International Forum on Fixed Price Law in Rio

Joachim Kaufmann

Representing:

Bonnier Books and Carlsen Publishing in Germany

German Publishers Association (Brsenverein)

International Publishers Association (IPA)

FIXED BOOK PRICE SYSTEM

IN GERMANY

WHAT TO EXPECT?

The German Book Market

History of Fixed Prices in Germany

Current System for Fixed Prices

International Overview

Market Effects of Fixed Prices

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THIS IS BRASIL &

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THIS IS BRASIL &

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THIS IS GERMANY

THIS IS GERMANY

80 million Germans do not only love football,

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they also love books

SOME FIGURES ABOUT THE GERMAN BOOK MARKET

Size 10 bn. Euro (30 bn. Reais)

Third biggest book market of the world

1,3m titles

100k new titles per year

(without self published books)

About 5.000 booksellers

About 20.000 publishers (8.000 with more than 10 titles)

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MARKETSHARES (TRADE CHANNELS)

IN PRODUCT GROUPS

Adult Fiction 34%

Childrenbooks, Young Adult Fiction

16%

Guidebooks 14%

Arts, Music 5%

Social Science, Law, Economy

3%

Education 9%

Non-Fiction

9%

Sciences, Medicine, Technology

4% Travel

6%

German Publishers and Booksellers Association, founded in Leipzig in 1825 (similar to Brazilian Book Chamber)

Our members represent all sectors of the book industry:

Publishers

Retail Booksellers, Antiquarians

Wholesalers

5.600 members (companies)

Organizes:

Frankfurt Book Fair

Peace Prize of the German Book Trade

German Book Prize

Custodian of the Fixed Price System

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HISTORY OF FIXED BOOK PRICES

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HISTORY OF FIXED BOOK PRICES

IN GERMANY

1888: fixed retail prices were incorporated into the statutes of the Brsenverein

After World War II Germany divided in four occupied zones, no possibilities to maintain this system

1958: anti trust law includes a paragraph permitting publishing houses to fix book prices

1965: Brsenverein introduced a contractual book price system which had to be watertight, meaning publishers must bind EACH vendor to sell at the price the publisher has set

Brsenverein introduced Sammelrevers (umbrella agreement covering a number of individual price-determining contracts)

1993: creation of the European Union lead in the following years to discussions mainly about the treatment of cross-border sales within the homogeneous linguistic area of Germany, Austria and Switzerland

2002: Price Fixing Law come into force

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WHAT IS REGULATED BY THE LAW?

Publisher must set retail price for each book

(including ebook, music scores, maps, globes - not audio books, calendars)

Prices may be changed by publisher

Prices may be cancelled after 18 months

Different editions of same work may vary in price

Limited types of discounts (high quantity, series, subscription, libraries)

Mandatory fixed discounts for schools

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POLITICAL ASSUMPTIONS/BELIEFS BEHIND THE

SYSTEM OF FIXED BOOK PRICES

1. Books are inevitable for our societys and individualscultural development

2. A strong network of book stores with a great variety of books would be

most effective for enhancing the distribution of books as an object of our

societys culture

3. The system of fixed book prices is the best instrument to achieve such a

network

All major German political parties (conservatives, social democrats,

green party, liberals, socialists) strongly support that law

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EFFECTS ON THE INDUSTRY

Booksellers of all sizes profit from calculable margin on bestsellers

Retail competition for selection, variety of books, customer service, reading

acitivities not mainly for price

No destructive competition for brick&mortar booksellers regarding the prices

of only a few bestsellers, offered by supermarkets, internet retailers, other

vendors outside book industry

Bestselling books allow publishers to cross-subsidise other works

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BENEFITS FROM A CULTURAL PERSPECTIVE

Dissemination of Culture

Wide variety of books: 1.3 million titles in print

Large range of small and large publishing houses

20,000 publishers in Germany

(of which 60% have less than 10 titles available)

Efficient logistics system

Wholesalers have around 500,000 titles on site

97% of all orders can be fulfilled by the following morning

Strong network of about 5.000 book shops promoting diverse and colourful

range of books

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Very long tradition

Denmark 1830

Germany 1880

UK 1900 (until 1995)

Recent

Spain 1975

Portugal 1996

Italy 2005

FIXED BOOK PRICES IN OTHER COUNTRIES

Move from contract to law to avoid anti-trust issues

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COUNTRY PAPER FIXED

PRICE?

