The battle of the books will now shift to the political sphere in the aftermath of the Productivity Commission’s recommendation for the removal of Parallel Import Restrictions on books after a three-year transition. And the battleground is likely to be jobs.
Australia’s booksellers and retailers have run a textbook lobbying campaign on the issue, which came out of the blue last July when COAG announced that parallel importation would be one of a number of micro-economic reform issues to be considered, and one of two — along with anti-dumping — to be referred to the PC for a review.
The Commonwealth included the reference on the COAG agenda (several Premiers oppose relaxing restrictions), following a recommendation to Cabinet from Chris Bowen. Dymocks board member Bob Carr is seen by many in the publishing sector as having played a role in elevating the issue; and either way, Carr’s image as the donnish, book-loving uber-reader has been important in softening the appearance of large retailers determined to force foreign competition on local industry. There have been rumours Carr is on a “success fee” on the issue, but Carr emphatically denied that to Crikey this morning. “My only personal interest in this issue is as a book lover. I’ve been arguing for reform on this issue since 1993 when I wrote to Paul Keating about it.”
The booksellers’ campaign on the issue has been highly professional. Dymocks and other major retailers such as Big W established a “Coalition For Cheaper Books” to push for reform under the website banner “Australians have their say about high book prices”. Veteran lobbyist John Richardson was the Coalition’s point man in Canberra. Meantime, the publishing industry was scrambling to catch up. Lobbying outfit Australian Public Affairs was engaged to coordinate efforts to thwart the reform push. Their own website was eventually established.
However, it was in working with the Productivity Commission that the booksellers really outplayed the publishers. There’s a sense that advocates of the status quo — particularly authors — didn’t take and still don’t take the Commission’s focus on the costs and benefits of the current framework seriously enough – an attitude best summed up by Peter Carey’s attack on “Excel sheet readers” in his submission and David Marr’s sneering at the Commission’s “jargon”. Publishers, however, argued strongly that the Australian publishing industry is competitive, that the 1991 reforms that permitted importation in certain circumstances, the availability of lower-than-RRP titles at big retailers like Big W, along with online booksellers, meant Australian readers were not being ripped off.
The Commission at first seemed inclined to agree; its draft report accepted that there were benefits and costs of the current restrictions but that the benefits could be preserved and the costs reduced by reducing PIRs to a 12-month window.
The response from the entire sector — booksellers and publishers alike — was overwhelmingly negative. Publishers said it would be no different to complete removal (a position they stand by today, despite the PC moving to any even stronger position) and booksellers said it would not address the bulk of the problem of high prices.
Meantime, the Commission was doing more work, with extensive input from the booksellers, querying and expanding their overseas price comparisons and analysing the extent of income leakage from PIRs. As a result, the Commission dramatically revised its estimate of the costs of the Restrictions, and decided they had to go and be replaced with arrangements that yielded the same benefits but without such high costs or leakage overseas.
Publishers dispute the Commission’s figures, suggesting the PC found the data it wanted to find or adjusted its models until it did, or relied — as the Commission itself admitted in the absence of much industry data — on theory. Publishers are still confident they can convince Cabinet that the PC’s conclusions are wrong, and that the Australian industry is highly competitive. In their view, the real agenda of booksellers is to use the threat of even more foreign competition as leverage against them to cut prices to unsustainable levels. “Dymocks already gets a significant discount on RRP now from publishers,” said a senior publishing industry figure, “but they can’t match Big W. They should look at their own business model. Why is Dymocks closing stores in New Zealand?”
Given the lack of competition in Australia’s retail sector, one must also wonder how much of any reduction in wholesale book prices will be passed on to consumers. Lack of competition is arguably a far greater problem in Australia’s retail sector than it is in books.
Booksellers, however, are worried that the jobs argument will sway the Government at a time when there is extreme sensitivity about unemployment. One of Australia’s three major printing companies, Griffin Press, is also in suburban Adelaide, in Nick Champion’s marginal seat of Wakefield. They say there is a counterfactual to the publishers’ arguments about job losses: the need to keep stock locally will mean, like CDs, a local printing industry will still be needed, and anyway there will be significant job losses in retail over time if online sales from the likes of Amazon continue to consume a growing share of the market. Booksellers are deeply worried about online’s share growing from its current 4-5% to the sort of levels it is in the United States of ~22%.
They’ll also be acutely aware that the Rudd Government so far has shown itself averse to pursuing reform if the losers complain too loudly.
Booksellers may yet win the battle but lose the war.