Predatory pricing practices in the US book market

by Sharyn Lilley

Alan Fels derided the recent Government decision, and referred to the opponents of the PIR abolition as being ignorant and uneducated.

I was opposed to the particular changes being put forward to abolish the PIR’s and as I left school at fifteen, almost three decades ago, I guess he could have been talking about me. I think, however, that such name calling by someone who could do a lot more for the cause he championed, provided he was prepared to work with both sides of the argument, somewhat lacking in graciousness.

Peter Donoughue, http://peterdonoughue.blogspot.com/2009/10/my-speech-at-copyright-symposium-sydney.html could also do more by getting together with the people at the coal face, and working with them to lower prices of Australian books, rather than slyly referring to Chicken Little scare practices of industry organisations, pandering to their lowest common denominator membership.

In fact if you are an author, publisher, printer, an agent, an editor, illustrator, a bookseller or in the distribution side of the Australian publishing industry, we all need to start thinking of ways to get everyone together to discuss seriously how to improve things here. Because there is a bigger threat waiting in the wings if we don’t.

The Huffington Post (United States) has an article highlighting the problems being faced by predatory pricing practices in the US at the moment. http://www.huffingtonpost.com/william-petrocelli/not-a-simple-price-war_b_336233.html

I note that the key players in this book war are Amazon, Walmart, and Target. It’s tempting to make gratuitous comments about evil empires striking back, but I’ll refrain. Because the ones being wounded by this war’s shrapnel as much as authors and publishers, are the booksellers.

The legitimate booksellers are those who specialise in books. They can’t use books as a loss leader, they don’t bank on people buying other more profitable goods while they are in the store.

Hands up anyone who was able to find someone in their local K-mart or Big W book section who knew what books were in stock, and when other books might be available?

No hands? Ahh, yes, that would be because your local supermarket has no say over what stock comes into their book shelves, and they can’t order anything in for you.

But the Huffington Post article raises a very valid point. When the mass market retailers use their market share to try to force competitors out of business you are left with no alternative but to buy from them.

The image of 500 buyers for different stores (as portrayed in the article) being replaced by a single buyer responsible for stocking 500 stores is chilling. Mass market retailers are only interested in products that give them the best profit.

SUPPORT AUTHENTIC BOOKSTORES before we all lose out!

What the dickens? writes economist, Martin Feil

Some relevant and rational comments by an Australian economist…

Martin Feil’s article is in the The Age (Business section) Nov 18 2009.  Here are his final few paragraphs.  Read the complete article and be informed.

Writing and publishing in Australia are not occupations for an upwardly mobile, asset-acquiring, gilded and persuasive intellectual. It simply doesn’t pay enough. No amount of psychic income removes the need for real dollars to buy houses, education and overseas trips, and afford children.

Professor Fels’ opinion demonstrates a steadfast allegiance to the tyranny of the economists and a steadfast commitment to the merits of unsupported assertions. How can he say that the Government is unable to deliver this simple reform because of the ”uneducated clamour of a few authors, driven by publishers’ interests”?

I am sure and am thankful that authors, generally, haven’t got an education in economics. It is a discipline that inculcates the baseless assertion and the unnecessary insult……

Plenty of global economic reputations have been burnt in the bonfire of the global financial crisis. Maybe it is time to look at the facts rather than defend, to the death, some outmoded theories about the operation of the unregulated market.

Martin Feil is a tax and industry policy consultant and a former director of the Industries Assistance Commission.

PI issue ‘goes to the heart of Australian culture’

by Sheryl Gwyther

The decision by the Federal Australian Labor Party to throw out the Productivity Commission’s recommendations was a victory for those who support the integrity of Australian authored and published books. But with all the ranting and raving by commentators in The Australian and some other newspapers you’d swear it will cause the demise of our economy.

Australian authors, illustrators, publishers, printers et al celebrated last week, but if we care about this industry it behoves us all to be vigilant because there will be no let-up from those who continue to push for total deregulation of Australian industries – including the publishing industry. (I must add that, while I’m voicing my opinion here I’m not Robinson Crusoe.)

We’ve allowed this to happen to other Australian industries in the past – in textiles, cars, petrol, shoes and food, and many Australian manufacturing and primary industries have gone to the wall. I urge you to read some of the articles from Ross Gittins, economics editor from the Sydney Morning Herald.  http://www.smh.com.au/opinion/no-such-thing-as-a-free-market-20090908-fg2o.html

We have the right to ask a pertinent question … what good has free-marketeering done for Australia already? We still face higher prices and lack of choice in supermarkets. Are clothes any better made now they pour in from Asian sweat-shops, and are good-quality shoes cheaper?

Some will call this a simplistic view of economies. But non-economists, ordinary Australians can only judge and decide on what we experience now.

Buy Aussie books!

