Who’s Being Greedy?

Guest Blogger: Sally Murphy, author, reviewer, teacher, parent

Today I googled the price of movie tickets and found a site suggesting the average movie ticket price in the USA is  less than $8.  Last time I went to the movies here in Australia I paid $17.

But I have never heard anyone say: “It’s unfair movie tickets are so cheap in the US. Filmmakers must reduce the prices so we can see movies cheaper here in Australia.”  No one says “actors must get paid less so my movie ticket can be cheaper.” And Hoyts et al are not setting up an organisation called “The Coalition for Cheaper Film Tickets.”

So, why all the fuss about book prices?

For years, consumers have add access to foreign editions, purchased freely over the internet from anywhere in the world. No one is stopping them doing this. So, it wasn’t Amazon-fans who started pushing for the scrapping of PIRs.  No, the push has come from the members of the so-called ‘Coalition for Cheaper Books’. This organisation, which sounds like some sort of benevolent society for booklovers actually has a surprising membership list: Dymocks, Coles, Kmart, Target, Big W and Woolworths.

Aware that perhaps some of the money they’d like to see boosting their own profits could be being spent elsewhere has alarmed them to the point of  pushing for the scrapping of restrictions which protect our local book industry.

But they haven’t stopped there. Instead of justifying their push through hard evidence, they have instead used tactics such as emailing booklovers and asking them ‘do you want cheaper books? If so sign this petition’.  It would be laughable if it wasn’t so underhand. They did not explain to booklovers that they were trying to reduce their access to buying Australian produced books. They didn’t explain to booklovers that they were eager to increase their own profit margin. And they certainly didn’t explain to booklovers that lower book prices were not guaranteed – that there is, in fact, no evidence that cheaper book prices will result from the proposed changes.

And, as if hoodwinking consumers into signing a dodgy petition isn’t enough, they have then stirred the pot by suggesting that the people who oppose the changes are greedy authors who want (gasp) to protect their incomes. They, the ‘Coalition for Cheaper Books’, want to not just protect their revenue – but to increase it. Yet they have the temerity to suggest that authors  have no right to try to protect their income.

And let’s get this  clear – NO Australian author makes anywhere near the income of the executives at Coles, Woolworths et al. And, when you buy a book, any book, it is not the author who makes big bucks. If you buy a book in a bookstore, the author receives a maximum of 10% of the takings (more often it is less). If you buy a book with a RRP of $25, the author receives, $2.50 (or less).

Some booksellers demand 50% of the cover price of books from publishers. Woolworths and Coles demand up to 70% of publishers’ cover price on books. So who is making big bucks here?

But there’s more – Dymocks, the only bookseller in the ‘Coalition’, doesn’t stop at 50%. Prices in Dymocks are regularly above  the Retail Recommended Price. So, instead of the book selling for $25, Dymocks sell it for $27 – and Dymock’s cut increases to  $14.50. Unfortunately, they aren’t the only bookseller selling above the Retail Rec Price.

If you decide to instead buy the same book at Target or Kmart you might find the book cheaper than RRP. So, instead of $25 you might pay $22. Great – you’ve saved money. But guess what? These chains can afford to do that because they demand that the publisher provide them with high discount copies of the book.

Instead of paying the publisher 50% of cover price (from which the author’s $2.50 comes), they expect discounts of 70%, so they pay the publisher just 30%. The publisher gets less money and – guess who takes the hit? Yep – the author. The 10% reduces to more like 5%. And the consumer thinks good old Kmart/Target is giving them a bargain. Yes, they are – but not at their own expense.

If PIRs are scrapped, the author’s cut will decrease. That 10% or 5% could become 1% or – in the case of remaindered stock, 0%. That’s right, nada, zilch. But the retailers cut will increase. And all this with no guarantee of cheaper prices for consumers. Booksellers (and chain stores) are not obliged to pass on savings to their customers. When PIRs were scrapped in NZ, book prices did not fall for book buyers.

I’ve been horrified during this debate to hear Australian authors tagged as ‘greedy’. Yes, one of the issues IS protecting author’s incomes (which are not high, in spite of common misconceptions). It is not the only issue. It is not even the biggest issue. But why are authors ‘greedy’ when the members of the Coalition are the ones trying to bolster their profits?

