Wednesday, March 25, 2009

Rubbish from the APA on parallel importation.

It has to be said that of all the nonsense written by various parties in the course of this debate - not just during the current Productivity Commission enquiry, but over the last 20 years - it would be hard to beat the exquisite madness being served up by the Australian Publishers Association (though I have to admit Peter Carey is probably still in the lead - see my blog entry of Jan 28.)

APA executive Jose Borghino issued the following statement this week in response to the Commission's draft report. Just about every phrase, every clause, every sentence is wrong. Not just wrong in understanding, in judgement, in rhetoric, but factually wrong.

My comments are in italics throughout:

‘How can the Government take seriously a ‘Discussion Draft' that is so ideologically pre-determined (no it isn't, it's just Economics 101) that it says, words to the effect that: We really don't know what the industry looks like or how big it is (the commission outlines how it went to great pains to estimate the size of the industry from a variety of sources), but let's destroy the back list (introducing competition is not destroying anything), make copyright worthless after a year (removing the PIRs after 12 months has nothing to do with removing 'copyright'), discourage exports and overseas rights sales (the commission, naively, suggests delaying, if publishers wanted to do that) boost Asian printers and American book-packers (even if this were true - which it isn't - is it necessary to go there?), exacerbate the leakage of books through Amazon ( exactly?), ensure Rudd and Gillard's education revolution is based on Third World materials that have been stripped of any high-quality online teaching aids (colorful but wrong, and yet another unjustified slur not just on Asians but on Australia's teachers and academics), make the whole system more complicated rather than more streamlined (in fact no more complicated than the current one) , and export skilled jobs in printing and publishing to our major competitors in Asia? (there it is again!)'--

(Borghino also claims that the commission's estimate of the size of the industry at $2.5 billion is way overstated. He claims it is only $1.7 to $2.0 billion. How way out of touch the PC is! The commission is clearly measuring retail and end-consumer revenues which Borghino confuses with publishers' net receipts - a common error.)

The APA should do a lot better than this. It's really not helping, and it's greatly lowering the quality and tone of the debate.

Friday, March 20, 2009

The Productivity Commission's Discussion Draft, March 2009

The Productivity Commission deserves to be congratulated for a generally calm, measured and robust draft report on the Parallel Importation Restrictions (PIRs).

There are some real weaknesses and confusions however. Allow me to address them in turn:


Publishers will not be happy about the removal of PIRs from the back list, and I can appreciate why. Many back list titles sell in very large volumes, frequently propelled as they are by new titles from popular authors. Publishers won't appreciate being told by the Commission, on no evidence, that back list titles generally sell in 'small volumes'. Many key titles, in Australia's trade paperback format, will suddenly get keen competition from far cheaper US paperbacks. The disruption here will quite possibly be much more serious than from any removal of the PIRs from the front list. Yet the Commission claims to be concerned about disruption.


The Commission makes far too much of Asia as a potential source of cheaper textbooks if the PIRs are abolished. The fact is that educational publishers have NEVER relied on the 30/90 day provisions since their establishment in 1991. They've never needed to. New texts published in the US or the UK are published at an optimal time for the northern hemisphere academic year. They are not flown into Australia in 'commercial' quantities for sale within 30 days, as the comparable Australian academic year starts six months later. If any copies are flown in and sold to customers they would be the exception, usually because the US or UK text is published later or earlier than normal, so catching a semester just starting in Australia. Usually a small number of copies are imported for distributing complimentary copies to academics to promote sales in six to eight months' time.

So supply from Asia could technically happen now, but it doesn't. Campus booksellers rely on the fine metrics of supply efficiencies for profitability. They are not going to throw these away for a possible few extra dollars of margin which may look tempting on paper but would be soon eaten up by supply realities. Secondly, if it did start to happen, global educational publishers would inhibit it very effectively by simply refusing to supply Asian-based wholesalers out of their Asian subsidiary companies (the only possible source of the lower-priced editions) any quantities in excess of identified Asian course needs. This happened very effectively a few years ago when certain Asian wholesalers began supplying texts online to individual students based in the US. The supply was effectively strangled, as it also was to supply out of the UK and Europe. Tertiary publishers are in the unique position of knowing precisely the ultimate customer destination of every text. They know each adoption everywhere, and the enrollments. That's the precision of the business.

Supply from Asia is a myth. Theoretically possible, but highly improbable.


The Commission misunderstands the effect of allowing remainders in, and it simply subverts its genuine desire to enhance competition when it argues that remainders are a legitimate source of it. Sure, authors don't get a royalty on remainder sales, but imported remainders could seriously undercut the normal royalty flow from continuing sales of the regular-priced Australian edition. This is the issue, not whether the author's royalty has encompassed the remainder end of a particular edition's journey. The critical point for Australia, without the PIRs, is the frequency, size and effect of the issue and whether it could it be mitigated by contractual , 'naming and shaming', or other ways. (By the way the draft misquoted my submission on this point. I was referring to possible non-remainder or buy-back clauses in rights contracts to inhibit any sale to a remainder dealer in the first place).


In arguing for 'prudence' on more thorough reform, the PC accepts too many assertions by the industry at face value, without subjecting them to rigorous analysis. As a result it puts far too much credence on disaster scenarios if the PIRs were abolished, and too readily accepts claims that significant local publishing activity, and thus cultural externalities, would be undermined.