In The Australian on Friday Nov 17, Peter Donoughue, a Parallel Importation supporter and publishing commentator, said – ‘the campaign against the reforms had been based on a “big lie” … and that … “the Australian book-buyer shouldn’t have to put up with high prices unrelated to today’s exchange rates, frequent out-of-stocks and slow delivery times.”

Given that the Aussie dollar exchange rate has reached amazing heights against the US dollar for well over six weeks, overseas orders would’ve been purchased at a much cheaper rate. If so, why haven’t bookshops passed on the savings by reducing their prices on overseas books sold in Australia now?

The threat of Parallel Imports of books won’t magically disappear any time soon. It is vexing is for all involved in this industry, including authors. But it also concerns many Australian readers – we know that because of the animated, passionate and concerned comments they’ve added to the SAB’s online petition.

For this reason, the SAVING AUSSIE BOOKS blog and campaign remains open.

It’s over – VICTORY IS OURS!

PARALLEL IMPORTATION RESTRICTIONS SURVIVE TO FIGHT ANOTHER DAY …

but don’t be lulled into a false sense of security; those who sought to destroy the Restrictions have not given up their intent. They have a powerful motive … to increase their profit margins.

…………………………

At a Federal ALP Cabinet meeting last night, the proposed changes to the copyright laws governing the Parallel Importation of Books were rejected.  Dr Craig Emerson’s office sent out a Press Release early this morning. PRESS RELEASE

We’ve had over 10,000 hits on this site since we set it up to oppose the removal of PIRs.

This just goes to show the importance of this issue and the fact that so many people have been concerned about the ramifications to any changes in the laws.

Authors, publishers, printers, agents and many independent booksellers have combined to reject the removal of PIRs. Hopefully, everyone in these areas of the industry will continue to work together to support our existing industries and embrace any positive changes for the future – whatever they may be.

A huge thank you to everyone who has supported this cause: authors, publishers, agents, printers, various trade unions, readers, parents, teachers, librarians, grandparents.

In particular we pass on our gratitude to those politicians who stuck out their necks to publicly support our cause: ALP Federal MPs: Arch Bevis, Steve Gibbons and Graham Perrett; and also the Australian Greens’ Senators, Christine Milne and Scott Ludlam.

We could not have done it without you.

Just a cautionary note amidst the celebrations: Australian booksellers, and this includes Dymocks Bookstores are under enormous pressure from the huge, retail discount stores – Woolworths and Coles, KMart, Big W and Target. It is up to Australian booklovers to support the authentic booksellers or they will go under!

Do your bit to support Australian bookshops and the people who know about books …  resist the temptation to save a couple of dollars at the discount stores, pay a little more at a real bookshop.

Thank you from all the authors behind the SAVING AUSSIE BOOKS blog campaign:

Dee White     Sheryl Gwyther    Kathryn Apel    Sally Murphy    Angela Sunde    Sharyn Lilley   Kim Rackham    Sandy Fussell   Nicole Murphy  Maree Kimberley    Meryl Harris    Trish Puddle

AUSSIE BOOKS RULE!

BREAKTHROUGH IMMINENT?

STOP PRESS: Is the battle against Parallel Importation of Books finally over?

WATCH THIS SPACE!

PIRs – MORE INFO ABOUT THE MELBOURNE PROTEST RALLY!

Details for tomorrow are:

1. 9.45 am. Meet 4 Treasury Place Melbourne.

2. 10.00am. Begin Rally.

3. Introduction by Steve Dargavel – Victorian Secretary AMWU. Brief introduction and chair.

Steve to introduce the 4 – 5 speakers .

Order of speakers:

• Steve Gibbons. MP. Federal Member for Bendigo – 8 minutes duration.
• Dave Oliver. National Secretary AMWU – 5 minutes duration.
• Shane Moloney. Author – 5 minutes duration.
• Michael Heyward. Publisher – 5 minutes duration.
• McPherson’s worker – TBC.

4. The rally will conclude by around 10.45 am as it is Rememberance Day and there will be a minute’s silence at 11.00am.

PIRs – MELBOURNE PROTEST RALLY ON WEDNESDAY

A PRESS RELEASE TODAY FROM THE OFFICE OF BENDIGO MP STEVE GIBBONS HAS ADVISED THAT:

There will be a protest rally on Wednesday November 11 in Melbourne against the proposed changes to the PIR laws.

Bendigo Federal MP Steve Gibbons will attend and speak at the rally as the campaign against changes to territorial copyright laws affecting the book publishing and printing industries gains pace.

Mr Gibbons advised that the rally will be outside the Commonwealth Government building at 4 Treasury Place, Spring Street Melbourne at 10am. “McPhersons Print group workers from Maryborough will attend the rally and Authors, Publishers, book retailers and others interested in supporting the campaign”.

