According
to the law's proposal, "... the book market has been dominated
by a duopoly of two chains which control approximately 80% of the
market, one of which is ... controlled by a large publishing house.
This causes serious damage to the principle of free competition. The
Ministry of Culture believes that ... there is no alternative other
than to manage the market, even at the cost of intervention in the
free market."
Has this "duopoly"
translated into artificially high prices to consumers? Nope. The two
major chains, Steimatzky and relative newcomer Tzomet Books, established as a discount chain, compete with
one another using large economies of scale to sell books at
attractive prices. Smaller book stores in Israel cater to niches,
such as graphic novels (comics), used books, foreign language books, science fiction, specialty Judaica,
to name just a few. These venues do not even try to compete with the
"duopoly" on price alone. So, the current situation
actually reflects a very healthy free market in
which booksellers offer increasingly better consumer
quality as a result of competition and improved customer service.
The
law's proposal proceeds to describe its goals, "to
ensure writers appropriate compensation for their work, to promote
literature in Israel, to preserve cultural diversity in the
publication and distribution of books in Israel, to provide readers
an opportunity to choose from a wide variety of books according to
their desires and tastes, and enable competition between publishers
and booksellers regarding the quantity, variety and quality of books
offered to the consumer." All of these goals reflect lofty
ideals and yet all of them are already served in the current free
market. Writers aren't coerced into agreements against their will and
Israeli readers enjoy hugely diverse offerings, especially
considering that Hebrew is spoken by relatively few people around the
world. Somebody's trying to fix something that isn't broken.
So,
what's the proposed "fix?" A "protection period"
has been defined as the first 18 months from a book's first
publication date, during which two sets of regulations apply. The
first is a minimum rate of royalties to be paid to Israeli authors:
8% of the sales price (minus VAT) for the first 6,000 copies sold and
10% thereafter. The second is a prohibition against any bookstore
selling a "protection period" book for less than the retail
consumer price – except for during Hebrew Book Week and the weeks
leading up to Rosh Hashanah and Passover, when booksellers can offer
discounts of up to 10%.
The
concept of minimum royalty rates might be fine for established
authors, who have existing consumer fan bases – and therefore
pose smaller risks for publishers. However, new authors present a
large risk to publishers, and a minimum royalty rate eliminates any
leeway to leverage increased risk with lower royalties. As a new
author, I might be willing to substantially reduce my royalties for
the chance of establishing myself in the literary world. Under the
new law, I'm not permitted to do this. It is no wonder that 270
established authors and translators signed a letter supporting the
law, which makes it harder for new authors to compete with them for
the patronage of the reading public. It serves as protectionism for
the established literary elite.
The
responses of the CEOs of Steimatzky and Tzomet Books to the law's passage were quite telling. Steimatzky CEO Iris Barel bragged
that
her company was
the only one that supported the bill and thanked its sponsor,
Minister of Education, Culture, and Sport Limor Livnat.
Tzomet Books was established in 2002 as a
competitive, discount alternative to the monopolistic Steimatzky.
Tzomet
Books
CEO Avi Shumer did
not comment on the new book law but, regarding price discounts, he
said, "We respect all authors who would prefer not to be sold
during sales." How
interesting that a law supposedly designed to break a duopoly is
supported by the former monopoly holder, but not supported by the discount-oriented bookstore chain. Price-fixing
tends to favor established sector leaders, like Steimatzky, who
prefer to avoid competing with hungrier business upstarts.
What of other countries which have legislated book price-setting laws? A comparison of 14 European Union countries reveals that those with price-setting laws release significantly fewer book titles per 1000 citizens than do countries with either completely unregulated literary markets or those with non-legislated sector-wide agreements. Finland abolished its book law in 1971 and Great Britain did so in 1996. In both cases, the result was substantial growth in both countries' bookselling sectors. Both history and common sense indicate that this law will make books more expensive in Israel and damage the literary market. Fewer new titles will be published, fewer books will be sold, and fewer new authors will be published.
