walkitout (walkitout) wrote,
walkitout
walkitout

A Few More Remarks about Germany, Books and Pricing

As near as I can tell, the German Fixed Book Price Agreement is agency model. It used to be a "gentleman's agreement", then it was a contractual system, and when it ran afoul of Euro antitrust law (because, seriously, _that_ is a cartel and _that_ is price fixing), the publishers association convinced the German government to embed the agency model in law. Publishers decide retail pricing, and they determine the cut that the retailer, distributor, publisher, etc. gets on the deal. If someone _imports_ a book into Germany, they get to make these decisions. All retailers, distributors, etc. are required to abide by this price system. There are provisions for abdicating (after a book has been out for a while, the publisher can decide to let retailers price it as they wish) and for various kinds of discounting (volume, etc.). There are strict rules saying you cannot give other stuff away with the book (with a 2% exemption, so you can give the kid a lollipop with the book if you want). Agency model, pure and simple; it does _not_ apply to books sold across the border. With the increase in cross border sales, there were efforts to group the German reading market together, but that did not survive the encounter with the European Union.

Source for all of this (details that are wrong are my fault):

www.tau.ac.il/~nirziv/FixedBookPricesinGermany1.pdf

It's a bit old -- 2004 -- but in English. Nothing about ebooks in it.

Obvs, in this system, you want to be the publisher AND the retailer, and German law is not particularly tough on verticals (which is why there was a Weltbild to go under last year). If you're thinking KDP in this context, you are not alone. You should also be thinking about AmazonCrossing.

http://publishingperspectives.com/2013/11/how-self-publishing-led-amazon-to-german-ebook-dominance/

I'm less sure how the Bonnier/Amazon relationship is impacted by fixed pricing. If Amazon is importing Bonnier books into Germany for sale, then Amazon gets to set the price (Bonnier isn't German; it is Swedish. I don't know which part of Bonnier is currently entangled with Amazon). But if the negotiation involves a Bonnier-owned German company (of which there are several), then Bonnier is deciding pricing AND cut for each participant in the chain. Bonnier is _really interesting_. First off, it is operating in a lot of languages in a lot of countries, and some of those countries _had_ fixed price agreements and some of them no longer do, and some of them got rid of the agreements and then brought them back. And it's a family operation, if wikipedia is to be believed. Among other things, they funded the super awesome app maker, Toca Boca.

I would like to point something out about the German book distribution system, which is directly related to the pricing controls. There is a dense network of retailers of books, but they cannot stock everything. There is a widespread network of distributors, and the claim made in the 2004 summary above is that even in the countryside, at a tiny book dealer, you could get any book you wanted within 24 hours. This would be accomplished by going to the bookstore, the bookstore getting the book from the distributor, and then returning to the bookstore to pick it up after the bookstore got it. This is _exactly_ the model which Amazon has re-adopted while negotiating with Hachette and Bonnier. This is in fact the original model that Amazon operated under, back when I was one of its early employees.
Tags: economics
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