Recently, a former Labor premier of New South Wales, Bob Carr, published an argument for cheaper books (‘The Forum’, Weekend Australian 13-14 December 2008). His piece displays just enough knowledge to be dangerous, and enough insouciance and ignorance to be breathtaking.
Let’s be clear what’s going on here. Mr Carr is seeking to justify the abandonment of territorial copyright for Australian publishers and authors on the grounds that it would result in cheaper books across the board. This is a powerful, simple rationale — which, as it happens, is plain wrong. But even if it were right, it ignores the devastating costs of such a radical move. His pitch is seductive because it is simplistic and selective.
To take Mr Carr’s main argument at face value, I find it extraordinary that, for a person who sits on the board of a book-retailing chain, he doesn’t seem to understand the first thing about book pricing or the book industry. He quotes, amongst his examples of apparent local rip-offs, the fact that The White Tiger sells for $32.95 in Australia, but only $21.53 in the US and $30.70 in Britain. Apart from the fact that he hasn’t added GST to the overseas prices (which immediately makes the UK edition dearer), he doesn’t mention that booksellers would have to get copies of a US title such as this into Australia in order to sell them.
To do so, booksellers have to pay for freight, compensate themselves for having to buy copies on a firm basis (not on sale-or-return basis, as they do locally) and, in the process of converting their costs from US dollars to Australian dollars, add a buffer to protect themselves against adverse currency fluctuations. The nett result of these practical factors is that, at the current $US-$Australian exchange rate, booksellers, like Mr Carr’s very own Dymocks group, multiply US prices by around 2.2 to arrive at an Australian recommended retail price inclusive of GST. Thus The White Tiger, which costs US$14.00 in America, would retail here for $30.80, assuming that booksellers didn’t round the price up — a maximum potential saving of $2.15.
In fact, most of the time, Australian editions of US-originated books sell for less than the US edition would if it were able to be imported by booksellers. Let me give you a few examples. We have just published Obama’s Challenge, by Robert Kuttner, a US paperback that retails for US$14.95 in its home country. If booksellers were able to import it, they would charge $32.95 for it. Our recommended retail price is $27.95.
We have also just published a small-format paperback of The Canon by Natalie Angier. The US retail price of $15.95 would become $35.00 in local booksellers’ hands. Our price: $27.95.
We publish many local editions of US-originated titles, and most of the time they demonstrate the same price disparity in Australia’s favour. But, what is even more extraordinary, Mr Carr doesn’t seem to have noticed that Australian consumers get the further benefit of having paperback editions available to them instantly instead of the expensive hardbacks that US publishers originate.
Thus, for example, next month we’re publishing ‘A Long Time Coming’ by Evan Thomas and Newsweek journalists, a book about the recent US election campaign. In the US, it will be published as a US$22.95 hardback, which would have an Australian RRP of $49.95. Instead, we’re publishing our edition as a paperback for $27.95.
Similarly, early in 2009 we’re publishing Legacy of Secrecy, by Lamar Waldron, an 864-page book on the Kennedy assassination. In the US, it’s just been released as a US$33.00 hardback, which would be priced here at around $72.50. We’re publishing it as a paperback for $45.00.
There are countless examples such as these available to demonstrate how Australian consumers continually benefit from the availability of what is called the trade paperback.
But even comparing like with like — hardback with hardback — local pricing is often keener. I notice, for instance that the US edition of The Man Who Owns The News, by Michael Wolff, a recently released hardback biography of Rupert Murdoch, retails there for $US29.95. If the Knopf edition were to be imported by local booksellers, they would charge around $66.00 for it. Instead, the Australian edition, published by Random House, is priced at $49.95.
Whichever way you look at it, the argument to abandon territorial copyright in order to reduce the retail price of books is not sustainable. It is not supported by the facts on the ground and, ultimately, is hostage to foreign-currency exchange rates and the behaviour of booksellers. This is not, to put it mildly, a sound basis for making such a major change.
Mr Carr has one extra claim to support his case: the experience of New Zealand since it allowed parallel imports ten years ago. He says that their publishing industry has thrived since then. I don’t know of the report that he relies on, but I do know that this doesn’t resemble the New Zealand publishing industry I deal with. Books are more expensive there than here; their indigenous publishing has been stunted and starved; and the country is essentially treated as a dumping ground by multinational publishers. This is not a picture of a healthy or growing industry.
Which brings me to my main areas of disagreement with Mr Carr’s argument. He seems to have no awareness of the centrality of territorial copyright, the nature of Australian publishing, or where the best interests of authors, consumers, and the culture at large lie.
There is no publishing industry of any significance in the Western world that does not rely on exercising exclusive copyright in its own territory. Indeed, it is impossible to imagine an industry that could exist without such an enforceable right. In Australia, which for many decades suffered from being a neo-colonial outpost, it is especially important in enabling indigenous publishing — and everything that goes with it — to flourish. Like taxation, territorial copyright is one of the prices we pay for civilisation.