PAPER BOOKS FIXED PRICE SYSTEM DETAILS EBOOK

FIXED

PRICE?

IF YES FOR

BOTH, SAME

SYSTEM?

TEXTBOOKS

INCLUDED? LEGAL BASIS DURATION OF APPLICABILITY MAXIMUM DISCOUNT

ARGENTINA Yes Law 18 months after publication 10% during book fairs, book festivals; 10% for schools and

libraries, 50% for public entities.

Yes Yes

AUSTRIA Yes Law 2 years after publication 5%; 10% for libraries No

FRANCE Yes Law 2 years after publication, 6 months after last supply to booksellers.

5% (consumers), 9% (libraries) Yes No

GERMANY Yes Law Minimum 18 months No discounts Yes Yes

GREECE Yes Law 2 years from publication 10% Yes Yes No

ITALY Yes Law 20 months after publication and 6 months from last bookstore purchase

15%; 20% for books sold during

Book fairs or trades fairs.

No Yes

JAPAN Yes Resale Price Maintenance Agreements

It depends on the agreement It depends on the agreement No

LEBANON Yes Decree of Ministry of Economy

20% to schools, distributors and

booksellers.

No Yes

NETHER-

LANDS

Yes Law Publishers can reduce prices

every 6 months

5-10% discount for students. No No

NORWAY Yes Agreement between publishers and booksellers

ass.

Until 30th April the year after publication. 12.5 % for book shops, 20% for

libraries.

Yes Yes No

PORTUGAL Yes Law 18 months 10%; 20% for libraries and during book fairs.

No No No

SLOVENIA Yes Law 6 months 0%; 20% only for book fairs, book series and subscriptions.

Yes Yes Yes

SOUTH KOREA Yes Law 18 months 19 % Yes Yes No

SPAIN Yes Law 2 years after publication, 6 months after

distribution in bookstores.

5%; 10% for World Book Day and

Book fairs, 15% for public entities

Yes Yes No

OVERVIEW OF CURRENT FIXED PRICE SYSTEMS

16

SWITZERLAND

Fixed Book Prices until 2007, referendum in 2012 decided against a law for

fixed book prices

High discount for bestsellers, in general higher prices for all other books

(no good figures due to currency matters)

Amazon delivers from Germany and sells with (at least) 20% discount for

ALL books

More and more independent book stores had to go out of business, the two

biggest book chains (Orell Fssli and Thalia.ch) merged in 2013

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Number of independent bookstores: 4.038

Marketshare independent bookstores: 31 %

Average retail price: 10,56

Marketshare Amazon print books: 14,9%

Marketshare Amazon e-books: 46 %

According to Buch und Buchhandel in Zahlen 2013 & GfK

mediacontrol

COMPARISON GERMANY VS. UK

Germany (Fixed Prices) UK (Net Book Agreement until 1995)

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Number independent bookstores: 987

Marketshare independent bookstores: 3%

Average retail price: 7,70 GBP (10 )

Marketshare Amazon print books: 27%

Marketshare Amazon e-books: 84%

According to several sources like Nielsen, Bowker

Co

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SALES CHANNELS UK VS GERMANY

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Germany 2013 UK Jan-Jun 2014

21 33

31 3 7

6 14

12 8

4 4

26 31

Channel share of volume within format

Internet-onlyretailer

Bookclub/direct

Other shop

Supermarket

Bargainbookshop