Australia debates axeing of import restriction rules

It’s either the death knell for publishing in Australia and an assault on its literary culture and its writers, or it’s the loosening of protectionist shackles to usher in a new era of greater freedom and lower prices.

The debate in Australia, following proposals by the government’s Productivity Commission to remove parallel import restrictions (PIRs) and turn Australia into an open market, has led to an expletive-laden condemnation by a member of the nation’s literary royalty, Richard Flanagan, and enough column inches to fill the Great Australian Bight.

PIRs were introduced in Australia in 1968 to prevent booksellers from sourcing editions of titles from publishers who did not have Australian and New Zealand (ANZ) rights. A 30-day rule was introduced in 1991, which meant that publishers had to make a title published elsewhere available in Australia within that time. It was a way of both protecting territorial copyright in Australia and ensuring the speedy availability of books. Today, that term is 14 days and is run as a voluntary agreement between publishers and booksellers.

If a publisher fails to make a title available within that time, a bookseller can source the title from anywhere— for example, a cheaper edition from a US publisher that does not have ANZ rights. The argument runs that if Australia were to become an open market, no Australian publisher would buy ANZ rights in a big international author because they would, in effect, be meaningless.

As Henry Rosenbloom, publisher at Scribe, put it: “If PIRs were abolished, the bedrock of Australian publishing would cease to exist. Local publishers would be unable to acquire rights from overseas publishers or agents with any confidence, as Australia would be an ‘open’ territory, so different export editions of the one book would compete with theirs, or local booksellers could import copies [that would compete] against their edition. Even if they acquired rights, local publishers would be wary of investing in marketing or promotional activities—such as bringing an author out to a writers’ festival—lest they enable free riders to benefit from their expenditure.”

Text Publishing publisher Michael Heyward is concerned about authors, arguing that without territorial copyright, the economics for writers are terrible. “Parallel importation enables booksellers to buy export and foreign editions without hindrance. The royalty on those export editions is characteristically around a third of a domestic royalty. Parallel importation enables remainders from one territory to be dumped in another territory. Authors earn no royalties from remaindered stock. You can see why this is terrible news for writers.”

The Productivity Commission’s argument is centred on competition and price. It supports the removal of PIRs “to make local booksellers more competitive with international suppliers, promote lower prices for consumers and ensure the timely arrival of titles”.

The industry is worried, perhaps more so than it has ever been (this is an issue that rears its head every few years in Australia). The concern is such that, for the first time, the Australian Booksellers Association, the Australian Publishers Association, the Australian Society of Authors, the Australian Literary Agents’ Association and the Print Industry of Australia have united in a public awareness campaign (#bookscreate) to put pressure on the government to abandon the proposals. The closing date for comment submissions on the government’s proposals was last Friday (3rd June), but public hearings are still planned in Sydney, Melbourne and Brisbane this month to increase the pressure on the government to reconsider.

UK publishers are concerned as they could potentially lose a valuable overseas market: booksellers could buy cheaper editions from the US or India. UK publishers also argue that the Australian branches of the “Big Five” need the income from big-name authors in order to invest in home-grown talent. As one UK publisher phrased it: “The major publishers don’t make most of their money on local publishing. They make their money by importing international editions and selling them with the protection of copyright. Local publishing can only really be supported because of the company being successful generally. How are you going to back these authors if you’re going to get cheap-priced imports—or even re- imports—coming in underneath you and destroying your own market?

“There’ll be American international sales people slavering at this possibility—but they could be richly disabused. If a title is sold in India, then they are in trouble, because that’s where the books will come from. That’s where they’re subsidised and that’s where they’re cheap. Australia could become an Indian market.”

But Australian booksellers find themselves in a frustrating position. Unlike publishers, they have to meet consumers every day. They hear what is being said about prices being cheaper overseas, and they are acutely aware of sentiments expressed in online comment threads and the perception that publishers and retailers are exploiting the public through high prices.

There is claim and counter claim hurled back and forth by each camp concerning prices. Kevin Chapman, former m.d. of Hachette New Zealand, said: “We allowed parallel imports in New Zealand in 1998. Our experience was that it didn’t bring prices down. All it did was enable booksellers to go and buy from wholesalers overseas, bring them in cheaper and then charge the same price.” The allowing of PIRs, which led to the sourcing of more books from overseas and a diminution of Hachette NZ’s business, is cited as one of the reasons for the closure of Hachette NZ in 2013.

Of course, the parallel imports that Australian booksellers are not allowed to stock can be bought from online sellers such as The Book Depository and Amazon. Bookshops can order these titles for customers, but are not allowed to stock them. Customers who buy offshore do not have to pay Goods and Services Tax (GST), but they do have to for the same title bought in-store (this is being assessed, with a proposal to make offshore sellers liable to GST next year). They can also buy foreign editions of e-books, which are also not liable to GST.

For Steve Cox, m.d. of the Dymocks bookselling chain, the protests are absurd. “The removal of PIRs will give local suppliers stronger incentives to provide greater efficiencies in their operations, sharpen their supply chain practices and make their prices more competitive. These benefits would be passed on to our customers.

“Publishers opposed to the removal of PIR can, and in many cases do sell books directly to international players, such as The Book Depository, to facilitate local supply into the Australian market. However, Australian booksellers—unable to source supply from overseas—are not given the same freedom. Dymocks believes this goes against the spirit of an open market. Australian online retailers also currently have the advantage of effectively circumventing the restrictions, while physical stores are constrained by outdated agreements. The current restrictions are inequitable and unsustainable in the modern global marketplace and our connected economy.”

The Castle Hill branch of Dymocks, Australia's largest physical books retailer, with some 65 premises across the country.

Mark Rubbo, m.d. of Melbourne bookshop Readings, acknowledged the global market too. “I don’t support the changes but having said that, we do live in a much more globalised world, so there does need to be some pressure on copyright holders to price competitively.”

Karen Wyld, who runs Barefoot Books in South West Australia, added: “I think lifting or relaxing PIRs has merit. Perhaps it’s a chance for booksellers, authors and readers to lobby for much-needed change, such as fairer price-setting and restricting publishers from supplying discount stores at massive reductions.”

David Gaunt, director of Gleebooks, a New South Wales bookshop, noted how booksellers must “balance a commitment to authors’ and publishers’ rights and the constant competitive pressures of price and availability, particularly from The Book Depository and Amazon. Some do support an open market; others, like myself, would like to see a [legally binding] seven or 14-day window for local publishers to secure the market on new publications.”

The argument is really one that has been raging since modern consumer society began: essentially, it’s about how much you regulate and how much you leave to the market. It is always harder for those arguing for the status quo, with words such as “restrictions” and ”closed” always a harder sell than “open” and “free”.

The internet and online shopping have created an expectation of immediacy and infinite availability, against which the current regulations, according to the free marketeers, look anachronistic. Yet of course, more than one observer has enjoyed pointing to the ‘free market’ US and UK and noting their decision to opt for identical restrictions over parallel imports.

Australian author Flanagan dismissed the government and its plans with an expletive-laden tirade at the Australian Book Industry Awards in Sydney last month. Fellow author Tim Winton—hardly the image of a fat-cat author exploiting his audience—said: “The pointless abrogation of independence will usher in a new colonial era in publishing. Once again Australian writers will be edited in London and read in export editions at home, as they were when I was a kid. That’s a huge and pointless step backwards.”

Whether such literary royalty, coupled with the industry-wide campaign, will be enough to quell the free market clamours of the Conservative/Liberal-National coalition government—generally perceived as centre-right conservative—remains to be seen.