WHY are so many Australians prepared to believe that a group of big businesses wants to reduce prices on ANYTHING? Remember, some of the members of this coalition are also the same business which control grocery and fuel prices in this country. Have you noticed grocery prices going down lately?

So, why are movies and books so different? Why are we not asking filmstars and movie producers  to take a cut in the name of cheaper films? I don’t know. But I do know that the ‘greedy author’ tag must go. If you wish to call someone greedy (and I’m not sure name calling helps any cause) then do it at the directors of the multinationals behind both the currently high prices and the push to scrap the Parallel Importation Restrictions.

15 thoughts on “Who’s Being Greedy?

  1. An excellent article. I can only shake my head at what I’ve seen going on here in Australia since I’ve returned with regards to corporate tricks and greed. The coalition you mention is only another example. The same kind of greedy corporate carryon occurs in quite a few industries in Australia. With the Australian dollar so high at the moment a lot of imported good should be cheaper, but they are not. Films, books, dvds and games all are priced at the highest in the Western World, and it’s not the authors who are getting the benefits. I don’t even want to start on Australian banks and supermakets. yeech. I would say that Australian consumers need to collectively wise and push for change, but we’re an apathetic bunch really.

  2. Bob Carr and the ‘coalition for cheaper books’ say that removing Australian Territorial Copyright will make books cheaper. They say that if US publishers could import to Australia, their books will be cheaper to buy than those published locally.

    Well, can Bob Carr and Dymocks’ CEO, Don Grover answer this? Over the past 12 months, the price of the US dollar has dropped by more than 20 per cent. From just under $1 AUD in July 2008, it dropped to 65c earlier this year, and is still just over 80c. The US dollar has been at least 20% cheaper for the past 12 months.

    So why haven’t the US-authored and published books in our bookshops now dropped in price by 20% as well seeing as it hasn’t cost the bookshops as much to buy them from overseas?

  3. Absolutely agree with you ‘Australian Online Bookshop’. But Sally wrote: “If you buy a book with a RRP of $25, the author receives, $2.50 (or less). Some booksellers receive 50% of the RRP – ie $12.50”

    Note the word ‘SOME’. Obviously that did not include independent bookstores. Her blogpost was about the mega retailers, who would like to see you go under.

    Let’s join together and fight this. This blog is for all those who love Australian books, especially parents, teachers and of course booksellers like you. Thanks for sharing your knowledge through your comments.

    *Note from blog administrator: I’d taken the liberty of adding what Sally intended in her blog entry = hence ‘some booksellers’.

    • I noticed that ‘Some’ has been added after my post. Thanks for the clarification Sally.

      Angela i agree whole-heartedly. I’ve been an advocate for the retension of PIR’s from day one. I was just making a distinction between us and the big end of town.

  4. Anyone that knows me or has read what i have posted both on our own blog and on others like this will know that i am a vocal opponent of the proposal to remove PIR’s. You might also have gleened from my posts that I detest the deceptive way in which the coalition for cheaper books has run their campaign.
    I do however have to correct your assumption that book sellers are making all the money.

    Sally said:

    [‘If you buy a book with a RRP of $25, the author receives, $2.50 (or less). The bookseller, receives 50% of the RRP – ie $12.50. So who is making big bucks here?’]

    I’m not sure what the majors make on their books but we don’t make any where near 50%. Without giving too much away, if a book has a RRP of $25 we generally sell it for 22.35. Of that we make less than $6.00. From this $6 we subtract all of our on-costs – ie wages, hosting, phones, etc. Our net is on average less than $2 per book. Now that may surprise some people but its a fact! Not all book sellers are making the big bucks.
    It’s a well known fact within the Australian publishing industry that the smaller book sellers subsidise the bigger ones and by that i mean we as a small independent pay much more for our books from Australian publishers than do the likes of Dymocks, A&R, Borders etc, not to mention the department stores. Publishers sell to the majors for not much above costs when you factor in volume discounts and rebates and make a fair margin from the smaller to medium size book sellers. It’s really no different to what the major petroleum companies do by selling at or below cost in one area with strong competition and making it up in areas where they have little or no competition.
    We could certainly look offshore to source up to 70% of what we sell but we don’t. We don’t because we think the Australian publishing industry, regardless of its business structure, is a valuable cutural reseouce that is worth protecting. I want my children and grand children to have access to Australian literature. It’s that simple.

