A Matter of Unparalleled Import

Last week, the Government announced it would support a recommendation to remove the Parallel Importation Restrictions (PIRs) that are applied to books by the Copyright Act, last proposed by the Productivity Commission in 2009. This is a serious issue for anyone interested in the book industry, as PIRs are a vital financial foundation of Australian publishing. As the Productivity Commission stated in their 2009 report,

“Parallel Import Restrictions (PIRs) provide territorial protection for the publication of many books in Australia, preventing booksellers from sourcing cheaper or better value-for-money editions of those titles from world markets.”

The report goes on to suggest that PIRs place upward pressure on book prices to the benefit of publishers and authors and detriment of consumers. What it does not state are the benefits to the consumer from the PIR regime, namely access to a higher quality product and greater opportunity to read and discover local authors.

Certain commentators have been dismissive of these benefits and the affect of PIR on them. They have argued that the removal of PIRs will have virtually no effect, as the industry is much stronger and competitive than it claims, or should become so as an effect of the changes. They haven’t offered any real evidence to these claims.

One complainant has even objected to the use of colourful language, to which I say: This is the business of words, why would they not be used for effect? And distinctions of the colour of the language aside, the result of this recommendation would be disastrous, so let’s not waste time critiquing the semantics.

If we must discuss the language, then let’s talk about the buzzword that all economic reform in this country now hinges upon: innovation. Let’s be clear, destroying territorial copyright is not innovative, it’s destructive. For this economy to succeed through innovation, it’s about making Australian product and industry innovative, not “innovating” policy to allow world markets to crowd Australian book producers out. That’s not the creation of competition. It’s the end of competition.

The Australian publishing industry is a diverse and competitive place. The proof of this is in the success of Independent Publishing, which is thriving in this country, in large part due to innovation. To hollow out the value of the market by flooding it with cheap international titles will destroy the conditions by which this innovation and competition is possible.

Why invest in local books when the risk of a return is made even more untenable? We already function as an extremely high-risk industry, and all this policy does is diminish the reward.

As a result of of removing PIRs, investment in Australian publishing and writing will be down, which means jobs will be cut and the voices of many local authors will not be heard here or overseas.

So how do we address this and stop it from occurring?

I had considered an open letter to the Prime Minister and Treasurer, but respected authors Richard Flanagan, Peter Carey and Tom Keneally beat me to it. Their letter was fantastic and covered many of the same areas I wanted to cover. But I absolutely wanted to reiterate some of those concerns and add my voice to this debate, because without vocal opposition, this policy could very well come to pass.

The Australian publishing industry employs some 20,000 people, and is worth around $2 billion. Territorial copyright is a pivotal financial plank of the industry. One of the counter arguments to this is that most of this money is made by Australian branches of multinational companies. But this naively ignores the various economic and cultural benefits that those companies bring to the Australian publishing industry. To see the vacuum that could be created by diminishing this input, one only needs to look to New Zealand.

One thing that these recommendations don’t seem to understand is this: Booksellers cannot compete with Amazon on price. The removal of PIRs may bring a temporary breath of cool air to booksellers, allowing them to drop prices, but they know as we all do, that Amazon cannot be beaten in a price war and nor should we want that. Not only would it signal the further deterioration of the perceived value of the book, it would diminish us as a book industry.

It’s a flight of fantasy that books cost too much. In Australia, the standard price of a paperback has dropped by around 20% since 2009. This fact alone shows that the Harper recommendation doesn’t understand or comprehend the mechanics of this industry. Yes, PIRs may place upward pressure on book prices, but local competition, as well as competition with overseas online retailers, places downward pressure on book prices. Competition from online retailers is not going to decrease in the future, so if anything the PIRs are vital to sustaining some upward pressure to keep publishing both profitable and able to employ the 20,000 or so people that it does.

I’d like to ask the Government this: if they are intent on removing PIRs on books, then they should first commission a review of the Book Industry by a panel that understands that this stunning practice of culture and commerce is an altogether different beast. As it stands, the removal of PIRs for the reasons stated in the recommendation is shortsighted and based on a poor understanding of the economics of the book trade. In short, it’s moronic.

