17 SEPTEMBER 1977, Page 12

Towards cheaper books

Max Harris

Adelaide The Woclehousian days of publishing are not all that far behind us. Publishing was, in fact, a gentleman's profession, and processions of willowy young lads would leap into their Jags on Thursday afternoons to dash down to Taunton for the weekend to do over Sandra and Annabel twice lightly. The Englishman's country home was his bordello, and all that. But these bright and brittle young men had a tough streak. Both they and the solid managerial forces have survived the decades to maintain the British publishing industry as one of the dynamic glories of a decaying business empire. British publishing is both conservative and progressive, idealistic and pragmatic, seemingly inert and yet possessed of the fastest sales gun in the West. It's a lovely phenomenon. The point of these panegyrics from a humble colonial is that they provide a kind of chop-logic background to a convulsive internal revolution that is inevitable in both publishing and retailing within the next one, two or three years. Day by day the mutterings and rumblings grow louder and louder.

The 'net book agreement' in Britain is going to be destroyed by silent if not legislated consent. This agreement means that wherever he goes the British book-buyer has to pay the same fixed price for a book. He can't 'shop around' for books as he can for foodstuffs, toothpaste, electrical goods, clothing, or motor cars. There's something sacredly different about books which exempts them from the competitive forces of the market place. This was the argument back in the bad old days. The theory was that if the bookseller were free to set his own retail price at a figure of his own choice, it would result in the destruction of the traditional retail pattern. The W. H. Smiths, the large department stores and discount chains would underprice the small 'service bookshops' and force them out of existence. The cultural loss would be a substantial one. The small single-owner High Street bookseller provides a procurement service, he carries a service range of stock rather than a conglomerate of quick-turnover impulse items. He is an endearing institution, worthy of preservation.

But with the vicissitudes of an inflationary economy, the whole game has changed. Despite the rigid posture of the Publishers' Association some of the senior traditional executives have come to view the net book arrangement as a factor inimical to their trade survival. They won't declare themselves because they don't want to risk the wrath and possible sanctions of the small retailer who exists economically on a hand-to-mouth basis. But declare themselves they soon will. Two horrible things have happened to publishers. Production costs have gone up disproportionately higher than the national average inflation rate because of the raw materials and the highly-paid level of technology in the British printing industry. Much worse, to reduce the risk factor the size of print runs has gone down drastically. Since the size of the print run is the major determinant in the unit price of the book, British publishers found themselves offering books at way above the level where a massive wall of consumer resistance is met. Library budgets have failed to inflate at the same rate as book prices, and therefore institutional sales are not what they were.

The ultimate blow was the disappearance of the traditional price differential which favoured the British as against the American book. And the all-important export market, which constitutes the difference between profit and loss for most major publishers, was endangered. Fortunately the British publishing industry dealt with the copyright crisis with forbearance, drive and flair. In the critical Australian market they had one thing going for them — price-fixing is illegal in Australia, and therefore there was room to manoeuvre, to wheel and deal, to outsell the Americans, to consolidate their financial presence and the heavy capital investments in their Australian companies. What's more, Australia was clearly the social laboratory to observe what happened to the complex structure of retailing in a free market. *missioned. The subsequent report was a startling contradiction of all the past gloomy prognostications. There was little or no decline in the number of academic or service bookshops. If anything the situation had proved expansionary. What's more, there was no evidence that price flexibility had led to price-cutting wars.

There was nothing surprising about all this. The American experience had been roughly the same. All that the Australian report proved was that the British net book arrangement is a pitiful anachronism.

The logical error had stemmed from a failure to appreciate that books are more diverse than any other consumer product. If there is price competition in Australia, it rarely if ever occurs with the same title. Booksellers mount their own promotions according to the character of their clientele. There are few, if any, British publishers with an Australian presence who do not actively and enthusiastically support free pricing in that market place. Yet, schizophrenically, the poor sods have to give the appearance in Britain of supporting the enforced fixed-price system.

Variable publishers' discounts allied to retail promotions and price concessions do not need to be confined to catch-penny popular titles, or standard reference works. Seeker and Warburg's erudite, beautiful and expensive edition of Tale of Genii had produced a retailers' pre-publication subscription of less than ten copies for the whole of Australia. With a publisher's discount negotiation and a price-cut by the retailer to meet consumer price expectations, one bookshop took two hundred copies, and sold them promptly. Yet what would happen if retailers in Britain were to be given the basic trading freedom to price books according to their own discretion and in line with their own economic strategy? The theory is that it would benefit a muscular giant like W. H. Smith, that their bulk-buying power would leave the medium bookseller helpless, unable to compete, and bereft of purchasers. However this theory is not borne out by the American nor by the scrupulously documented Australian experience. In fact the retail giants in Australia, like Angus & Robertson, have tended to price conservatively and to avoid enthusiastic promotion through the media. The fact seems to be that the large chains need every penny of their gross profit mar gin.

Free price competftion in the British market would tend to produce challenges to the monolithic power of W. H. Smith. There is no shortage of young pretenders on the British retailing scene — and good luck to them! Certainly the consumer stands to benefit, and the retail trade stands to benefit on the whole, because price competition in books tends to enlarge the total market rather than divert a fixed number of purchasers from one outlet to another. And this, above all, is where the admirably imaginative British publishing industry can reap its rightful reward.