The book business is not an easy one. The digital age has brought us Amazon, e-commerce, digital books, e-coupons, and instant price comparisons, disruptive technologies which pose major challenges to the publishers and booksellers. Government protectionism will not make these challenges go away, it will just reduce the incentive of these industries to adapt and thrive under new conditions. Besides, the provisions of this law do not meet the rhetoric of the law's declared justification. The law does not encourage the diversity, quantity, or quality of literary offerings. Writing is one of the hardest professions by which one might scratch out a living; very few authors sustain themselves on their books alone. But is this such a bad thing? The greatest authors of the past 200 years have not demanded government protections - they had day jobs. At this point, new authors might find themselves "protected" to the degree of being un-publishable.
The recent legislation seems less concerned with the health of the Israel's literary sector than with the interests of entreched players like Steimatzky and the established intellectual elite - who seem to think they are entitled to their positions of influence independently of the choices of the consumers who sustain them. The cause of literature and literary culture is served when a well-read public has easy, cheap access to a dynamic marketplace that presents the work of both established and new authors. The best way a government can serve such a cause is to stay out of the way.
Free markets clearly benefit consumers, by linking customer value and merit with business success. The apparent apathy of Israeli citizens over this government intrusion into the intellectual marketplace, which will end up hurting the Israeli book buyer, is cause for concern. The law was passed with 45 ayes, 3 nays, and 72 abstentions. Even disregarding the gaping disconnect between MKs and Israeli citizens, this legislation can hardly be considered as the will of the people. The People of the Book deserve better - but it's up to them to demand it. If you want to find common cause in liberty and limited government, join the Israeli Freedom Movement. Check them out at www.liberal.co.il.
What of other countries which have legislated book price-setting laws? A comparison of 14 European Union countries reveals that those with price-setting laws release significantly fewer book titles per 1000 citizens than do countries with either completely unregulated literary markets or those with non-legislated sector-wide agreements. Finland abolished its book law in 1971 and Great Britain did so in 1996. In both cases, the result was substantial growth in both countries' bookselling sectors. Both history and common sense indicate that this law will make books more expensive in Israel and damage the literary market. Fewer new titles will be published, fewer books will be sold, and fewer new authors will be published.
The book business is not an easy one. The digital age has brought us Amazon, e-commerce, digital books, e-coupons, and instant price comparisons, disruptive technologies which pose major challenges to the publishers and booksellers. Government protectionism will not make these challenges go away, it will just reduce the incentive of these industries to adapt and thrive under new conditions. Besides, the provisions of this law do not meet the rhetoric of the law's declared justification. The law does not encourage the diversity, quantity, or quality of literary offerings. Writing is one of the hardest professions by which one might scratch out a living; very few authors sustain themselves on their books alone. But is this such a bad thing? The greatest authors of the past 200 years have not demanded government protections - they had day jobs. At this point, new authors might find themselves "protected" to the degree of being un-publishable.
The recent legislation seems less concerned with the health of the Israel's literary sector than with the interests of entreched players like Steimatzky and the established intellectual elite - who seem to think they are entitled to their positions of influence independently of the choices of the consumers who sustain them. The cause of literature and literary culture is served when a well-read public has easy, cheap access to a dynamic marketplace that presents the work of both established and new authors. The best way a government can serve such a cause is to stay out of the way.
Free markets clearly benefit consumers, by linking customer value and merit with business success. The apparent apathy of Israeli citizens over this government intrusion into the intellectual marketplace, which will end up hurting the Israeli book buyer, is cause for concern. The law was passed with 45 ayes, 3 nays, and 72 abstentions. Even disregarding the gaping disconnect between MKs and Israeli citizens, this legislation can hardly be considered as the will of the people. The People of the Book deserve better - but it's up to them to demand it. If you want to find common cause in liberty and limited government, join the Israeli Freedom Movement. Check them out at www.liberal.co.il.
