A Full Plate for Oz Booksellers
John Mutter -- 6/19/00
Taxes, tighter terms and a possible open market
dominate Melbourne conference discusssions
Australian issues and book-marketing programs that might be adaptable to Oz from other countries were the focus of the final two days of the Australian Booksellers Association and International Booksellers Federation joint conference in Melbourne, Australia, late last month.
Several panels focused on some of the major changes in bookselling in Australia taking place: new terms of trade; the messy beginnings of the Goods and Services Tax, which g s into effect on July 1; and the possibility of an open market.
Testy About Terms of Trade
Unilateral changes in the terms of trade with booksellers made by many Australian publishers in the past year drew some angry, frustrated responses from booksellers. Besides tightening payment terms (30 days now means 30 days!) and enacting more stringent penalties, the most dramatic change has to do with backlist, which some publishers are now selling on a nonreturnable basis only, for no extra discount. Scott Whitmont of the Lindfield Bookshop spoke for many of his fellow booksellers when he said he would have liked to see the tone be "win/win, not punitive."
Booksellers agreed that nonreturnable backlist in general is not a problem for the well-managed store, but that in certain circumstances it would work against booksellers--and publishers--when, for example, an author is making appearances and would expect to have his or her backlist available in large quantities. In such a situation, Jeff Higgins of Dymocks said, "Publishers can't expect booksellers to buy."
Publishers emphasized the business realities behind the tightened terms. Juliet Rogers of Random House emphasized the "external forces at work" that were pressuring Australian publishers and forcing the industry to be more businesslike: the weak Australian dollar, price jumps overseas, more competition in general and the effects of Internet bookselling.
Responding to bookseller disappointment and anger about the unilateral nature of the changes in terms of trade, Rogers, whose house, incidentally, has not gone the route of selling backlist nonreturnable, noted that "consultation is important, and consultation is something we will be doing in the future."
Peter Blake of Penguin called the introduction of nonreturnable backlist part of "a general response to a changing environment." He noted that reps used to check stock and recommend purchases, but that the adoption of computers had transformed buying. Now because so many bookstore orders are for a single copy of a title, distribution costs have been pushed "up the line." While there is little cost to booksellers for just-in-time ordering, publishers are dealing with "far more invoices than ever before, but fewer books in 10 years. It's a significant cost to us."
Blake lamented that some stores pay their bills via returns and that half of all returns wind up being pulped, adding that "the cost of pulping imported books is horrible." He did say, however, that his company would be flexible about terms on backlist sales for author appearances.
Mary Drum of ADS and Hodder Headline noted that if booksellers don't make timely payments, "it costs us money." She stressed that the relationship between publishers and booksellers is a delicate one and should be based on "full trust, respect and common purpose. The conditions of supply change only to reflect the strength or weakness of that relationship." Drum added, "Copyright should be respected because publishers do tours, marketing, publicity."
Ross Gibb of Pan Macmillan said his company had the "open market in mind" when it changed terms. "We don't want to take back books not bought from us." He added that only six booksellers--out of more than 1,200 customers--had complained about the changes in the first month. Gibb also said that the nonreturnable backlist terms were intended "more for chains" than booksellers.
For her part, Drum noted that there is "a 15% difference in backlist returns between independents and chains."
GST and the Open Market
Although the new 10% Goods and Services Tax sounds simple to enact--just add 10% to the final price, no?--it is so convoluted that it makes U.S. personal income tax filings look like child's play. Because retailers aren't supposed to "profiteer" from the GST, they are required to calculate the savings they receive by not having to pay the old 22% wholesale sales tax, which will now be abolished, but balance that with their cost of compliance (including re-stickering books and reconfiguring software) to come up with a price boost. Like a VAT tax, the GST becomes part of the overall price of the book, not a separate item on the receipt, as sales tax is here in the U.S.
As a result, book prices will now vary from store to store, rendering the suggested manufacturer's retail price, called recommended retail price in Australia, moot. Some publishers have stopped printing RRP on books. Random, for one, has not printed RRP for two years. Because of these changes, net pricing is becoming a de facto standard.
As Stuart MacDonald of DK said, "The responsibility for determing price has shifted totally from supplier to bookseller."
Some are estimating that between the addition of GST and the weak Oz dollar, book prices could go up dramatically in the near future. As it is, "We're holding prices at an unrealistic level now," Random's Rogers said.
For his part, Ross Gibb said prices could go up 30%--40%. At those levels, "Can books compete with other products?" he asked. "We'll take a basting."
Some observers have indeed predicted that book sales will be flat or drop for a few months after the introduction of GST, and they said the government is making the situation worse. As Shelley Roberts of Collins Booksellers put it, "Consumers are being encouraged [by the government] to be wary and cynical."
Roberts added that the government is making her company--one of the three large chains in Australia--"jump through hoops between perceived savings and compliance costs." She said that the two years of "surveillance" will focus especially on Collins and other industry "large targets."
Opener Market?
Forces in the government that consider themselves pro-consumer view the Australian 30-day rule as protectionist, and many in the industry believe the rule, under which the local copyright holder loses copyright if it d s not release a title within 30 days of its publication elsewhere in the world, will be changed.
Some predict that an open market will hurt publishing in Australia. For example, Juliet Rogers of Random said that an open market could lead to a reduction in the range of titles stocked locally; more nonreturnable sales; and scaled-back promotional campaigns, because they would be "hard to justify without a guarantee of sales income to support author tours, publicity, advertising," and related programs.
She noted, too, that it will be difficult for booksellers to build relationships with overseas suppliers. "If a title is hot in the States, Australians will not be given priority," she said. "The books will go to accounts on their doorstep."
Max Oliver, former owner of Lindfield Bookshop, said that if booksellers "get stocking and promotion," they will be able to live with an open market. "If not, we'll be pushed into the arms of Baker & Taylor and Ingram."
He emphasized what several other speakers did: an open market will have less resonance in Australia because of currency problems (which, of course, can change) and the distances that separate booksellers from the main "alternative" sources of supply in the U.S. and the U.K. "How do we deal with just-in-time stocking from 12,000 miles away?" he asked. "How can we afford air freight?"
Michael Webster of WebsterAAP pointed out the problem of definition regarding the open market. "It's not a closed market now," he said. "Rather, it's partly open."
In a related note, New Zealand's new Labour government is reviewing its parallel import laws and may enact a two-year probation on them, which Tony Moores of Booksellers New Zealand called "ill-conceived."
E-Books on Back Burner
The hot topic of the book industry in the U.S.--e-books and e-publishing--was barely touched on during the conference. But as several participants emphasized to PW, this was not because of a lack of interest. As Mary Dalmau, the outgoing ABA president, said, "It's human nature to focus on what's in front of you," and between the introduction of GST, the possibility of an open market and the effect of e-commerce, the Australian book world has much to deal with at the moment.
In fact, Michael Webster, who called e-books "just information in another package," said that e-books are "a reality at the beginning of their evolution." He called on Australian booksellers to be sure to get "a piece of the action."
Hail to the New Chief
The Australian Booksellers Association elected several new officers. Margie Arnold of Meg's Bookshop in Port Pirie, South Australia, a bookseller only since 1991, is the new president. Mary Dalmau is now immediate past president. Elected first vice-president was Phil Page; second v-p is Brent Russell. Ian Robertson was re-elected treasurer.
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