Why Fixed Book Prices Are Needed in North America

Across the globe there are two main ways of pricing books: free pricing and fixed pricing. Free pricing is what we commonly see in Canada and the United States where, despite the publisher printing a suggested price on their books, retailers can price the books as they like, often offering major discounts. The problem with this is that authors only receive commission on the amount a book sold for, not the original price. Fixed pricing, on the other hand, means publishers set the prices for their books and retailers must sell them for that price (Anderson 2019). Discounts can be made after a period of time for “defective copies or bulk pricing,” but otherwise the price of a book is the same nationwide (Anderson 2019). 

There are currently thirteen European countries alone with fixed book pricing (Anderson 2019). Among them is Germany, a major advocate for fixed prices who recently released the results of a study about the benefits of fixed book prices. A “research team made up of economists and one legal scholar were commissioned by the Börsenverein des Deutschen Buchhandels (German Publishers and Booksellers Association) to examine the impact and legitimacy of Germany’s fixed book price system in an independent and comprehensive manner using the most up-to-date information possible” (Börsenverein 2019). While the full report has not yet been released, the highlights have been published on the Börsenverein des Deutschen Buchhandels website. This research found five key results in favour of fixed book pricing, which could help improve the Canadian and United States publishing markets. 

The primary result found by the study is that fixed book prices help sustain independent bookstores (Börsenverein 2019). As noted by Publishing Perspectives “Amazon alone has a market share of roughly 45 to 50 percent [in the UK], whereas small bookshops have only around 5 to 10 percent. In Germany, the online book trade accounts for only roughly 20 percent of sales, while roughly 30 percent is generated at independent bookshops and roughly 20 percent at chain stores” (Anderson 2019). The numbers in North America are closer to those in the UK, with Amazon owning nearly 50 percent of the market share in the US (Shatzkin 2018) and just over 30 percent of the market share in Canada (Collins 2018). The growing popularity of online shopping, primarily due to the high discounts available, has led to increases in these shares, while bookstore sales have declined in comparison (OEDb 2011). While independent bookstores in Canada and the United States are not going out of business as quickly as the general public believe, Amazon’s high market shares in North America indicate independent bookstores could be doing better. 

The study also found that fixed book prices raise the demand for books which results in a decline in book sales when a bookstore closes (Börsenverein 2019). An average of 6,100 fewer books are sold annually when a bookstore closes in Germany (Anderson 2019).While there are currently no easily-accessible stats on the effects of bookstores closing in North America, it is unlikely the impact on the market is as high as in Germany. Keeping brick and mortar bookstores open is important, because “when bookstores disappear, people lose important contact points and thus access to books. Bookstores are places that foster exchange among local residents, while also promoting literary education, cultural work, literacy and a love of reading,” particularly in the case of independent bookstores where customer service is (Anderson 2019). 

 The third result of the Börsenverein des Deutschen Buchhandels study is that fixed pricing makes books less expensive (2019). This is supported by previous research done on free versus fixed book pricing. Loyland describes why quite succinctly, saying 

 

free prices seem to have made it possible for the big actors at the retail level to [give] discounts to customers in the fight for market shares, while managing to obtain bigger discounts from the publishers, who have responded by increasing the recommended retail price. Thus, the prices paid by customers have increased despite bigger discounts. What appear to be cheaper books are, in fact, the opposite (2011). 

 

When the UK abolished their fixed price system for books, they saw an 80 percent increase in book prices over the course of two decades (Börsenverein 2019). During this time, Germany, with their fixed price system still in effect, only saw a 29 percent increase in prices (Börsenverein 2019). There will likely be an increase in book prices in North America as the United States has now placed tariffs on books imported from China, which is where many publishers get their books printed (Rowe 2019). Higher production costs means higher book prices for consumers. The publishing industry as a whole will be much better off if fixed prices can help keep retail prices down.

The final two effects found during this study are that fixed prices increase the sales of non-bestsellers, and increase the discovery of new authors and titles (Börsenverein 2019). These two results directly relate to a major issue within the Canadian publishing market: the decline in the sales of Canadian-authored books in Canada in recent years. This is not as big of an issue in the United States, but is significantly impacting the Canadian industry. The Globe and Mail reported that “the English-language share of sales of books by Canadian authors in this country fell more than 50 per cent in a little more than a decade” (Lehmann 2018). Fixed book prices could help solve this problem, as the Börsenverein des Deutschen Buchhandels reports that fixed prices increase the visibility and sales of non-bestsellers (Börsenverein 2019). Foreign titles dominate the Canadian market, with “foreign-controlled companies [accounting] for 53.8 percent of revenue in 2016” (Nawotka 2018). Increasing the visibility of Canadian titles could help increase profits for Canadian-owned publishing houses and help the Canadian industry thrive. 

