The price of a book

Holiday gift buyers in Berlin may notice that they’re just as likely to stop into the local corner bookshop as to seek out gifts on Amazon. But why is that? Thanks to a 125-year-old agreement-turned-law, independent booksellers in Germany thrive!

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Photo by Tania Castellví

A 125-year-old book price agreement helps keep Berlin’s independent bookshops alive… but it’s hard to ignore the discounting elephant in the room.

LeseGlück is your typical German independent bookshop. Opened in 2006 by Eleni Efthimiou and Susan Pfannstiel – “I just wanted to open a bookstore near where I lived,” Pfannstiel says – the store survives by offering expertise, good books and a welcoming place to get them. That LeseGlück is also based on Ohlauer Straße in Kreuzberg, “where my customers are proud to buy local,” also helps. A customer enters to pick up an order. Pfannsteil carefully gift-wraps a book for free and chats whilst the customer’s son uses the toilet.

On the surface, it’s the small details – from a slice of homemade cake to personalised recommendations – that allow independents like LeseGlück to service their neighbourhoods. But behind them, a national law ensures their survival. The Buchpreisbindung is a 125-year-old pricing safety net that aims to sustain Germany’s diverse publishing ecosystem through strict rules on how and when books can be discounted.

It all started in the late 19th century, when smaller bookstores in Germany were already under threat from large mail-order companies offering substantial discounts to customers. In 1888, the Börsenverein (German Publishers and Booksellers Association) signed an agreement: the Buchpreisbindung, a voluntary fixed price agreement between publishers and distributors. What it means is that a new book can’t be sold cheaper than the cover price decided by the publisher.

The agreement puts Germany alongside France, Denmark, Greece, Italy, the Netherlands, Austria, Portugal and Spain as countries that regulate book prices. It is the sole competition muzzle of its kind in German competition law.

And it is legally binding – following an unsuccessful attempt by the EU in 1999 to overturn Germany’s exemption, the Bundestag, prodded by the then Secretary for Culture Michael Naumann (also a publisher), passed the Buchpreisbindung into federal law in 2002. Although initially designed for print books and traditional retail, the German law was extended to all distribution channels (including online) and e-books in 2006.

As it stands now, German publishers set the price on all new books: hardcover, paperback or electronic. After an 18-month period, prices can be reduced by publishers themselves through an announcement in the trade press. Books deemed “damaged” were initially exempt from the agreement, a loophole later closed.

Imported books are not subject to restrictions, but German books cannot be “laundered” through neighbouring nations without fixed price agreements and re-imported to sell for cheap. And the agreement forbids cartels between would-be competitors, such as Apple’s collusion with several book publishers in the US to attempt to fix the price of e-books.

The Buchpreisbindung primarily protects Germany’s new book market. According to the Börsenverein, 79,860 books were published in Germany in 2011, with an additional 10,862 first-edition translations. At LeseGlück, most books are no older than three years in publication, and customers often opt for new releases on Efthimiou and Pfannstiel’s recommendations: their current pick is the German translation of Swedish best-selling author Jonas Jonasson’s latest release Die Analphabetin, die rechnen konnte. It’s new hits like this – and the fact that larger retailers can’t offer them for lower prices – that help smaller shops like LeseGlück thrive.

There has to be respect. You cannot sell these books cheaper, because you cannot make them cheaper.

There are, of course, bargain bookshops in Germany too – but they sell either imported or older books. Max Erbe, co-owner of The Bargain Bookshop, explains: “We either buy books which don’t have fixed prices anymore because the publisher officially took it out of the Preisbindung, or we buy books at lower prices from the US or UK.” Included in his selection are Restposten (remainders).

“Those are books which the publisher or wholesaler want to ‘get rid of’ – books which they might have printed too many of or simply just don’t sell. They don’t want them to be sitting in their warehouse forever.” The fact that the price regulations only apply to books issued by German publishers also means that English bookstores can sell at whatever price they want – suggested price on the back not necessarily followed.

Not only bookshops benefit from the agreement. “It is important because publishers – and writers – can rely on a fixed income for sold books no matter what bookshop readers choose to go to,” says publishing insider Nikola Richter. With books selling at the same price everywhere, everyone who ‘traditionally’ participates in the business of selling stories to readers – whether author, agent, publisher or any of the 3500 independent bookstores in Germany – can continue to do so. It also applies to the e-books Richter publishes – her Mikrotext titles cost the same (just under €3) on Amazon, Beam, and every other e-store.

The price agreement reflects a cultural attitude towards books – and those who sell them. After all, this is Kulturnation Deutschland, where modern book printing was created by Gutenberg, where parks are named after poets and the act of reading a book ranked 11th in the list of Germans’ 50 favourite leisure activities in 2012.

Bookstores are still acknowledged as a vital part of that act. Here, bookselling is a real profession, with many, like Pfannstiel, earning degrees in book studies at universities such as Mainz or Leipzig before embarking on further training. Others, like Ocelot owner Frithjof Klepp, complete apprenticeships to learn the craft. Klepp worked in bookstores in Berlin for 16 years before opening his own last year on Brunnenstraße. Despite alluring extras including a slick cafe, Klepp is proud to claim 90 percent of sales from books. “I don’t know how the bookshop could exist without the fixed price agreement,” he readily acknowledges.

