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International Forum on Fixed Price Law in Rio

Joachim Kaufmann

Representing:

Bonnier Books and Carlsen Publishing in Germany

German Publisher´s Association (Börsenverein)

International Publisher´s 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 &


THIS IS BRASIL &


THIS IS GERMANY

THIS IS GERMANY

80 million Germans do not only love football,


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)


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


HISTORY OF FIXED BOOK PRICES


HISTORY OF FIXED BOOK PRICES

IN GERMANY

• 1888: fixed retail prices were incorporated into the statutes of the „Börsenverein“

• 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: Börsenverein 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

• Börsenverein 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


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


POLITICAL ASSUMPTIONS/BELIEFS BEHIND THE

SYSTEM OF FIXED BOOK PRICES

1. Books are inevitable for our society´s and individuals´cultural 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

society´s 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


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


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


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


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 Füssli“ and „Thalia.ch“) merged in 2013


• 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)


• 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 …

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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

Independent

Chainbookshop

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7,78 7,61 7,53 7,57 7,48 7,43 7,51 7,59 7,49 7,7

9,86 10,01 10,04 10,14 10,12 10,27

10,47 10,52 10,47 £10,56000

£7,000

£7,5000

£8,000

£8,5000

£9,000

£9,5000

£10,000

£10,5000

£11,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

ASP Average RRP

AVERAGE SALES PRICE VS. AVERAGE

RECOMMENDED RETAIL PRICE IN UK

Germany 8,28

SUMMARY

• A Fixed Price System does not lead to higher prices in average, only

bestsellers are not that much discounted

• This saves a countrywide distribution, supports cross-subsidization and

mainly helps booksellers to be able to compete with pure E-Commerce

companies and supermarkets


QUESTIONS?

[email protected]

MUITO OBRIGADO!