  5. Brendan,

    Yes, independent booksellers have a difficult time, but this is a lose/lose situation for both you and the publishers. As an independent the removal of PIRs would be like a death knell to you and publishers both. Perhaps it is time to support each other. Otherwise Coles Group and Woolies (together with Dymocks) win again against small business in Australia.

  6. Great piece Sally,

    I agree that name calling doesn’t achieve anything – but it’s so important to get the truth out there – to let people know what is really going on, so that they can make an informed decision based on ‘real facts’ not figures plucked out of the air by high profile executives who DO NOT have the best interests of the Australian reader at heart.

  7. Well said Sally! Keep spreading the word! And my sympathy to independent booksellers, who have their own grievances when struggling to keep viable in a commercial world controlled by big business and corporate greed.

  8. Brendan
    I am sorry to hear that Independent Booksellers get a raw deal – because i am a big supporter of Independents and choose to shop at independents because they do support Aussie authors and, in an independent bookstore you are so much more likely to find someone who is passionate about books and actually prepared to serve you.

    I do make the point in my piece that it is Dymocks who is the only bookseller in the ‘coalition for cheaper books’. Other members of the Australian Booksellers Association support keeping the Parallel Import Restrictions in place. And the other point is, Dymocks’ are run by franchisees, but whose head is Don Grover, a leading voice in the ‘coalition for cheaper books’.

    In the end though, if you don’t feel comfortable supporting Australian publishers, or even Australian authors in this argument, perhaps instead you can support Independent Booksellers such as yourself – who are going to be adversely affected by Dymocks et al’s actions. And we should all be supporting Australian booklovers, who are the ones who are being hoodwinked by the ‘Cheaper Books’ catchcry.

    Russell – yes, you are right. This won’t just adversely affect authors and publishers from Australia. Because it effectively removes territorial copyright it means that authors who, in the past, have been able to negotiate Australian rights, will no longer be able to do that. And, when these same authors’ books are remaindered and sent to Australia they will miss out on royalties. I am glad you brought up this point.

    Thanks for reading and responding all.

  9. As an Independent Bookseller I’m going to disagree with a lot of what you’ve stated about booksellers making “The Big Bucks”. Australian Publishers are less likely to get support from us Independents than you think for the following reasons:

    The Australian publishers are also significantly more difficult to order from than the US publishers.

    A significant portion (probably even nearly 100% of all the repeat customers who buy from us exclusively) of our customers prefer to have the content when it comes out and don’t really care where it comes from. We’ve had delays of up to 12 months on an Australian release of a book and sometimes they don’t even come out.

    When we buy titles from Ingram, they cost us between $6 and $12 AUSTRALIAN dollars, shipped. The same titles from an Australian publisher would cost us between $15 and $20. Dymocks et. al. don’t have to pay anywhere near this much – they get discounts of up to 75% from the Australian publishers so I wonder how much cheaper their product really would be from the US?

    I don’t like the fact that if this passes, there will effectively be one distributor of books but the Australian publishers don’t appear to be allowing the independents to support them so I’m not entirely sure why they should be supported by us.

  10. Sally, this is an excellent article – well articulated and most definitely needed to refute the lies getting around about cost of books – or rather, ‘profits’ from books. Not forgetting that picture book authors earn even less than the 10% quoted (they only earn 5% of the RRP on books) because illustrators also need to earn an income (the other 5%).

    5% just doesn’t come close to the 50% that goes to Dymocks, or the 70% that the other members of the Coalition for Cheaper Books take – yet the book is a finished product when it gets to them.

    Go figure!

  11. This is not just a matter of protecting Australian literature. Authors from all over the world have contracts with Australian publishers, and they are affected by this exactly as Australian authors are. Aide from this point your blog is excellent.

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