It hides behind 'lack of up-to-date data' on the industry, when more data is not what is needed, rather clearer thinking. 'Better information' won't remove the claimed 'uncertainty about the significance of the impacts of the PIRs, how the industry would respond to their abolition, and how large the accompanying adjustment costs would therefore be'. There needed to be a recognition by the Commission that key players in the industry, as seen in the vast majority of the submissions, are conceptually confused on the fundamental issue of territorial copyright, how it is established, and the part played by the PIRs. As the Draft says at one point, in Section 3.2, 'by adding to what the holder of the publication and reproduction rights can control, the PIRs thus potentially add to the value that those rights might have in the marketplace'. Unfortunately most submissions are arguing for the retention of territorial copyright rather than the PIRs, as if they were one and the same. I would have liked to see the Commission address this confusion rigorously and analytically, much as it admirably did on many other issues, such as on the value and methodology of international pricing comparisons. In failing to do so I fear it has given too much weight to the possible 'disruption' that may be caused by the 'total abolition' option.

Fundamentally, there is a mismatch between the Commission's constantly repeated views of the negativities and costs of the PIRs and the timidity of their final recommendations. This is disappointing. They are confident and on firm ground in their economic analysis, but go to water in the face of specific publishing industry claims from participants that are allowed to stand without question.

Thursday, March 19, 2009

The Carbon Capture of Kevin Rudd

On some issues you can just read and hear too much. You get to an overload stage, where your brain feels like a dull fudge of half digested ideas, facts, statistics and opinions, and you yearn for some cut-through enlightenment and vision.

Then you read something that blazes with such clarity and light that it's as thrilling and cleansing a sensation as your first love. The two books pictured here gave me that in spades. If you read nothing else about climate change then read these two wonderful contributions to the debate.

I first read Nigel Lawson's An Appeal to Reason nearly 12 months ago when it first came out. Lawson was a cabinet minister in Margaret Thatcher's conservative government in the UK in the 80's. He held two portfolios that gave him the credentials to write about climate change - Energy and Chancellor of the Exchequer (Treasury). He takes a conservative line of course, bordering on denialism, but he does it with such fierce intellectual clarity and logic that he exposes, persuasively in my view, much of the cant, overstatement and sheer bluster that dogs this debate on all sides. He takes particular aim at Sir Nicholas Stern's very influential report to the Blair government on the economic effects of unmitigated climate change. He virtually demolishes it. Sure, Lawson has been attacked by economists supportive of Stern, and I've read them, but they're lame and they don't have the power, the zing.

The just published, latest Quarterly Essay by Guy Pearse, Quarry Vision, is a similarly invigorating read, and of course focused on Australia. Pearse used to work in Canberra as a Liberal Party minion with a particular interest in the environment. In sheer frustration he left the party, but not before dumping all over the Howard government's denialism in his 2007 book High and Dry and on a subsequent Four Corners program.

Quarry Vision takes aim at the fossil fuel industry, especially coal, and Rudd's truly miserable Emissions Trading Scheme. I can't recommend this little book (120 pages) highly enough. It's powerful, provocative and exceptionally well written, and full of the sort of clarifying information that's revelatory, shocking and persuasive. It's not about the science. Like Lawson, it's about the politics and economics, and it's all you need to read to get a full picture of our pathetic political response to the greatest crisis of our time.

Buy these two and read them.

Friday, March 6, 2009

The Great Fire

Well Shirl, I've done it...I've finished your book!

With only 30 pages to go, I was barely hooked, but right at the end it clicked for me, and I saw clearly why most people love it. It's a powerfully romantic novel.

The sadness and melancholy are overwhelming. War and disease take the young, beautiful and good. Oafs and fools remain. Isolation and alienation eat away at the sensitive and intelligent.

However, Hazzard is a snooty Australian ex-pat and it shows. The cultural sneer is not far from the surface, mainly directed at vulgar Australians.

The language also remains bad all the way though! Here are some more jarring 'examples:

'..Leith was driving with Talbot into green hills: discarding the exploded dockland..' (she means 'deserting').

''There might be other incidents, recorded or obscured, beside which the present outbreak would not look well' (she means 'good').

'Impetus was irreducible' (She means 'momentum was unstoppable' - two clangers in the space of three words!)

'Looking across the straight, you now saw...the interior life of the mainland: grouped habitations, laborious paddies, serpentine paths...' ('laborious' is so wrong. We know what she means but in trying too hard to achieve some adjective/noun rhythm in the sentence she buggers it).

'He was fretted by his own assertion that he would soon be gone.' (She means he was made 'anxious').

'I say your name in this flimsy room so strangely become immemorial' (she means 'memorable').

I could go on and on with these examples but you get the point. To be fair however, there are some potent, quotable lines and passages. Take this: 'As Gardiner had said, the Driscolls were disquieting as a symptom of new power: that Melba and Barry should be in the ascendant was not what one had hoped from peace. It did not even seem a cessation of hostilities.' [Melba and Barry, you probably guessed, are ugly Australians!]

So in summary The Great Fire is both very good and very bad. It's like wading through a long stretch of mud to get a decent meal. Is it worth it? No. It's far too exhausting. Read something else.