The decision last week of the Federal government to reject the recommendations of the Productivity Commission's report on parallel import restrictions re the Australian book industry has been hailed as a victory by many. The description of the decision as a pyrrhic victory on LP would seem to me more accurate.
Some of the arguments as to why PIRs should remain in place are creaky to say the least. The consequences are however much more worrying.
1. "
The removal of PIRs will flood the Australian market with cheap imports which will kill the Australian publishing industry"
The failure to investigate this thoroughly raises both a failing in the PC report and within much of the debate that surrounded it. PIRs in and of themselves do not protect Australian publishing. They protect the territorial rights of editions within Australia - including those published in Australia but also editions published and printed overseas. Australian publishing and distribution are not the one and same thing.
Apart from the multinational-owned publisher/distributors and a very small number of independent publishers, most Australian publishers are not involved in the business of importing and distributing books other than their own. They do not derive any income in any way protected by PIRs. A common sentiment from this type of publisher was that the cheaper overseas titles would erode their market share. I struggle with this for two reasons - firstly, this seems to be based on the assumption that one book is replaceable in the customer's hand with any other. Books are not a generic consumer product - we buy a particular book for an infinite set of reasons, but it is not an indiscriminate purchase. And Australian book buyers are particularly attached to Australian content. Very little of which is published by anyone else other than Australian publishers. Secondly, it suggests that buyers are also motivated by price in a predictable manner, i.e that a cheaper edition of an overseas author's book will also lead to loss of market share, (a cheaper overseas book will replace a possible Australian purchase) I cannot disprove nor prove that assumption - neither can those arguing it - we simply cannot predict how a consumer will alter their buying patterns if PIRs were abolished. It is equally possible that a saving of $10 of an new title by say Arundhati Roy will see the book buyer purchase a second Australian published title.
As to the role that PIRs play in supporting the publishing programs of the multinationals, the report did not explore if and how the profits from closed market distribution ensure the continuance of those publishing programs. No commercial publisher will choose to publish any book unless it can be argued that a reasonable assumption of return on investment will occur for that particular title, or that a strategic advantage can be gained (such as fostering a new writer who editorial believe will meet the financial return expectation with subsequent books; nor should the importance of prestige as to a stable of authors be ignored - it helps ensure agents and authors will submit new manuscripts to a publisher seen to be significant). Nor did the PC report offer a thorough analysis of the number of new authors that the publishers benefiting from PIRs are supporting. Some such as Text, Allen & Unwin and Scribe are lights on the hill as regards this, but they are not the major beneficiaries of PIRs in the Australian market by percentage overall, and could I think be better supported by innovative funding regimes.
2.
Australian book prices are comparable to overseas prices'Comparable' covers a multitude of sins. The PC report clearly identified that:
For like editions in 2007-08, Australian prices are estimated, on average, to have exceeded UK prices for like editions by 9 per cent (on an RRP basis) and 18 per cent (on an ASP basis), and US prices (on an RRP basis) by 35 per cent. For 2008-09, the equivalent estimates are 12 per cent (RRP basis), 25 per cent (UK: ASP basis) and 12 per cent (US: RRP basis).
Taking into account the 10% GST, there is still a differential. But it is the 'like editions' that I find particularly interesting. Australian divisions of multinational publishers began a number of years ago to release new fiction titles from overseas authors in paperback in Australia, whilst they would be published in the UK & US as hardbacks only. Specifically Australian editions, though for the most part printed in Asia. (Most Australian authors also have their new releases published in same C format). Such as Khaled Hosseini's
A Thousand Splendid Suns or A S Byatt's
The Children's Book. Byatt's title retails in Australia for $34.95 as a paperback. It was first released in the UK and the US as a hardback only; and a hardback I had to have. Ordered from an Australian bookshop, it arrived (and it's not your best printing job Clays Ltd of St Ives) at a RRP of $60. Printed on the fly of the jacket is the UK RRP - £18.99. Which converts from sterling to A$33 (ignoring the fact that I could have bought the hardback from The Book Depository for £7.99 converting to A$14.31 with no freight costs to Australia). I wouldn't, perhaps naively, expect to have paid the same for the paperback but it does raise the question of quite what "like edition" actually means. Yes, obviously the words are the same but the binding is quite different. And it is often suggested that Australian booksellers are being privileged by their access to a paperback edition in terms of making international internet-based sales. Whether anyone would order a copy from an Australian bookshop with a RRP of A$34.95 which would convert back to sterling at £19.53 and undoubtedly have to pay freight on top of that remains a mystery.
But it is not frontlist or best sellers that concern me most. It is the pricing differential for academic titles - access to which is a vital part of any country's knowledge economy and culture. These were not included in the analysis of price differentials in the PC report. This is a sector heavily dominated by the multinational publisher/distributors few of whom have editorial offices in Australia for academic publishing (Pearsons Ed, John Wiley, & McGraw Hill being among the exceptions who do - all of whom have large textbook divisions). I had previously made up a list of prices comparing
Australian RRPs with The Book Depository which is quite astonishing, but I've since checked against UK RRP. It isn't much prettier (and nor does The Book Depository discount as much as I thought - looks like 10% on average - but the free freight policy is significant)
Essential Halliday - £24.99 converting to A$44.71 Australian RRP $74.95
Language of Evaluation - £19.99 converting to A$35.76 Australian RRP $64
Cambridge Guide to Second Language Teacher Education - £20.50 converting to A$36.68
Australian RRP $75
Infant & Toddler Mental Health - £48 converting to A$85.88 Australian RRP $134
There were two issues not explored adequately in the PC report which impact upon why these differentials may occur.
