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Fixed Book Price System in Germany - .FIXED BOOK PRICE SYSTEM IN GERMANY . ... anti trust law...

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  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 2

  • THIS IS BRASIL &

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 3

  • THIS IS BRASIL &

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 4

    THIS IS GERMANY

  • THIS IS GERMANY

    80 million Germans do not only love football,

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 5

    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)

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 6

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 8

  • HISTORY OF FIXED BOOK PRICES

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 9

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 10

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 11

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 12

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 13

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 14

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 15

  • 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

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 18

  • 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)

    INTERNATIONAL FORUM ON FIX PRICE LAW, RIO 19

    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

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