The future is not all bright. Traditional retailers are experiencing a decline (2011 marked the first year that sales slipped to under 50 percent for German brick-and-mortar stores) and total sales are also falling (down 3 percent from 2011 to 2012). Yet Germany is still faring better than the UK, which scrapped its equivalent Net Book Agreement in 1997. In the last year alone, accountancy firm Wilkins Kennedy reported 98 UK publishers shut down, up 42 percent from the year before.

Cut-price literature has also affected booksellers, with the UK Booksellers Association reporting the number of bookshops down from 1535 in 2008 to 1028 in 2012. University of Heidelberg literature professor Roland Reuß, author of the 2013 book Fors: The Price of a Book and its Value, says that on his first visit to Oxford in 1991, there were six or seven local bookstores. “Now you have two – one which is the Blackwells chain, another stocked with bestsellers and nothing else. It’s an intellectual desert.” Without the fixed price, a race to the bottom ensues – and as the UK shows, it is the smaller independents that get left out in the cold.

Richter and Reuß are both confident that there is still a political consensus in favour of the Buchpreisbindung, suggesting no immediate threat to the law. A cheering statement – but clearly, there is a large discounting elephant in the room.

When Amazon recently offered US independent bookstores the opportunity to stock Kindles and receive a two-year, 10 percent share of related e-book sales, Sarah McNally (of the independent McNally Jackson Books in New York) responded with a succinct “They can go fuck themselves.”

Since the company appeared in 1994, Amazon has had a dual identity complex, as both liberator of book pricing and destroyer of book publishing. Amazon is by no means the first or only company to aggressively discount for customers – the bestseller market it thrives on was created by a boom in book sales in the 1990s that enabled the rise of larger stores like Barnes & Noble and Borders in the US – but it was Amazon’s shrewd move to take those tactics to the internet and open up market domination on a more international level.

It’s this eagerness to disrupt the industry, initially achieved by presenting the book-as-commodity with monumentally large stocks and monumentally low prices, which presents the greatest threat to the Buchpreisbindung.

In the US, Bowker book industry data reports Amazon captured 31 percent of dollars spent on all books in 2012, a rise from 26 percent the previous year. While the Buchpreisbindung puts a damper on discounts in Germany, the country nonetheless remains Amazon’s largest territory outside of the US, with sales making up 33.2 percent of their international total. It is also a market Amazon is committed to growing.

One of their strategies is e-books. Amazon is basing its success on offering potential German consumers the cheapest Kindle at €49, compared to a usual European price of €79. With a price point lower than the numerous alternatives on the German market (including the Tolino Shine), their hope is to capture readers with a device that is conveniently linked to a single distribution platform: Amazon.

But while digitalisation has allowed readers cheaper and wider access to literature in the UK, where Amazon controls 79 percent of the e-book market, Germany is a different story, with the fixed book price applying to e-books as well as printed ones. A quick review of titles available shows that German-language digital lit is far from competitive: the new Christiane F. memoir Mein zweites Leben sells for €17.90 in hardcover, be it at Thalia, Amazon or your corner bookshop; meanwhile, the Kindle version goes for €15.99! Bestsellers such as Russendisko cost €7.99 for the printed paperback format and €6.99 for the digital version. Add to this the starting investment for a reading device, and it’s no wonder e-books currently make up only 2.4 percent of total sales in Germany.

For an indie digital publisher like Richter, however, the dominance of Amazon spells trouble. “E-books in Germany have a VAT rate of 19 percent. The reduced tax for cultural products is not applied to digital books at the moment, because they are seen as ‘software’. In Luxembourg the VAT is only 3 percent. This is where Amazon has their tax address, and thus Amazon can earn more money with e-books than Mikrotext. This is a very unfair, even illegal market competition.”

With little chance of the Buchpreisbindung being overthrown, Amazon is exploring ways to circumnavigate the law in the bid for customers. In the words of Reuß: “The whole policy of Amazon is not to offer special things, but kick out others from the market, and then they can control the price and set it to a higher value – and that will be very dangerous. When you only have one distributor, they will tell you what sells and they can dictate those terms to a publisher, meaning a monopoly will actually have a strong influence on the content.”

Ultimately, what is the price of a book? Are books in Germany too expensive? Unsurprisingly, booksellers disagree. “There has to be respect. You cannot sell these books cheaper, because you cannot make them cheaper – so how?” asks LeseGlück’s Pfannstiel. For the moment, his shop can continue to offer quality literature for what could be called a fair trade price.

But for how long? While Amazon’s aggressive policies have introduced the fox to Germany’s bookselling henhouse, Reuß is confident that the Germans’ long history and love affair with the printed word will prevail. “The book is, in fact, the symbol of dissidence.”

*additional research by René Blixer

Originally published in issue #122, December 2013.