Sunday, April 12, 2009

Crikey and Dymocks and my reply

Jeff Sparrow, editor of the journal Overland, had this to say in the Crikey newsletter last week:

The economist John Maynard Keynes once explained that the free market rested on "the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone".

The book chain Dymocks might not be wicked but there’s something a little coy about its current campaign for the parallel importation of books into Australia. Parallel importation would allow booksellers to import overseas editions, irrespective of whether they’d already been published in Australia. It’s a measure resisted by most authors and all Australian publishers, who fear that exposure to open market will wipe out the local industry. Interestingly, parallel importation’s also opposed -- and for similar reasons -- by the Australian Booksellers Association as well as by the majority of its individual members.

Dymocks presumably calculates that its size will provide a competitive advantage when it comes to dumping discounted or remaindered overseas books on the Australian market. But that’s not the kind of argument that carries much public weight. So when former NSW Premier Bob Carr writes on parallel importation for the Oz, he doesn’t say: look, I’m on the board of Dymocks, and this proposal will make me and my mates a lot of money. Instead, he explains that Adam Smith’s invisible hand, protector of readers the world over, will rest its sainted palm on working class kids and transform them into lovers of literature.

Now in the midst of a GFC, most people feel less than confident about entrusting the cultural development of their children to the same free market that just destroyed their retirement, and so despite the best efforts of Dymocks and Mr Carr, there’s been little public enthusiasm for parallel importation: of the 268 submissions received by the Productivity Commission, some 260 opposed the idea.

Hence Dymocks’ latest wheeze. If you are a member what Dymocks calls its Booklover’s Loyalty Program, you would have recently received an email explaining: "We need your help to bring you cheaper books."

Goodness, you might say. How do I get those cheaper books?

"The Australian Government, through the Productivity Commission, is reviewing the restrictive laws that unnecessarily inflate the price of books. The current laws stop Australian Booksellers importing books other than through the Australian subsidiaries or agents of overseas publishers. This may sound reasonable but it prevents copyright-protected books from being imported from the most competitive market, usually the United States or the UK, whichever is the cheapest when ordering. The current law stops us buying books at the lowest price to put in our stores for you to buy. […]

"Dymocks and the Coalition for Cheaper Books believe Australian booklovers deserve better. Dymocks believes that lower prices will enable more Australians to read more and as a consequence Australian literacy levels will improve. Dymocks believes that the Australian book industry should be driven by the Australian book buyer and not the local subsidiaries and agents of overseas publishers."

The email concludes by suggesting that, if booklovers don’t want greedy foreigners preventing dinkum firms like Dymocks from educating Aussie battlers, they should sign up on a petition in support of the Coalition for Cheaper Books.

And who, pray tell, is in this coalition? Well, naturally it’s an alliance of firms long known for their association with fine writing … K-Mart, Target and Big W (no, really!).

PR insiders call the creation of phony grass roots campaign "astroturfing" -- it’s the technique that led Philip Morris to fund the Advancement of Sound Science Coalition (where "sound science" was defined as anything that proved the healthful effects of tobacco). One wonders how many Booklovers signed up on a Loyalty Program thinking they’d be used to promote the business interests of K-Mart.

It might be appropriate to mention here that it’s far from certain parallel importation would actually reduce prices. Henry Rosenbloom, from the small publisher Scribe, argues convincingly that it wouldn’t, while the draft produced by the Productivity Commission itself acknowledges substantial uncertainty on the question.

To be fair, Dymocks might protest that its opponents have equally pecuniary motives for defending the status quo. Books are simultaneously artifacts of culture and saleable commodities, which means aesthetics and economics invariably get hopelessly tangled. But you can oppose a free market in publishing without signing on to every jot and tittle of the current arrangements.

Indeed, instead of these tired debates about parallel importation, it would be nice to hear some new arguments about how to foster literary culture. Last week, Scotland's Sunday Herald – like the Washington Post, the Los Angeles Times, the Independent on Sunday and the Daily Telegraph before it – abolished its book section. The steady erosion of literary journalism is merely one indication of the difficult environment literary publishing faces in the years to come.

It’s great that we’re going to get super fast broadband but, in the twenty-first century, Gutenberg’s invention could also do with some love.

I posted the following reply:

The publishers and authors defending the status quo are the victims of a truly incredible mass hysteria the likes of which I've never seen in my 35 years of publishing. Now they've been joined by many equally deluded booksellers. For otherwise intelligent people they have fashioned some of the silliest and most illogical pronouncements that protected industries are capable of.