I’d love to fight with people in the comments. I love doing that. So please, have a crack.

As a wrap I would suggest the following for further reading on the subject (not all of which I agree with):

Black Inc. and Hachette: how the removal of PIR will affect our business, from Books + Publishing

The Productivity Commission Report on Copyright Restrictions on the Parallel Importation of Books

Jason Ensor, Read it and weep: the book trade needs more than parallel import restrictions at The Conversation

A resurrected debate with the same old dead language, Peter Donoughue Pub Date Critical

 

Disruption Is The Decline of Publi- Shh!

What’s to fear from disruption? More to the point, what is disruption?

Disruption is the use of digital technology to supersede established businesses by newer and leaner competitors. Disruptors are often regarded as “smarter” companies, but the truth is that they are nimble and able to disrupt because they don’t have the existing systems that prevent the established companies from moving quickly (often in ways that hurt their traditional model). Disruption is a creative, yet destructive force.

Publishing companies are among some of the oldest established businesses in the world, and hence stand to lose a lot. Even if they can innovate incrementally, the destructive nature of disruption (literally the removal of parts of their business chain) means that they can never competitively disrupt their own practice to defend against newer and more aggressive competitors.

However, it’s a very big leap to assume that publishing is doomed by disruption. I was reading an article late last week that began with the premise that publishing is in decline. This is a premise that I strongly disagree with. I hope many of you reading this will also disagree. I want to look at this from the perspective of an intern or in a more grandiose (or delusions of grandeur) sense, from the perspective of a young-publisher-to-be.

I can understand the doom and gloom when we get stuck on the Disruption narrative – the Amazon narrative. And boy, what a narrative that was last week! Amazon’s office culture was exposed by the New York Times and then there was a subsequent flood of “surprised” and “concerned” articles that ranged from expressions of disappointment to demands to boycott. I found these particularly bemusing. If you’re expecting a company founded on disruption to be the friendly ideal of the childhood ballpit as opposed to the brutal reality of a childhood ballpit, I cannot understand why.

See what just happened there? I got distracted by the Amazon narrative. This happens very often. It happens to all of us. But books are more than their commodification, as is the publishing industry, despite its critics.

Now, are we in the death throes of this industry? No, no we are not. It’s simply a period of change. Whether that change is ending now, or will drag on for a longer period still remains to be seen. It is clear, however, that the initial panic has faded and things have stabilised. I mean, publishing companies are even hiring bright, young people like me. Or more specifically, slightly brighter, slightly older people kind of like me.

That’s not to say that there are no threats or concerns that arise from disruption by digital technology. But more simply, that the business of publishing books seems to be rolling on, ever on. It’s different now in the details, and probably more competitive, but from a big picture perspective, the game remains largely unchanged.

“Is it a good story? Yes, huzzah, let’s publish it. Will it sell x amount of copies? We’ll hedge a bet, let’s publish it. Is this a book that people need to read? We think so, let’s publish it at a greater risk.”

What can be said is that there are dwindling opportunities for new and midlist authors at the bigger end of town. Conversely, however, there is an abundance of new opportunity at the smaller end of town. The changes we’ve seen in the publishing industry allow small presses to be more competitive and more active than ever before. Digital disruption has increased access to publishing tools and services and transformed self-publishing from a difficult affair into a manageable and potentially profitable model for authors.

It’s the literal meaning of swings-and-roundabouts. Yes, a large corporation is making large inroads in controlling a significant portion of the book trade. Yes, they are disrupting the traditional publishing model, but they aren’t burying it (at least not successfully). None of this is an integral part of the publishing industry: it’s all ephemera. It’s affecting, it squeezes the margins tighter, but at the end of the day they were already pretty tight. As an intern and student, I’ve studied the history of publishing and the industry has survived bind after bind just like this. It’s going to do it again, and I’m going to be there when it does.