Having fixed book prices in Canada and the United States could have other benefits beyond those found in the Börsenverein des Deutschen Buchhandels study. Authors and publishers are currently dealing with the fallout of Amazon’s change to the “Add to Cart” button on their website (Warner 2017). Before the change, customers would be purchasing books from Amazon directly, who bought them from the publisher (Warner 2017). Now, however, third party sellers can compete for the “Add to Cart” button, as long as the book is new (Warner 2017). This means that instead of the publisher being the default seller, whoever has the lowest price on a new item “wins” the buy button and, more often than not, gets the sale (Warner 2017). Most consumers are unaware of this change, or of how to buy from the publisher instead of third parties by clicking “more buying options” underneath the buy button (Warner 2017). The problem with this is that the books sold by third-parties are often obtained by said parties in a manner akin to piracy (Warner 2017). They may be selling promotional copies that are not meant for resale, minorly damaged copies that they bought for a discount and are now reselling as new, or simply books from a used bookstore that can pass as new (Warner 2017). Purchasing from one of these third-party sellers means the publisher doesn’t receive any money, meaning the author does not receive royalties for these copies. Having fixed book prices in North America could help give sales back to the publisher, and therefore, royalties to the author. 

While both fixed and free book pricing are viable options in today’s market, the benefits that come with fixed pricing could help stabilize the Canadian and US markets while protecting them from capitalist companies such as Amazon. There will, of course, always be challenges in the publishing industry but fixed book prices help create an environment that allows literary culture to thrive. 

 

References

“12 Stats on the State of Bookstores in the U.S.” n.d. Accessed December 9, 2019. https://oedb.org/ilibrarian/12-stats-on-the-state-of-bookstores-in-america-today/.

Anderson, Porter. 2019. “Fixed Book Prices in Germany: Two New Studies Are Introduced in Berlin.” Publishing Perspectives. November 8, 2019. https://publishingperspectives.com/2019/11/fixed-book-prices-in-germany-two-new-studies-borsenverein-released-berlin/.

“Bücher befördern Ideen – Börsenverein.de.” n.d. Accessed December 1, 2019. https://www.boersenverein.de/presse/pressemitteilungen/detailseite/germanys-system-of-fixed-book-prices-acts-as-a-guarantor-of-quality-and-diversity-on-the-book-market-new-research-results-presented/.

Collins, Amy. 2018. “Everything You Want to Know About the Canadian Book Market.” Blog. New Shelves Books. April 12, 2018. https://www.newshelves.com/2018/04/12/everything-you-want-to-know-about-the-canadian-book-market/.

Lehmann, John. 2018. “Canadians Reading Fewer Domestic Books, Report Shows.” The Globe and Mail. December 12, 2018. https://www.theglobeandmail.com/arts/books/article-canadians-reading-fewer-domestic-books-report-shows/.

Løyland, Knut, and Vidar Ringstad. 2012. “Fixed or Free Book Prices: Is a Hybrid System Superior?” International Journal of Cultural Policy 18 (2): 238–54. https://doi.org/10.1080/10286632.2011.573850.

Mitchell |, Stacy. 2011. “Why Publishers, Not Amazon, Should Set Book Prices.” Institute for Local Self-Reliance. June 23, 2011. https://ilsr.org/why-publishers-not-amazon-should-set-book-prices/.

Nawotka, Ed. n.d. “Canadian Publishing in 2018.” PublishersWeekly.Com. Accessed December 9, 2019. https://www.publishersweekly.com/pw/by-topic/international/international-book-news/article/77992-canadian-publishing-in-2018.html.

Rowe, Adam. 2019. “Publishers Are Still Battling Book Tariffs As Deadlines Loom.” Forbes. November 30, 2019. https://www.forbes.com/sites/adamrowe1/2019/11/30/publishers-are-still-battling-book-tariffs-as-deadlines-loom/.

Shatzkin, Mike. 2018. “A Changing Book Business: It All Seems to Be Flowing Downhill to Amazon.” The Idea Logical Company. January 22, 2018. https://www.idealog.com/blog/changing-book-business-seems-flowing-downhill-amazon/.

Warner, Brooke, ContributorPublisher, Coach, and Author. 400AD. “How Amazon, Once Again, Is Driving Down The Value Of Books And Undermining Authors.” HuffPost. 52:18 400AD. https://www.huffpost.com/entry/third-party-sellers-can-now-win-the-buy-box-on-amazon_b_590b309be4b05279d4edc31f.

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