market operate.

  6. November 15, 2011 2:22 am

    Here in the U.S., since the advent of Amazon Prime, Kindle and iBooks, I’ve actually *increased* the amount of books I’ve been reading. Simply because it’s cheaper and quicker than I’ve ever experienced before.

    Technical books are a particularly egregious example. Consider the “Sendmail” book (for some context, a large book describing the configuration and maintenance of e-mail transport and delivery software).

    On Amazon I can order this book for $39.98. With my prime subscription I can two day free shipping, so ordering today (Monday) I receive it Wednesday. I can receive it Tuesday for an extra $3.99.

    Alternatively I can buy the kindle version for $22.67 and have it within seconds.

    Now let’s look at Dymocks. Their website (“for booklovers”!) lists the same Sendmail book for $110.

    That’s 275% more expensive at face value. I didn’t bother factoring in the 2c difference in exchange rate today.

    Dymocks also say it will ship in “5-21 days”. Delivery to a Sydney metro area will be about $5.50, which price increase more like 288%. And, horrifically, scales up to $13.50 if I happen to live in Tasmania and order three books.

    I think Bob is right on the money here. The right way to address problems like this is to kneecap the subsidies at the lowest levels. The market is the best tool we have for ensuring supply chains, retailers, producers, and consumers are operating at efficient levels.

    Regulations should be there to stop attempts at defrauding or destabilizing the system, never as a means of “protection” for local industries. How many times do we have to learn this lesson? The market is like a river – if you erect a barrier you will deflect the water for some time before it eventually finds ways to seep around and consume the hapless people who thought they were being protected. The BISG report was written by people with very damp feet.

    The best bet is to build a boat and sail along with the rest of us. Into uncharted territories that might be unfamiliar and uncomfortable, but if history is any guide, ultimately better for us.

  7. MJ House permalink
    November 17, 2011 11:39 am

    New Zealand is an open market – have you seen how expensive books are there? Opening that market has done nothing to drive down prices or improve competition or access, or to save booksellers’ business.

  8. December 9, 2011 3:39 pm

    I think it’s quite amazing that a Dymocks board member would advise shooting his company in its own foot by advocating for a removal of the PIRs, based on what appears to be nothing more than blind faith in The Free Market System – a belief that’s been comprehensively debunked these past few years in many industries. (No, that doesn’t make me a lefty-socialist-retard – that makes me someone who thinks slavish unthinking adherence to any one economic system makes you the idiot who’s not been paying attention for the last century).

    Indeed, for the comparative tiny fraction of the world’s book retail volume that Australia’s locally-sold book business is worth, USA & UK book publishers would say “Thank you very much, Australia” if we were to drop our parallel import restrictions, because all our retailers would suddenly be buying directly from them (rather than indirectly), instead of via Australia’s publishers & middlemen – it’s more cream for them – but don’t expect them to drop their similar restrictions any time soon! As MJ House said above, doing so has not exactly been Happy Days for New Zealand.

    We aren’t the USA or UK. We don’t have a large international or domestic market for Australian-authored books with which to feed Australian publishers. Australian publishers exist largely because of the COMBINATION of both PIRs that allow them to add their mark-up to imported books sold in Australia, as well as locally authored & produced books that are largely of interest only to Australian readers. If you take away the PIRs, you take away a significant proportion of the income that keeps Australian publishers alive and able to support Australian authors – by support, I mean so far as at least some are able to make a living as authors.

    I’m not saying I like protectionism or tariffs or PIRs – in principle I don’t, and I LOATH the whole notion of territorial copyright – I would love if the world could function as an truly open level-playing field market – but it isn’t, and the impact of taking these protections for Australian publishers away seems, for the time being, too high a cost.

    The removal of PIRs would kill many Australian publishers, and leave many Australian authors to the wolves of international publishers whose royalty rates are far lower than from Australian publishers, in recognition of their comparatively vast domestic (eg. USA, UK) markets.

    So that’s where you get your “bad for authors, bad for publishers, bad for culture” quip. So far, Bob, you’ve not said anything to explain why you think this wouldn’t be the case. This is your blog, you have no space constraints here, so please explain yourself, or, politely, shut up. To continue to push for the Free Market model without explaining in rational terms why the removal of PIRs wouldn’t cause the kind of damage that much of this industry is warning you it will, simply makes you untrustworthy.

  9. Paul Heath permalink
    December 11, 2011 7:39 am

    Anthony,

    I like your passion for Australian writing but your argument boils down to this.

    Australian authors cannot make living unless we maintain a system which increases the costs of all books on all subjects in the hope that some publishers will take some of that additional income and cross subsidise the work of some Australian authors.

    That is an extremely expensive and inefficient method of providing some authors with some income. It also involves some wishful thinking about how much publishers actually give the authors from the fat protected margin.

    If subsidising writers, who otherwise could not make a living from writing, is the goal it would be more effective to simply increase the number and size of ‘writer’s grants’.

    But there rise of e-books is a far greater problem for your argument as the business model you want to preserve is a bit like the business of selling LP records or video tapes. Rapidly shrinking.

    Not only will you need to ban the public from ordering physical books directly from overseas websites

    How do you propose stopping the parallel importation of ebooks?

  10. December 11, 2011 2:44 pm

    Our serving up our own market for intellectual monopolisation is becoming more dysfunctional with every passing minute. No Netflix, no Amazon prime and on and on it goes.

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