his wholiness the rev drjon (drjon) wrote,
his wholiness the rev drjon

Parallel Import Restrictions and the Book Trade in Australia

It was with great relief to many in the industry when the news came over the other day that the Australian regulatory regime for books would not be lifted. As I requoted on twitter, "If territorial book protection is good enough for the US and the UK, why is it wrong for Australia?"

The following just came through on a local SF list I'm on, and as it's an interesting perspective, I asked the writer, Chuck McKenzie, if I could reprint it here.
I'd like to add a (fairly long and involved) note to this - apologies to those with sort attention-spans. :)

As an actual employee of Dymocks (I manage a store), it's probably worth my mentioning that the so-called 'Coalition for Cheaper Books' was never, and is not now, *necessarily* backed by the Dymocks *franchisees* who actually own and run the individual stores. I can only speak for the dozen or so franchisees to whom I personally have spoken (or whose opinions have been passed on to me by other franchisees) regarding this issue, but the fact that *none* of those franchisees were enthusiastic about the campaign does suggest an overall trend.

There are two main reasons for this lack of enthusiasm. One is that, throughout this campaign, franchisees were given *exactly* the same information by Dymocks Head Office that was given to the media and the general public, usually in the form of memos and press releases. In other words, at no time that I've been made aware of were franchisees asked to comment upon, or contribute to, the setting up of this Coalistion, before or during the campaign. At no point, either, have they been made privy to the 'deeper motivations' - if any - behind the campaign. Yes, I know you only have my word on this, but there it is.

The second reason brings us back towards the issue that Rob has explored. There are currently many threats to, and problems within, the Australian bookselling industry (which includes everyone from authors, agents and editors, to printers, publishers, suppliers, booksellers and - yes - customers), the most obvious of which are posed by changing trends and technologies (plus the Global Financial Chicken, which has made this last year an absolute bastard for most booksellers). There are also problems that have been affecting the industry for ages, but which the aforementioned changes to T&T have only now begun to highlight. One of these problems is that - as mentioned by Rob, and a host of others over the past few months, from both sides of the fence - books *are* generally much more expensive in Australia than elsewhere (and there are reasons for this - some valid, others less so - such as market size, standard pricing of goods and services, etc); thus, if cheaper alternatives are offered to customers, booksellers, or anyone else involved in the industry, why the heck *wouldn't* they take advantage.

Here's the thing, though; lifting the PIR was touted as a means to solve this specific problem. Fair enough. Except that it almost certainly would not have worked. Even if you put aside for a moment the much talked-about long-term repercussions of such a move upon authors and the publishing industry and upon independant bookshops (and if you doubt the veracity of such claims, I'd invite you to do a little research into what happened to the UK and NZ publishing industries when they went and lifted their bans on PIR, even to a lesser extent than the Coalition were suggesting Australia should), there is no evidence whatsoever to suggest that *anyone* would actually have benefitted from the move: not the customers, not even Dymocks itself!

Why? Because, no matter how cheap an imported book may be, there are still freight costs to pay, from OS and within Australia, plus various other sundry overheads. Here, I'm citing mainly my own financial figurings on the issue (because I *really* wanted to find out exactly how lifting the PIRs would benefit me personally as a bookseller), but once you've factored in all those overheads, and passed on that cost - even per individual item - to the customer (because booksellers don't sell books for the fun of it - it *is* actually a business, and if we *lose* money on books we don't stay in business), the price per book generally comes out at - gasp! - pretty much the same as if a local edition had been ordered. Sometimes slightly less, often slightly more. The only way I can see that a bookseller could make the books cheaper *and* make a profit would be to buy in bulk, and therefore get a better discount on the OS Fine. Except that the average individual bookseller, independant or franchised - again, as Rob pointed out - can't afford to buy potentially hundreds of copies of one title just to make a couple of bucks per book.

So that's the second reason why the Dymocks franchisees were less than impressed with the campaign.

However, this last point goes even deeper. Because there *are* bookselling groups in Australia who *would* find it profitable to import extremely large quantities of OS imprints. One of these groups is an Australian bookselling chain that is set up to supply its company-owned stores (as opposed to franchised stores) from existing warehouses. Other groups include some of the 'big box' chains that *also happen to be part of the Coalition for Cheaper Books (!)*, and for exactly the same reason: buy a couple of thousand copies of an OS imprint for less than half AU price, shove it in a warehouse, and distribute amongst your stores Australia-wide.

Which means, folks, that had the PIRs been lifted, the *direct competitors of Dymocks* would have been able to undercut virtually all other booksellers - including Dymocks stores - more than they already do, and on a *far* wider range of titles than they are currently able to!!!!

Don't believe me? Here's some information to play with, which you can actually go out and verify (to a certain extent) for yourself:

The store where I work (and most other booksellers in Australia) has just received in about 100 copies of a particular heavily-promoted book that is likely to be a 'hot item' for Xmas. The rrp is $69.95. We have immediately marked this down to $39.99 - which, I'll be completely frank - is our cost price. Yes, we literally make no money on this item (although, on the flip side, we don't lose any either). Why would we do such a pointless-seeming thing? Two reasons: firstly, we are situated in a shopping centre close to about four other booksellers, and we want customers to come to *us* to buy that book. Secondly, we are using this book as what is known in marketing circles as a 'lead' item: ideally the customer buys the item at nil profit for us, but then goes on to buy several other items with a decent mark-up, making the exercise worth more to us than if we'd lost the sale of that first book to another retailler.

Now, our closest competitor (another bookselling chain) initially keep this same title at full price, but quickly marked it down to $49.99 to at least *appear* competitive (and it works - often a 'sale' sticker is enough to make something appear to be a bargain, so customers don't bother to price-check between stores). The next closest competitor - a big box store - has this same item priced at *below* what *we* paid for it, and quite possibly below what *they* paid for it, and for the same reason that *we're* selling it so cheaply.

Now, what do you think would happen if that big box store were able to buy cheap OS imprints of that same book, and then still mark it down to their cost price? That's right - we and the other chain bookseller wouldn't get a look-in. And if the big box store then decides to expand their range of titles...

But again, don't take my word for it: if you *really* want the proof, check out a couple of different bookselling shops situated in the same mall or street, compare prices on a range of titles that all of them stock, and see what you find.

So why did Dymocks Head Office enter this campaign? Damned if I know. And some of us *have* actually asked. And have received nothing but the standard line about 'cheaper books for customers'.

All of which, I guess, brings us to the issue of what can actually be done to *fix* the bookselling industry. Because it does need fixing, if anyone currently involved with the industry (discounting authors and customers, perhaps) wants to still be a part of that industry 3-5 years from now.

Here's my suggestion, this not being the first time I've made it: there needs to be a radical overhaul of the *pricing* of *everything* all the way along the publishing/bookselling 'chain': Books too expensive? Okay, let's see booksellers reduce their profit margin. And to do that, suppliers maybe need to take a smaller cut. And publishers. And printers. And, yes, maybe even authors. Because maybe the solution - or at least part of the solution - is that if everyone in the industry takes a smaller cut *per item* we may end up selling more items overall to customers whose primary interest - in general - is Value For Money. Everyone needs to sit down - maybe as part of a Royal Commission - and *talk* about this seriously.

I doubt it'll even happen, though. People rarely think long-term when there are short-term profits to be made. :/

Hope this has been of interest to someone.

(Yes, Chuck, I believe it has been of great interest. Many thanks for permission to reproduce.)
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