Firstly, the inefficiencies within distribution chains in Australia. Unlike the UK & US, many distributors have their own warehouse and separate inventory. Some distribute only their own imprints; some distribute other imprints apart from their own; some distribute only books and do not publish and some of these do not hold exclusive rights to the Australian market. There have been, apparently, attempts to set up some equivalent to Ingrams here but to no avail. For a market of our size, this is mind bogglingly stupid. I can only gather that it must be rather comfortably profitable with PIRs in place to protect such inefficiency in distribution.
Secondly, the PC report did not explore what impact having divisions of multinational publisher/distributors buying stock from their own parent or sibling companies in an environment with no competiton. Even if a bookshop decided to order stock from a UK or US wholesaler in exasperation at there being no stock kept in the Australian distributor's warehouse and at the Aust RRP they are expected to charge their customer, they would often discover that the book is short discounted - 10% or even nett pricings by the wholesaler ( the terms of which are set by the publisher). By the time a margin, currency conversion and freight is factored in, the book ends up being very close to the Aust RRP. I do not why this should be so. But I would like to know.
Publishers and distributors do not behave in any way differently from any other business desirious of making a profit, and making good a return on shareholders' investments. They will as all businesses do, utilise market conditions and the regulatory environment under which they operate to maximise profit. They will also attempt to influence both the market and governance to maintain and improve business performance. It is however naive to believe that they enter into a debate such as the pricing of knowledge and our cultural writings without that business focus as their primary responsibility.
3.
If it aint broke, don't fix itAnd given the bouyancy of the Australian book industry, even through the GFC, from most players' perspectives, things are going swimmingly. American visitors express surprise at the health of the independent retail book sector, and equal surprise at our RRPs. But is it healthy? or as healthy as it should be?
Do PIRs really benefit local Australian publishing? The small publishers who are the usual suspects when it comes to publishing both new writers in non-fiction, fiction, poetry and drama would be better supported by a grants program (perhaps funded by part of the GST revenue raised on books) perhaps a program that supports the writer during the research & writing process, funds editorial support and work on the manuscript (surely the most under-valued work in the Aust book industry), even perhaps funds indexing and rights permissions for illos.
As for booksellers, I've been very aware of the continuing disappearance of academic titles from their bookshelves. I gather the general consensus is that academics were early adapters to internet supply of books and have largely disappeared as customers for academic titles. Given the price differentials, this is hardly surprising. This concerns me enormously but even more concerning is the continuing flight of sales to overseas providers. Distributors respond by reducing what they actively carry in their warehouses, with more and more titles on a 4-6 week supply indent basis; customers willing to buy from bookshops give up and go online; and inventory is reduced again in response to a further fall in sales. If the distributor is also owned by the publisher of the title, do they really care? - they're still getting the sale; people aren't buying another book, they're just buying it offshore and the publisher has still sold that particular book.
This has three consequences for booksellers - they appear to the average customer to be merrily price gouging, generating illwill. And the quality of bookshop stock is falling as the custom for those books is being withdrawn. They will be incredibly hard to win back. It also will mean that bookshops will become more homogeneous as the range of readily available sale or return stock shrinks. I suspect it will be the large affairs such as Borders who will struggle most - they are already reducing inventory following their buyout and Dymocks enthusiasm for the abolition of PIRs is their self-interested recognition that a diverse stock holding is increasingly difficult to finance. If Australian bookshops become less interesting and less visitored, the exposure for Australian published titles that authors and publishers so eagerly pursue has been diminished. Whatever dreams publishers may have about the internet giving them unmediated access to customers, bookshops with a faceout of their new releases still remains the best marketing exposure they can achieve. Particularly if you'd like to engage with the cultural elites.
It will also stymie innovation in both distribution and publishing. Lightning Source have been considering setting up here in 2010 - given a steady as she goes regulatory environment, few publishers will see the point in investing in new processes and models such as POD for overseas published books, which would have generated work for Aust printers, reduced the carbon footprint arising from shipping & air freight, reduced the need for warehousing and its current inefficiencies and finally, lowered the prices of those titles.
No one has any idea how large the purchase of books from offshore providers actually is. Attempting to get GST collected in other jurisdictions wont solve much - look at the price differentials. While the individual customer lives in a global bookshop, their local bookshop is prevented from sourcing imported titles at the best price and delivery time they are willing to pay for. And without a change in regulatory pressures, new technologies such as POD wont provide a possible solution to that inherent inequity. One rationale for the rejection of the recommendations was that Aust book industry requires support while it adjusts to the impact of digital forms. If the astonishingly ill-prepared announcement concerning Titlepage as an ebook delivery platform is anything to go by, it should be about 2055 by the time the industry gets its act together.
The question the government blithely failed to investigate in an evidence-based manner? Are the PIRs the best mechanism for protecting and developing Australian knowledge and cultural economies and Australian writing and publishing culture in general?
I don't think they are.
Addendum 18.11.09: If by chance you think I'm being harsh, Cassandra-like, or have been possessed by Ayn Rand, then don't read this post by Clay Shirky -
Local Bookstores, Social Hubs and Mutualization.