Parallel Importation of Books

(picture licensed under a CC-BY licence from Ian Wilson)

The Productivity Commission has recommended that the laws enforcing the parallel importation restrictions (PIRs) be repealed.

If Australian publishers meet certain conditions, the Copyright Act 1968 effectively bestows upon them a monopoly in the local book market. Booksellers in Australia are restricted from imported a cheaper version of the book, and must buy it from an Aussie publisher instead (if available).

On the whole, this means that Australian publishers wield considerable market power, and arguably make supernormal profits as a result.

I just bought a book from The Book Depository (UK) for $34.40 plus a $2 international transaction fee on my credit card. The Book Depository charges in pounds and does NOT charge for shipping. At the local second hand book store across the road from my office, the same book goes for $40. At Borders further down the road, it's $59.95. Ouch.

Even if you accounted for foreign currency exchange differences, it seems to me that the Australian book retailers are charging a lot more for these books that our overseas counterparts. Presumably, that's because they have to buy it from Aussie publishers. When it comes to the relationship between booksellers and book publishers, booksellers appear to be the price takers.

An interesting quote from the Senator Carr on Printnet reveals something about these margins (or supernormal profits). He says (and presumably the printing/publishing industry agrees) that the margins the publishers make from best sellers are used to invest in more risky and unknown Australian authors. That is, the (supernormal) profits are used to invest in some authors which produce "cultural externalities" which would otherwise not be commercially successful.

Graeme Connelly (CEO of Melbourne Uni Bookshop) reckons "much of the argumentation by publishers (to the Productivity Commission) has frankly been rent-seeking."

Allan Fels made an interesting remark about the (then) Prices Surveillance Authority 1989 report recommending the repeal of PIRs on books. "It made a terrible mistake. It said there were two problems. Never give a politician two problems. Cos they'll take the easy one and solve it. We said that (a) there was a delay in books getting to Australia and (b) the prices were too high."

In 1991, amendments were passed requiring Australian publishers to supply the books within 30 days of publication in order to receive PIR protection. This solved the delay problem, but did not affect prices.

One other thing about Senator Carr: he thinks that the publishing and printing industry should be *tin foil hat on* "protected" *tin foil hat off* because we need the excess capacity in Australia to ensure the maximum dissemination of ideas. That is, despite the internet providing almost no barriers to dissemination, we still need books (and hence the decision makers and gatekeepers, publishers) to get the ideas out there.

I dunno about that, it might be true, it might not be. Something tells me, if we lift the PIRs, although the publishers can kiss some of their supernormal profits goodbye, they'll be just fine.

Let's maximise consumer surplus!!