How dare Dymocks seek to buy around over-pricing and under-servicing publishers! Global behemoths like Murdoch, Pearson and Bertelsmann should never be forced to compete with trumped up local retailers from the lower classes. It's just not good for culture!

As for Henry Rosenbloom's 'convincing' arguments that prices could never be lower if imported directly by booksellers, they are rubbish. Henry's calculations are deeply flawed. His multiple of 2.2 to arrive at the retail price is based on a very low A$ - certainly under 60c. Over the last five years, before its recent collapse, the multiple was around 1.6. And that's at an average 80c. The dollar actually went to 96c in mid 2008. Did publishers lower their prices in response? Of course not! Are you joking?

As the Productivity Commission concludes: Australian retail prices were 30% higher than equivalent US editions, and 50% higher than the lowest priced US editions.

Defend that Jeff.


Alison Croggon said...

You claim that authors are "hysterical" and "irrational". Toni Jordan - an extremely rational businesswoman as well as an author - made an excellent submission in which she pointed out, by the bye, that she stands to personally lose a great deal if the restrictions against PI are dropped. That is, that her British publisher has remaindered thousands of copies of her bestseller Addition, due to a dispute with amazon uk. That book has just been shortlisted for the Miles Franklin, and re-printed in a new edition by her publisher. If parallel importation was permitted, what would protect her from the British publisher dumping its remaindered copies on the Australian market, and losing a great deal of her hard-earned royalties? Every Australian author who publishes overseas faces the same possibility of having their domestic royalties cut, or in the case of remainders, destroyed altogether. I don't think being alarmed by losing your income is "hysterical" or "irrational". An income from writing is hard-earned and long in the coming.

I see that the US and the UK have no intention of dropping territorial rights for their authors. Why ever not? Why should Australian authors be reduced once again to colonials of the bigger economic powers? Unless you subscribe to those "psychic rewards" the Productivity Commission mentions, which might be nice but are impossible to eat.

The only possible support for this measure must come from a contempt for the labour of writers.

Peter Donoughue said...

Thanks for your comments Alison.

In my response to the Commission's draft report (also on my blog) I commented on the problem that overseas remainders presented to Australian editions and therefore to authors' regular royalty income.

I've always considered this the major issue if the PIRs were dropped, and the only genuine reason to not abolish them.

I support a new law altogether, that would prohibit their importation under Australia's anti-dumping legislation. I'm not sure if this could be done under Austalia's treaty obligations but it should be looked into.

Just two other points:

1. Abolition of the PIRs does not entail abolition of territorial copyright in Australia. They are two separate things, however most authors and publishers consider them one and the same. This is a fundamental intellectual confusion. Think of it this way: You as an author own an apartment in an apartment block that enjoys 24/7 security patrols provided by the government. The government now says this security is expensive, unnecessary, and should be abolished. You still own the apartment. You may have to adjust by installing stronger locks or alarms, but, basically, you're still able to live in and enjoy life in the apartment. The ADDITIONAL security you enjoyed has gone, but not your fundamental rights.

2. Overseas publishers cannot dump their remaindered copies on the Australian market. The supply chain just doesn't work that way. Australian booksellers have to import them, by placing orders for them with a wholesaler. Most booksellers would never do this. They would never stoop this low. I have suggested a 'naming and shaming' strategy if they did, and consider this would be extremely effective.

Steve Carey said...

For the first time on this issue I find myself less than convinced by your arguments, Peter, specifically: "Most booksellers would never do this. They would never stoop this low. I have suggested a 'naming and shaming' strategy if they did, and consider this would be extremely effective." This is weak and unconvincing.

Money is like water, and finds the lowest point. Conditions are so tough for booksellers that if there is a temptation I don't think we can rely upon 'naming and shaming' to hold back the tide. And if it doesn't work? Then what? I reckon you'd find that once two or three booksellers had done it and, naming and shaming notwithstanding, 'got away with it,' you'd find many others would complain that they were being asked to fight with one hand tied behind their back. The floodgates would open.

Otherwise I'm with you. On this, not so much.

Peter Donoughue said...

Steve, even if you're right - and you're not - then the problem would never loom large in the scheme of things.

Firstly, the Australian title would have to be remaindered overseas. This is nowhere near as common as is being made out. And secondly, there would have to be a sufficient number of units remaindered to be a decent source of supply back into Australia.

Finally, the Australian publisher could contract to buy back any remainders at the going price if absolutely necessary. They would cough up $3000, say, and get a destruction certificate from the overseas publisher for the 3000 or so excess inventory. This expense could even be shared with the author.

There are ways!