Books and competition

What is it with books and competition? In Australia, we have seen continual moves to keep foreign editions out of the country with parallel importing laws. In this case, it is nominally to protect Australian authors but in reality it protects Australian publishers of foreign best-sellers and harms bookstores and, of course, readers. And our copyright laws seem to pervade this entire space to restrict free trade. finally launched an International kindle but some books aren’t available (for instance, Parentonomics although Australian readers can look at much of it for free on their computers but not others) and others are much more expensive. For instance, Malcolm Gladwell’s new book is US$9.99 to US customers but US$17.24 to Australian ones! So there, booksellers as well as publishers are protected.

This doesn’t seem confined to Australia. Today, the American Booksellers Association which represents independent bookstores complained to the DOJ about predatory pricing by Amazon, Wal-Mart and Target. Apparently, Wal-Mart decided to discount some new release hardcovers to $10 (from about $25 or more) and a price war ensued and you can pick up these titles for under $9. That is the same as the Kindle price.

The argument is that this is a deliberate strategy by these chains to put smaller stores out of business. Now it may have that impact but the question is whether that is the purpose of this action. Two things suggest otherwise. First, to reap the benefits they would surely want to put other chains out of business. What value is it to Wal-Mart to engage in a nation-wide strategy to get rid of smaller bookstores who carry a larger range than it or eliminate them as sellers to best-sellers if is still around? Second, if was wanting to put Wal-Mart out of business why keep the Kindle price of its books the same? Once again we are led to wonder whether those in the book industry really like reading.

[Update: Malcolm Gladwell’s price for Australians changed today to $11.99.]

4 thoughts on “Books and competition”

  1. You are right Australian prices are much more that the currency conversion… and then shipping of a $10 book to Australia costs something like $21.00.
    The reason why I don’t buy books is the cost for shipping is way to much for me.


  2. Australia’s policy on this is so stupid. I can’t remember the last time I bought a book from an australian bookstore – overseas websites are much cheap including postage.  If everyone else behaves like me, then no wonder the local publishing industry is suffering.
    So, it’s hard to see how australia’s policies will change because, ironically, those policies have meant that our publishers are struggling and need protection.
    I think I prefer the status quo, to a taxpayer-funded grant to publishers help with the transition.


  3. I find buying books over the internet is relatively cheap even when importing from overseas.
    For instance, have free shipping to Aus (don’t ask cos i don’t know where there margins come from). Another website (catered for australians) compares prices (incl. postage) of titles between major booksites (and even smaller ones like unimelb bookstore).
    I regularly find titles online at substantial discounts from what I could get at borders or unibookshop (for textbooks) and sometimes I can order new release titles before they’re on retail in aus. I guess this is just one example of how the internet can make an big impact on improving social welfare (in the economic sense).
    I don’t know the mechanics of the parallel importing regime but it seems to me the internet plus cheap transportation costs makes it increasingly redundant.


  4. I once saw a summary of competition laws which ran thus:

    Are your prices higher than your competitors? Then you are clearly a monopoly and thus, anti-competitive!
    Are your prices lower than your competitors? Then you are practicing predatory pricing and are thus anti-competitive!
    Are you prices the same as your competitors? Then you are colluding and are thus anti-competitive!

    It gets a little Kafkaesque at times.


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