“The Rudd Government will most likely make its decision at a cabinet meeting in Canberra in mid November and it’s vital that the message gets through loud and clear just what the proposed changes will do to the future well being of all involved in this important industry”.

“There will be a group of speakers addressing the rally including high profile Authors, Publishers and Trade Union representatives. Mr Gibbons said he had been asked to speak and had no hesitation in agreeing.

“Maintaining Territorial Copyright is important, not only for Maryborough’s future, but the future of all those involved in the industry across Australia”. “The Australian Publishers Association estimate the loss of around 2000 jobs in the publishing and book printing sector across Australia if the Rudd Government accepts the Productivity Recommendation to remove the current restrictions on imported books”, Mr Gibbons said.

IF YOU’RE IN MELBOURNE ON WEDNESDAY, THIS IS YOUR CHANCE TO PROTEST AGAINST THE PROPOSED CHANGES!

PIRs – FINAL CALL FOR ACTION – by Dee White

The Australian Publishers Association has issued an urgent bulletin to members of the industry advising that NOW is the time to act – that this is likely to be the last opportunity to voice concerns over the proposed removal of PIRs.

The APA is urging people to write, fax or email the following politicians as soon as possible, clearly stating that the PIRs should remain in place and that the 30 day rule should not be changed.

Chris Bowen MP; Minister for Human Services, Financial Services, Superannuation & Corporate Law.	chris.bowen@treasury.gov.auPhone:  02 6277 7200 Fax:  02 6273 4406 Suite  M1 24 Ministerial Wing Parliament House, Canberra ACT 2600
Senator Stephen Conroy; Minister for Broadband, Communications & the Digital Economy	minister@dbcde.gov.auPhone: 02 6277 7480 Fax:  02 6273 4153 Suite  MG 70 Ministerial Wing Parliament House, Canberra ACT 2600
Simon Crean MP;  Minister for Trade	simon.crean@dfat.gov.auPhone: 02 6277 7420 Fax: 02 6273 4128 Suite  MG 46 Ministerial Wing Parliament House, Canberra ACT 2600
Martin Ferguson MP; Minister for Resources, Energy & Tourism	martin.ferguson@ret.gov.auPhone: 02 6277 7930 Fax:  02 6273 0434 Suite  M1 23 Ministerial Wing Parliament House, Canberra ACT 2600
Senator Joe Ludwig; Special Minister of State	joseph.ludwig@finance.gov.auPhone:  02 6277 7600 Fax: 02 6273 4541 Suite  MG 64 Ministerial Wing Parliament House, Canberra ACT 2600
Nicola Roxon MP; Minister for Health & Ageing	Nicola.Roxon.MP@aph.gov.auPhone: 02 6277 7220 Fax:  02 6273 4146 Suite  MG 50 Ministerial Wing Parliament House, Canberra ACT 2600
Kevin Rudd MP; Prime Minister	Kevin.Rudd.MP@aph.gov.auPhone: 02 6277 7700 Fax: 02 6273 4100 Suite  MG 8 Ministerial Wing Parliament House, Canberra ACT 2600
Stephen Smith MP; Minister for Foreign Affairs	Stephen.Smith.MP@aph.gov.auPhone: 02 6277 7500 Fax: 02 6273 4112 Suite  M1 27 Ministerial Wing Parliament House, Canberra ACT 2600
Wayne Swan MP; Treasurer	wayne.swan@treasury.gov.auPhone: 02 6277 7340 Fax: 02 6273 3420 Suite  MG 47 Ministerial Wing Parliament House, Canberra ACT 2600
Lindsay Tanner MP; Minister for Finance & Deregulation	lindsay.tanner@finance.gov.auPhone:  02 6277 7400 Fax:   02 6273 4110 Suite  MG 48 Ministerial Wing Parliament House, Canberra ACT 2600
Craig Emerson MP; Minister for Small Business, Independent Contractors, Service Economy, Competition Policy, Consumer Affairs & Minister Assisting on Deregulation	craig.emerson@innovation.gov.au Phone: 02 6277 7450 Fax:  02 6273 9395 Suite M1 22 Ministerial Wing Parliament House, Canberra ACT 2600

On Wednesday 11^th November, the AMWU (printers) will be stating their case at an organised rally outside Julia Gillard’s office in Melbourne.

WHY THE APA OPPOSES THE 30-DAY RULE

The APA says that Minister Emerson’s proposal to retain PIRs but reduce the 30-day rule to 7 days is unfair to Australian Publishers because they will be at the complete mercy of the good will and efficiency of overseas publishers.

They say that changing the 30 day rule will have a major impact across the entire industry but those most affected will be small to medium- based Australian publishers who depend on securing exclusive copyright for overseas titles.

Loss of profitability will mean that fewer Australian editions are produced, meaning less opportunities for local authors.
According to the APA, such a move will also lead to lower print volumes meaning higher book prices and less variety in bookshops.

