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The implications of parallel importations

Publishing is a gamble. Yet it is, ironically, the most structured, conservative, risk-averse gamble in town, with well-established parameters for bets that are rarely broken. (The trip Dorling Kindersley made to the Dark Side is a salient lesson in breaking those rules.) For publishers, their model is hardwired into the current ecosystem and resistance to change is naturalised.

Statistics in the book industry are hard to come by: the last ABS numbers are from 2004 and Nielsen Bookscan doesn’t have the capacity to measure sales in every channel, but there are educated guesses that pass as fact. The book industry claims to be worth about $2billion a year, with around 45 per cent education and 55 per cent trade books. Depending on who you ask, included in this number are about $200 million of ebook sales and over $200million in overseas online purchases from Amazon and their ilk.

Much of the debate about Parallel Import Restrictions (PIRs) has focused on the impact the removal of these restrictions will have on Australian writing, and independent publishing specifically. But some perspective is needed here: in 2015, small publishers – excluding Allen and Unwin, Hardie Grant and Hinkler – make up a little less than 7 per cent of the trade market. As the government looks at the effects on industry, size matters, and the subsequent decision to abolish PIRs seems to reinforce that view.

Parallel importation of books has been a battleground between publishers and retailers since the 1980s. The first skirmish saw amendments to the Copyright Act (1968) and the introduction of the 30/90 day rule in 1991 (see explanation below).

Since then, there have been a number of inquiries and various governments of both hues have approached the issue with a view to abolishing the restrictions only for change to fail legislatively or through lack of will. The most recent inquiry before the Harper Review was a lengthy Productivity Commission inquiry in 2009, which found overpricing and inefficiency in the market and again recommended the removal of PIRs.

Given that governments have wedded themselves to competition, and their mantra that benefits to consumers should be paramount, it was inevitable that this particular issue would find its way to another enquiry, and that the same conclusions would result.

Much has been made of the cheaper books argument – and to be frank, at the time of the 2009 enquiry it was hard to justify pricing, particularly of imported books by overseas authors.

Today, with the depreciation of the dollar and the eventual, though somewhat sluggish, response of publishers, the pricing differential has substantially closed (once local tax regimes are taken into consideration. This statement is in the macro, of course; one of the frustrations of the debate is that those on both sides dwell on the exceptions). That fact is somewhat lost in the Harper Report, but further competitive pressure is recommended, presumably to ensure prices do not blow out again.

Arguments around the decimation of Australian culture, the death of local publishing and the potential savaging of authors incomes are at Defcon 1, making it hard to extract many of the reasonable concerns from the hyperbole.

For an explication of the two poles, I’d suggest reading Peter Donoghue’s recent piece in The Conversation, which argues in favour of an open market, and Michael James’ response in the comments. For a more measured analysis of the issue of remainders, Guy Rundle’s Crikey piece from 2009 remains relevant.

Suffice to say that there are a couple of things that removing PIR protections won’t do:

  1. Have any impact on ebook sales. Geo restrictions are controlled by contract and metadata between publisher and retailer
  2. Make it any easier to import pirate or counterfeit editions – these are still illegal

All of these things considered, the removal of Parallel Import Restrictions is likely to have little impact on mainstream readers and small presses – but those medium-sized independent publishers that have built their businesses on rights trading will be nervous around what emerges in the next few years.

And larger multinational publishers will need to keep a keener eye on price and availability – and given the current economic environment, the added risk may act as a disincentive to expansive local publishing programs. Booksellers, with a few notable exceptions (such as Dymocks), will be nonplussed and mostly unaffected by the change.

Unfortunately, writers, as ever, will bear the brunt of market uncertainty and the attendant loss of appetite for the gamble.

 

 

30/90 day rule
A book’s local rights holder has 30 days to publish said book once an overseas edition is published, which allows the rights holder to maintain their edition’s exclusivity. After publication, they have 90 days to resupply a bookseller to maintain that exclusivity.

Here, ‘exclusivity’ means booksellers cannot import wholesale quantities of a competing (legally produced) version of the same book. The actual rule, however, is very complex and interpretation of its boundaries are not easily described.

In 2012, the Book Industry Collaborative Council agreed to voluntarily reduce the time period to 14/14. However, not all publishers feel bound by this agreement.

 

Overland is a not-for-profit magazine with a proud history of supporting writers, and publishing ideas and voices often excluded from other places.

If you like this piece, or support Overland’s work in general, please subscribe or donate.

Malcolm Neil currently works as Director of Content for Rakuten Kobo Inc and is a founding board member of the Small Press Network. He took part in the productivity commission enquiry 2009 as CEO of the ABA and participated in discussions around the forming of the Book Industry Collaborative Council. He sits on the board of Overland.

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