Book Trade War – Price fixing, TTIP and Amazon

At the beginning of January the German publishers and booksellers association published statistics which see stationary book trade as remaining a successful distribution channel. Turnover may have sunk by 1.2 percent in stationary trade in comparison to the year before, but shoulders were still being patted, digitalisation has worked and the people are even still coming to the shops. The fact that Thalia gave up a total of 9000 square metres of shop space in the end and Weltbild registered for bankruptcy doesn’t bother anyone any more.

Crisis survived, now off into a rosy future…no? While stationary book shops have had a turnover slump of 1.2 percent, the annual results for all sales channels – stationary book trade, train station book trade, e-commerce and warehouse/department stores – fell by 2.1 percent in total. The reason: a strong year 2012 and the late Easter. No one is daring a prognosis for the next years yet. So what does the future hold for book trade?

A Changed Market Situation

Unlike the German publishers and booksellers association, the Goethe-Institute views the situation within the branch more critically. According to them, the marketing is in a situation of permanent upheaval, which evidently even giants like Thalia can’t avoid. The general thrust however is that it is possible to keep up with the new distribution channels via the internet. A reduction in shop size doesn’t always have to immediately go hand in hand with losses, but with the realisation that customers’ shopping behaviour has changed.

This has made itself felt above all in area of e-books: In 2014 45 percent of Germans read their e-books on the Tolino. Amazon’s Kindle devices only made it to 39 percent. The total proportion of e-books in branch turnover rose to 4.8 percent in 2014. According to this, the German book trade has adequately reacted to Amazon’s hegemonic designs, but still needs to build-up the e-book offer. Especially smaller book sellers could lose out with the growing market share of e-books if they don’t have them on offer. Apart from this, Apple – the secret power in the e-book market – also poses competition in e-book sales.

Amazon, who else?

So where is the problem? Evidently, as in many branches, it’s the online market place Amazon. At least, this is the general opinion. The relentless battle of publishers, authors, and book traders again the US conglomerate when many authors vented their frustration in an open letter. They followed the example of their American colleagues who reacted to Amazon’s unfair treatment of the publishers Hachette. The recommendation lists are supposed to have been manipulated. Accordingly, only books from publishers who have a good relationship with Amazon were recommended. No one has yet been able to explain how the manipulation of the recommendation lists differs from the display of certain books in book shops.

Book price fixing adé?

Large companies, such as Amazon are still being held back by the fixed book prices in force in Germany and other European countries. This is actually the basis of book sellers’ worries: if there is no longer set book pricing, Amazon and other large book/online traders will determine the price in the future. Thalia, Weltbild and Hugendubel could probably keep up, but smaller book stores with a select range will be in trouble. Fittingly, Amazon showed just what it thinks of set book prices at the Frankfurter Book Fair 2014. Kindle Unlimited, an Ebook-Flatrate more or less gets around the law. The free trade agreement Transatlantic Trade and Investment Partnership (TTIP) could put fixed book prices in even more danger.

However, the abolition of fixed book prices sounds good to customers, as the prices will apparently sink. In Great Britain however, customers know better. Because the prices don’t just sink, but can rise at any time without price fixing, prices were raised before Christmas for instance. Exactly then when the demand is highest.

Cultural good not trash

The book trade is doing well at the moment. This statement is supported by statistics and cannot be denied, even in light of the bankruptcies and reduced retail space. However, in order to remain competitive, book sellers cannot afford to rest on past achievements, but have to take decisive action. The e-book reader Tolino shows how you can beat Amazon. Admittedly though, the possible abolition of fixed book prices through the TTIP would be problematic. At the end of the day, publishers, book sellers and authors have to fight so that the book is still sold as a cultural good and not as trash.