Even the Productivity Commission rejected the idea of changing the 30-day rule.
With a possible Caucus debate later this month, now is the time to have your say. Contact the politicians on the above list TODAY!

Is the end in sight? by Sheryl Gwyther

The grass-roots workers behind the front of the SAVING AUSSIE BOOKS campaign have been mainly authors who write for children and young adults.

We took on this battle because we believe Australian children have the indisputable right to read stories set in their own country, with our language, ideals, experiences, in-your-face and sometimes irreverent humour, subtleness and spelling.

And with your support, I believe we have had an impact in this fight against Parallel Imports of Books, exactly what we and our thousands of supporters set out to do.

So far it appears the majority of the ALP Caucus in the Federal Government appreciates these sentiments too – let’s hope they hold true to their convictions.

So take heart, even though the PI battle continues it appears that the focus has shifted – those who were most strongly opposed to the current restrictions are now no longer pushing  for their abolition and are seeking compromises to solve this issue.

Our Petition against the removal of Parallel Importation Restrictions was certified as ‘being in accordance with Standing Orders’, and presented in the House on 19th October by the Hon Arch Bevis, Member for Brisbane.

The petition of 2,097 signatures has now been referred to the Attorney-General. Unfortunately, the number of signatures on this batch of petitions couldn’t include the further late-coming ones posted after the date I took this lot to Canberra and presented them to supportive MPs.

Since then many more signatures have appeared on this website petition – presently totalling 1445 and many more Australians have become aware of the PI issue and of our concerns as Australian authors.

This is an excerpt from Arch Bevis’s speech:

The petition…is signed by 2,097 Australians and asks that the parliament retain the current restrictions on parallel importation of books. This is a petition which I and a number of members of the parliament received from a group of authors and others involved in the Australian creative arts industries. It is clearly an important issue and I urge all members of parliament to give it proper regard.

Click here for the whole speech.

On behalf of authors, our supporters and the children of Australia we would like to thank ALP MPs, Arch Bevis, Steve Gibbons, Graham Perrett, and other ALP Government Members who added their weight; and also the Australian Greens’ Senators.

Taking authors' concerns about PIs to Parliament House

PIRs – MORE ON “THAT” 1% LEVY – by Sharyn Lilley

Dymocks has sent material to the Labour Caucus meeting suggesting that a 1% levy on publisher’s sales could fund up to $15 million for grants for writers to write those culturally significant novels. http://www.theage.com.au/national/dymocks-says-levy-could-fund-writers-20091026-hgr4.html .

This intrigues me. I notice they make no mention of book sellers contributing to this levy, but they do mention that there could be losses amongst sales assistants if their version of change is not put through, and put through now!

A job loss is hard to bear no matter what you do. But massive job losses in the printing industry will be extremely hard to absorb as many will occur in small communities who rely on this work for their survival

In the course of discussions with other people on forums both for and against this proposal, I’ve learnt that most people accept it as a retail store’s right to routinely charge as high as 80% for goods in their stores, citing the risk the retailers take in stocking product; electricity, wages etc. So I’d like to do a layman’s look at how these things stack up.

Publishing:

If accepted by an agent, the agent approaches the publishing house on the author’s behalf, making it a solicited manuscript; slush pile readers for those increasingly rare publishers who will accept unsolicited manuscripts – Baen Books in the US have a 3 year wait on manuscripts in their slush pile; contractual lawyers, specialising in intellectual copyright; an editor assigned to work with the author to get the story ready for being printed. A copy editor to look for any grammar mistakes – feral commas and such, and typos; artwork commissioned for the cover; typesetting and layout designers.  There are the costs of housing the publishing house, rent or rates, editors, marketing team, web site developers, receptionists, electricity , phone calls, postage, wages, advances, royalties, payroll tax, business tax, accountants etc. This is before the book even looks like getting to the printers, where it has to be printed, proofed, any final adjustments made, then finally it is ready for printing (Wages PAYE and business taxation, paper stock, presses, cover stock, inks, finishes collating and binding, electricity, phone calls etc), and then to the distribution agent (warehousing; electricity, phone calls; transportation – fuel, vehicles, insurance, sales reps, PAYE tax, business tax etc.)

Bookselling

Book sellers receive a percentage of the RRP on each book they sell. This doesn’t mean they can’t then add extra to the RRP, overcharging does happen. They also have to have premises, involving rent or rates, electricity; accountants, or taxation agents for business and PAYE tax; store fittings (book shelves) electricity, phone calls; franchise holders are automatically in the parent company’s website, otherwise use of a web developing company’s service; sales assistants wages.

Oh, and that ‘risk’ the retail side takes in stocking books? If they don’t sell them they are sent back, and they get fully reimbursed for any ‘risk’ they may have taken. So you tell me, gentle reader, who best can afford to contribute to a levy for Australian books?