Books on the Border

The New York Times today had a story on the pressures on the German book market created by the … wait for it … Swiss. In “German Border Threat: Cheap Books,” Michael Kimmelman discusses the challenge to an old German law forcing uniform pricing on books. Contrary to default American economic assumptions, this price-fixing has resulted in a more diverse bookstore market, with downward pressure on book pricing.

The German Book Association counts 4,208 bookstores among its members. It estimates that there are 14,000 German publishers. Last year 94,716 new titles were published in German. In the United States, with a population nearly four times bigger, there were 172,000 titles published in 2005.

Germany’s book culture is sustained by an age-old practice requiring all bookstores, including German online booksellers, to sell books at fixed prices. Save for old, used or damaged books, discounting in Germany is illegal. All books must cost the same whether they’re sold over the Internet or at Steinmetz, a shop in Offenbach that opened its doors in Goethe’s day, or at a Hugendubel or a Thalia, the two big chains.

What results has helped small, quality publishers like Berenberg. But it has also — American consumers should take note — caused book prices to drop. Last year, on average, book prices fell 0.5 percent.

Switzerland decided that within its borders, fixed-prices on books would no longer be permitted.

The fixed-price system is not unique to Germany. France had it, gave it up and reinstituted it after finding that discounting hurt small booksellers. But in the German-speaking book world, the system has long been a source of special pride until Switzerland jumped ship this spring.

Despite vigorous lobbying from German and Swiss publishers and independent booksellers, the Swiss government sustained a ruling by the Swiss Competition Commission to overturn the fixed-price law and allow discounting there.

It’s still early, but some Swiss prices have since gone up. Discounts for best sellers are forcing Swiss booksellers to raise the prices for other books.

Michael Kimmelman, the NY Times reporter, tried to understand the motivations of the Swiss government by inquiring of the agency that ruled against the traditional practice. What I find interesting about the response is that it claims that theoretical economic doctrines (“cartels are wrong”) should trump cultural prerogatives, even while admitting that current real-world economic outcomes might actually be better aligned with the same doctrinal body of economic theory that pre-disposes against the price-fixing in the first place. In other words, a precis of rational economics valuing means over ends.

I called Rafael Corazza, director of the Competition Commission, to ask what he was thinking. “It’s not normal for one market to have special regulations,” he explained. “It was a cartel. The German and Swiss booksellers said it was for a good purpose — they made a cultural argument, but we are an economic commission. They said the system fosters a broader, deeper market for books, that discounting will hurt the small booksellers who support the small publishers, and then you will have fewer books and more focus on best sellers.”

Are they right? I asked.

“I’m not quite sure they’re completely wrong,” he said. “Nobody knows for sure yet. But nobody can read one million titles, so the question is, is it better that more people read fewer books or that fewer people read a lot of different books?”

Here then is a meaty nugget, because it discloses that economic policy impacts not just the range of commerce in books that prevails within an economic zone (such as a country); economic and social policy also impact what gets read, and by whom. If one can take the question crassly, then it devolves to the consideration of whether should our economic and social policies encourage a diversity of reading, or encourage the greatest magnitude of reading.

It is easy to oversimplify this argument: a nation that through its economic doctrines encourages the development of an oligopoly of bookstores begets a readership of mass-market book consumers, vs. a nation in which multitudes of small bookshops thrive encourages the development of a richer cross-section of arts and science. Historically this has been tied up in questions of selection and curation: indies stock a smaller range of titles, but with either 1) greater in-store variation across the types of authors and publishers represented, or alternatively 2) deeper exposure of a specific type of literature (e.g. show me a B&N that can match the collection of City Lights in San Francisco, or St. Mark’s in New York).

This bricks and mortar consideration must be posed in our digital realm. The tremendous, almost overwhelming, aggregation of books and journals presented by Amazon and Google could present any possible mirror to this chamber of reading’s future. Our expectations across a range of issues that remain poorly examined will determine society’s reflection in these tools:

  • How does discovery shape selection?;
  • How does the control of privacy affect reading selection?;
  • Does our in/ability to interact with media direct our interests?;
  • … and many others of greater profundity than these.

We must own – shape – the future of reading. It has very little to do with technology; it has everything to do with whether we attempt to influence how reading is socially constructed in a digital age.