On 30 October, Dick Smith replied to my email to him which I’d sent earlier that day (see my previous post to this blog). A couple of hours later – while still in Athens – I replied. Here is that exchange.
Thanks for your email of today.
I would wager that every single component used in your publishing business has been purchased through a competitive marketplace. By this I mean your printing equipment, photocopying equipment, telephone equipment – everything used in your office and production facilities.
I am also confident that you would be outraged if Dick Smith Electronics, or indeed any other business, colluded to stifle competition.
Further, I would assume that when you went to purchase your last washing machine or television you understood that Australian business has to compete in the world’s marketplace – in fact, that’s probably why you would have had the opportunity to purchase the goods at such a low price.
Perhaps you remember I owned my own independent publishing house – “Australian Geographic”. I owned it for about ten years and then sold it for over $40 million to Fairfax. Not at any time did I have any problem in competing with overseas publishers. At that time I was totally opposed to import restrictions on books, and I still am.
I happen to love competition, and because Australia has benefited so much from it’s opening to world markets, I am happy to accept some of the disadvantages which accompany globalisation.
I will support import restrictions for books if you will support import restrictions for products that I would like to produce in the future for my own financial gain.
Regards Dick Smith
Thank you for your quick response. I can see that you are well-intentioned, but I still think you are misinformed. Perhaps that is why your reply is rhetorical, and does not address the specific points I made.
Territorial copyright is not akin to tariff protection. It is more like sovereignty: without it, no nation can safeguard its own interests. In commercial terms, it is much more like patent law, which provides essential certainty to the originators of intellectual property.
For book publishers who buy and sell in the international marketplace, territorial copyright is the bedrock for all their activities. That is why the parallel importation of books is forbidden in such havens of free-market economics as the United States and the United Kingdom.
The arguments that I and my fellow publishers make against parallel imports are not based on fear of competition from overseas books; they come, instead, from our understanding that a large source of our business will be removed if we are unable to have guaranteed access to our own territory when we acquire overseas-originated books or sell Australian books to overseas territories.
Your Australian Geographic business, admirable as it was – which I vividly recall you establishing and building up – is not a comparable model. It would have been, had you tried to engage in international trade within it – then you would have quickly learned how important territorial copyright is. I should add that, given you were producing a narrow range of Australian-themed and -branded items, it was never subject to the general trade conditions that I am talking about.
The argument for the retention of parallel-import restrictions is not about restricting competition. If it were as simple as that, the Productivity Commission would have said so, and the decision to abandon the restrictions would have been made years ago. It is essentially about the necessary conditions for any book-publishing industry to have the confidence and the income to invest in books and authors within its own market.
You say in your accompanying letter to the ceo of the Australian Publishers Association that ‘big multinationals’ have been ‘ripping off Australian consumers with inflated prices’. Speaking as a non-big mini-national, I feel bound to tell you that this is simply not true. Book publishing (and retailing) operates on very skinny margins, and our book prices merely reflect all the basic conditions of our economy, especially our size and our wage levels. In particular, whether our book prices seem high or low relative to, say, US book prices, is largely dependent on the exchange rate of the Australian dollar. Given that the main course in a restaurant costs more than a 450pp large paperback, Australian book prices are, in fact, relatively modest.
Finally, I must add that neither I nor my fellow publishers have been ‘manipulated or brain-washed’ into making such arguments, as you assert in your letter to the APA. I have written many thousands of words on this subject, in two submissions to the Productivity Commission, in several posts to my blog, and in other communications. They are all – for better worse – all my own work, independently arrived at and expressed. The alternative is truer: we know our industry, but you are the victim of an ideology.