An opinion article about possible deregulation of the publishing industry.

Author: Mark Seymour, The Age.

Date: 10 July 2009.

Original URL: http://www.theage.com.au/opinion/the-book-price-row-rings-too-sadly-familiar-20090709-deln.html?page=-1

Article Text

This championing of the rights of the consumer is grasping self-interest.

IN 1991 I took part in a press conference, along with several other singers, to show support for record companies and publishers who were at that time facing the prospect of market deregulation. The Prices Surveillance Authority, under the stewardship of Professor Allan Fels, was arguing that CDs were overpriced and that record companies were profiteering by using the parallel import provisions in the Copyright Act to keep prices artificially high.

As artists our argument was simple. If deregulation was allowed profits from CDs released here would be snookered by imports, which would be a disincentive to record companies investing in local artists. Import provisions were a guarantee that our work, if indeed it succeeded overseas, wouldn’t come back to bite us in the form of imported product that we had a smaller piece of. The US and Britain had their copyright laws firmly in place (and still do, I might add.) As to price? The market determined price. Retailers all discounted anyway. The notion that import reform would bring about a fall in prices was entirely theoretical. And it still is.

Our case was doomed from the start for no other reason than because we presented a commercial argument. Most journalists at the media conference appeared to believe that to be artistically true there has to be fundamental antipathy between the artist and the record company. Otherwise, all the artist is doing is playing into the hands of base commercialism. This view demonstrated a fundamental lack of understanding as to how the music industry worked. In the end the controversy boiled down to one simple question. How dare we defend the status quo in the face of a black-and-white and entirely theoretical proposition?

Five years later we lost the argument. The Howard government pushed the reforms through. The import provisions were repealed and the rest is history. But is it? Today there are remarkable parallels to be drawn between the 1991 CD controversy and the current draft proposals of the Productivity Commission regarding the price of books.

There is the same level of hysteria driven in large part by “the coalition for cheaper books”, a cartel of the retail mega-chains — Woolworths, Coles, Kmart, Big W and Target. The “coalition” has been lobbying the commission hard, with a similar argument. Books cost too much and it’s the publishers’ fault. Its major spokesman, former NSW premier Bob Carr, has famously demanded we “bring Aussie publishers to book”, as though there is something darkly underhand going on.

But as was the case for the music industry, these big retail chains are the only sector who stand to gain anything from reform. What appears to be an altruistic championing of the rights of the consumer is in fact nothing more than a repeat of the grasping self-interest on display in 1991.

The real clincher is that nobody, not even the Productivity Commission, knows whether removing the import provisions will actually deliver cheaper books. Nevertheless, the commission has quoted a 40 per cent reduction in the average retail price of CDs since the 1996 reforms and Carr’s coalition has pounced on this figure as proof that deregulation works.

The reality is that the Australian music industry is in deep trouble. It has halved in size in the past five to seven years and the fall in the price of CDs is directly attributable to a spectacular decline in demand as a result of digital downloading and copying — it has nothing to do with the removal of import regulations.

Quite simply there is no money in selling CDs, which is why successful vendors, such as JB Hi-Fi, have diversified so heavily. In fact, there’s very little money in the business overall. Those of us who’ve survived the past 10 years have done so by adapting. Margins are down. Audiences likewise. Australian radio has retreated even further from Australian content. The rot was already well set in around the time of the reforms, which is why you’ll often hear the ’80s referred to as the golden era in Australian popular music.

Like the publishing industry, the music industry is a complex chain of commercial interests all inextricably linked by small margins. It is a labyrinth of agents, promoters, record companies, publishers, radio stations and, at the pointy end of the food chain, the retailer. We’ve all been affected by downloading. Carr’s glib observations about how the Australian music industry has flourished despite reform are — to use his language — “absolute rubbish”.

The truth is the Productivity Commission’s drive for market reform in bookselling has been hijacked by the coalition of giant retailers. If the giant retailers are allowed to import books as soon as they become available from overseas then they will simply demand discounts for the same titles from local publishers or buy overseas. And there will be no legal compulsion to pass the savings on to the consumer.

Of course, they can only do this because size matters. The independents would not have the same clout simply because they could never buy in sufficient quantities to have any effect, as the margins would be infinitesimal. As to the price of books? That’s not what this controversy is about. In the end, it’s all about selling a free-market line to the tabloids.

Singer-songwriter Mark Seymour was the frontman of Hunters and Collectors.

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