Spain's Digital Initiatives and Price Fixing

Yesterday’s Publishing Perspectives (which you should really subscribe to if you haven’t already—it is that consistently good) had an interesting piece about a digital distribution company for ebooks that is being set up by Planeta, Random House Mondadori, and Santillana (the three biggest publishers in Spain). Here’s more from Emily Williams’s article:

This initiative will go hand in hand with a major marketing effort starting with a splashy launch of e-books and e-readers this holiday season through at least one major retailer. They have set a goal of having every frontlist title able to be published simultaneously in both print and ebook form by mid 2011. [. . .]

In negotiations with the Association of Spanish Literary Agencies (ADAL), the publishers have agreed to price ebooks at 80% of a printed books cover price, with a standard 25% royalty rate. Booksellers will be offered a maximum discount of 50%. The two groups hope to sign an agreement soon.

Although the Carmen Balcells Agency isn’t too keen on this 25% royalty rate (they want 40%!! Not sure if they realize yet that although they have a stellar list of authors, this means absolutely nothing if there are no publishers in business to publish said authors’ books. Agents!), this seems pretty civilized and like the Big Three actually thought this all through.

What’s really interesting to me is this 80% of printed retail. In a completely free market, I still believe that supply and demand will bring the amount readers are willing to pay much closer to $9.99 than 80% of a typical hardcover. But, like in a number of countries, Spain operates under a fixed price law that determines what price books are sold to the public. In other words, there is no discounting, which greatly changes the retailing landscape.

This “long tail effect” has not yet had much of an impact on the Spanish book market, which has not embraced online book retailing to the same extent as other countries. Spain reliance on fixed book prices has kept away powerful online discounters like Amazon.com. This gives publishers much more leeway to experiment with pricing on their own terms, and will also determine how Spanish ebooks will be sold internationally. In most cases Spanish publishers control the worldwide Spanish language rights to the books they publish (both native and translated authors) and will be able to sell their ebooks to consumers anywhere in the world. However, because of price controls those purchases will have to go through Spanish booksellers or other sites that respect the terms set by the Spanish market. This would likely exclude Amazon, who will not only be unable to sell books in Spain, but will not have access to the vast majority of Spanish language titles for either the US or Latin American market.

Anne-Solange Noble of Gallimard is a huge proponent of this law, and was asking me at BEA about why we don’t do this in America. (Short answer: propose something anti-free market like this and you’ll be tarred and feathered as a Communist.) Her argument is that the fixed price law has helped keep independent bookstores in business, and allowed publishers to continue to publish poetry and other sorts of books that typically don’t sell all that well.

Personally, I am in favor of something like this, because it would level the playing field in a potentially interesting way. Part of the problem with the book industry is the fact that every outlet has raced toward the middle, and the same books are being promoted at all the stores at the same time. With certain exceptions (the City Lights, McNally Jacksons, Seminary Co-ops of the world), most stores strive to be the same as every other store. You can get the same book anywhere—even online. So for your average reader, price becomes the only distinguishing factor between B&N, Amazon, or Idlewild. If the ability to set your own prices were removed, it would be a lot easier (or tougher, depending on your point of view) to highlight the value-added components of these outlets.

Putting all that rhetoric aside for a second, the other reason I think this is such an important story is the line about Spanish publishers being able to sell their books all over the world. When I was in Buenos Aires last year, this “Spanish world rights” issue really caught my attention. Since the largest Spanish language publishers are in Spain, and since they tend to buy world Spanish rights to the books they publish, a reader in Argentina has to pay an exorbitant amount for a book imported from Spain. Ebooks solve this dilemma, eliminating all of the shipping costs, etc., and, if the device is cheap/good enough, could revolutionize the Spanish market around the world.