Catherine Blache

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Why Fixed Book Price is essential for real competition

by in Book policy
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A book is not a product like any other. Recognising this, France has had a Fixed Book Price (FBP) law since 1981. We're not alone; FBP exists in Argentina, Austria, Germany, Greece, Israel, Italy, Japan, Lebanon, Mexico, the Netherlands, Norway, Portugal, Slovenia, South Korea and Spain.

In countries without FBP, there's a perception that FBP is anti-competitive. The concept of price fixing tends to imply cartels, which invariably spell bad news for consumers. But with FBP, the main idea is not to prevent competition. It is rather to increase it, by creating a level playing field for all retailers, thus avoiding the dominance of a single actor.

Today, in countries without FBP, the book chain is dominated by supermarkets and Internet retailers. They can afford to instigate price wars, offering big discounts on new releases and bestsellers on the "loss leader" principle.

In France, retailers can only grant a maximum discount of 5% to consumers. Booksellers compete not on price, therefore, but in terms of the variety of books they offer, their location and the quality of their customer service.

Which system works better in practice? Let's consider three metrics:

1.Diversity of booksellers

librairie-simone-thomasIn the UK, one third of independent bookstores have closed during the last 10 years. The US has lost half of its booksellers in the last 20 years. There are 1,900 booksellers in the US today. To put that in perspective, there are 2,500 booksellers in France, with a population five times smaller.

A strong, diverse network of independent bookstores has allowed France to maintain exceptional cultural diversity in book purchases. Booksellers' expertise and personalised advice lets readers discover new authors and breathes life into publishers' back lists.

2. Diversity of titles

Because aggressive discounting of popular new releases is impossible, France doesn't have the a big phenomenon of "best-sellerization". In 2005, the top 20 best-sellers in the book sector represented just 1.7% of the sales in value; whereas they represented 16% of the market in the UK.

3. Affordability

In France, the book remains a non-expensive product: the average price is 11€ (the price of a cinema ticket in Paris). Between 1998 and 2008, book prices increased half as much as the consumer price index

In the UK, since 1995, prices have decreased on best-sellers, i.e. 1% of the titles. But prices have increased by over 50% for all other titles, outstripping the cost of living (up 28%) and creating a sort of two-speed market.

Fixed book price in the digital age

In 2011, France extended fixed book prices to e-books, to avoid the nascent e-book market being dominated by giant internet retailers. Those web giants are not booksellers. They want to shift bestsellers.

In countries where aggressive discounting of e-books is permitted, what happens? Through selling e-books at a loss, Amazon obtained a US market share of 90% by 2009. Last summer's Hachette dispute revealed that Amazon had a 60% market share of their e-book titles in the US and 78% share in the UK.

When you have a few dominant retailers, one dangerous consequence is their tendency to delist publishers' books either for censorship or commercial reasons. During a fight over discounts with Hachette US and Bonnier Germany, Amazon withdrew those publishers' titles from sale. Apple recently banned French-Belgian comic e-books, and a work by Denmark's largest publisher Gyldendal, due to the presence of nudity.

When a handful of retailers control markets, they can shut down reader access to ideas and culture. Fixed book price ensures that all retailers have the same access to the offer of e-books and makes it easy for new players to enter the market.


Why do we believe in Fixed Book Price?

A broad and diverse distribution chain ensures the equality of access to books. It produces affordable prices for readers. It enables exceptional cultural diversity, boosting discoverability and allowing publishers to monetise their entire catalogues.

In France we believe that "there are no books without booksellers". Haitian-Canadian author Dany Lafferière puts it another way: "If a bookseller closes, it is the heartbeat of a city that stops."

Fixed Book Price has worked wonders in France. We invite all publishers and book industry professionals to reflect on our experience. Don't wait until all the booksellers have disappeared.

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Catherine Blache joined the French Publishers Association (Syndicat national de l'Edition) as Senior Counsellor, International Policy, in 2003. She is in charge of European and International Affairs on behalf of French book publishers.

Earlier in her career, she worked in the EU Office of Bertelsmann in Brussels (1998-1999) and then in the Public Policy and Government Relations Department of Vivendi in Paris (1999-2003), as the main liaison for a leading industry lobby on e-commerce issues. Ms. Blache has a Master of European Studies in Politics and Administration of the College of Europe (Bruges, Belgium).
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Guest Thursday, 30 March 2017