As I’ve noted in a previous blog on the subject, the current copyright rules, which were introduced in 1991, have led to the emergence of a vibrant book publishing industry. In fact, in terms of its market share, Australian book publishing has become the most successful cultural industry in the country (much more successful than the local film industry, for example) — all without any significant subsidies from government. It has never boomed financially but, compared to the US and the UK, it is healthy. Whereas it was once a plaything of foreign-owned distributors, it has become a complex ecosystem, with multiple symbiotic relationships between publishers, booksellers, authors, writers’ festivals, and the media increasing all the time.
All of this is now at serious risk if the arguments of people like Bob Carr were to be listened to by the Productivity Commission or the Rudd government. There are two main ways, I think, in which the industry would be decimated if parallel imports were allowed.
Earlier, I gave examples of US-originated titles that publishers like us acquire regularly. We can only do this if we have a territory to buy — that is, if our own territory is available to us exclusively. Without the protection of territorial copyright, no local publisher would be able to make an offer for the right to publish overseas titles here with any confidence (as our print-runs could be undermined by booksellers importing competing editions, or by overseas publishers or distributors exporting their editions, especially if the exchange rate moves in their favour). We certainly could not afford to support the publishing of such titles with local marketing and promotional activities.
It’s also possible that US rights-holders (that is, publishers or literary agents) would be reluctant to license Australian rights at all, as they might be unnerved or emboldened by the prospect of UK editions competing with theirs in our market, or they might think they could do better by exporting their own editions.
Consequently, Australian local publishing programmes, which are underwritten by our access to profitable overseas-originated titles, would shrink: there would be a severe reduction in quantity and quality, and a forced emphasis on likely bestsellers.
Meanwhile, Australian publishers selling rights would face unbearable competition from foreign editions of their own titles — either offered at run-on marginal costs, or as remainders. In either case, their authors would get either low royalties or none at all. For this reason as well, local publishers would not be able to afford to pay significant advances to prominent local authors, and local publishing programmes would contract significantly.
The collateral damage would also be significant. Book printers would be devastated, as their business has been built on local and UK-owned publishers printing locally to abide by the so-called ‘30-day rule’ that currently protects copyright. Local authors and literary agents would be imperilled. Independent and serious booksellers would face a crippling loss of diversity and quality in their range. And Australia would revert to its twentieth-century status of being a territorial dumping ground, our bookshops filled with books that other people wanted us to have.
All of these consequences would follow from the imposition of Bob Carr’s simplistic solution in search of a problem. Dymocks, the company on whose board he sits, would be free to import whatever titles it wanted to, whenever it wanted to. Everybody else would be free to wander a blasted heath. Perhaps they should adopt the motto of ‘Import and be damned.’
Bob Carr also raises the issue of Australians increasingly buying books online at lower prices than local booksellers charge. This is true, but is a red herring. It has nothing to do with territorial copyright, and would remain a marketplace reality whatever regime were imposed. Its real significance is that it is an example of an unlevel playing field — a gift to Amazon and its ilk — as the government imposes no GST on online purchases, to the great disadvantage of local booksellers, let alone local publishers. This is a genuine reform crying out to be undertaken, which would have the added benefit of contributing to government revenues.
Mr Carr mentions that there’ve been five inquiries into this subject since 1988, and he hopes, exasperatedly, that this new one will be the last. A little humility might have led him to realise that the very fact that there have been no changes following so many inquiries is an indication that this is a highly complex subject, and that there might be good reasons why it has so far withstood the urgings of economic-rationalist zealots and the superficial attractions of free-market ‘reforms’.
Mr Carr concludes by saying that, ‘All expect reform to happen, the Productivity Commission to say, “Open the Market”, and the cabinet to agree.’ This is precisely what he has been lobbying for. The truth is that hardly anyone else in the industry — from multinational publishers to independent publishers, from authors to literary agents, from writers’ festival directors to most booksellers — agrees with this idea. But the fix is certainly in with the referral of this question to the Productivity Commission. If it proceeds as expected, Australian publishing will face an existential threat of the utmost severity.
It will be ironic indeed if an Australian Labor government listens to the siren-song of a failed ex-premier, and tries to resurrect market fundamentalism and deregulation at a time when the whole world is suffering terribly from the consequences of such a demonstrably asinine approach.
(A shorter version of this article appeared on ABC online at www.abc.net.au/unleashed/stories/s2450051.htm.
Mr Carr’s article can be accessed online at www.theaustralian.news.com.au/story/0,25197,24774541-26063,00.html)
To read my full submission to the Productivity Commission’s inquiry into ‘copyright restrictions on the parallel importation of books’, download the PDF: Download
Over 200 submissions were sent to the commission by the due date of 20 January, and they came from a wide range of individuals and organisations. Following its evaluation of the submissions, the commission will release a draft report (in early March); arrange ‘roundtables’ to discuss the draft report (March–April); call for supplementary submissions (by 10 April); and issue a final report to government (13 May).