Cover prices--authors fight back

<p>Antony Beevor</p><p> World Book Day finds the UK publishing industry approaching a dangerous crossroads. Writers, with the full backing of the Society of Authors, the Association of Authors' Agents and the Royal Society of Literature, are going, metaphorically, to the barricades. Their cause is to reject the proposal to remove prices from all trade books, a dangerous move that has clearly not been thought through.</p><p>Book retailers and publishers are in the throes of debating the idea, arguing mainly over the issue of pricing control (The Bookseller, "What price power?", 13th February). There is, however, also a suspicion that the change is being driven by a desire to impose supermarket disciplines on the book industry. The supermarket system of "category management" allocates shelf footage according to turnover. But most books, by the very nature of their content and diversity, are not staple items and are not usually bought like other food or non-food items. Some retail chains might like the idea of a couple of hundred pre-packaged bestsellers a year and very little else, yet literature--in the widest sense of the word--depends upon diversity and unpredictability. Without them, it dies. </p><p>Since the collapse of the Net Book Agreement in 1995, supermarkets and booksellers have been able to reduce the recommended retail price of a book by as much as they like, or even increase it. While there is little evidence of prices being raised (for fear of adverse customer reaction), retailers cannot claim that they have no control over their margins under the present system. Publishing houses know to their cost who wields the power. </p><p>This new suggestion of removing cover prices is hardly a blow for consumer transparency. Removal of prices would prevent the public from knowing by how much a book had been reduced. It would also give supermarkets and bookselling chains the opportunity to increase prices without customers realising. Retailers would be able to raise the price of backlist and slower-moving titles, which would lead to their eventual elimination. </p><p>Yet, following the law of unintended consequences, this process is more likely to benefit internet booksellers and accelerate the decline of high street bookselling, which is already suffering from suicidal price-cutting. The failure of much of the bookselling sector to earn money from sure-fire bestsellers, such as the latest Harry Potter, rather undermines the claim of those retailers advocating the abolition of cover prices that they are the best judges of price at point of sale. They also appear to ignore another danger. Their continual price-cutting promotions are drastically undermining the perceived value of books. </p><p>There can be no objection to supermarkets selling books, but a policy of relentlessly reducing prices year after year is distorting the whole industry. Tim Hely Hutchinson of Hodder Headline has spoken of "seven years to zero" if the present downward pressure on prices is allowed to continue. Publishers lack the resolve to refuse the supermarkets' demands for greater and greater discounts because of their influence on the bestseller lists. Surely this is a case of the tail wagging the dog. </p><p>True discount</p><p>Supermarkets claim that they do not ask for more than 65% discount, yet by the time they have charged a non-returnable promotion "contribution" of &#163;50,000 for 50,000 returnable paperbacks, the true discount is really closer to 85%, or even higher if there is a heavy rate of returns. One literary agent has estimated that, once the author royalty has been deducted, the publisher is receiving not much more than 65p for each copy of a mass market paperback. This is commercial madness. The publisher's receipts hardly cover the cost of printing and distribution, let alone make a contribution to overheads. </p><p>It is not only the supermarkets that are cutting prices to the bone. Most chain booksellers are following them down this dangerous slope. "I have this very day received details of discounts given across the board by a British publisher for a piece of commercial fiction we had sold them," the same agent told me. "The hardcover and trade paperback were sold at an average discount of 58.5%; the mass market at an average of 66%; and this doesn't include any sweeteners that the publisher may have paid along the way to obtain a window or front-of-store display."</p><p>Implications for authors</p><p>There are many other aspects of abolishing the r.r.p. that have not been thought through. It would have grave implications for the relationship between writer and publisher. Publishers may be attracted by the idea of simply paying their authors a percentage of net receipts--it is one of the very few avenues open to them to reduce their costs. But this would require the renegotiation of every existing contract and would lead to serious disputes over future contracts. </p><p>The Society of Authors' last survey into author earnings showed that three quarters of respondents earned less than &#163;20,000 a year. A switch to payments based on publishers' net receipts from retailers (that is to say, based on a dealer price) would make things far worse. For authors simply to maintain their existing income levels based on a hardback royalty of 10%, rising to 15%, the equivalent income per copy would have to be at least 20% to 25% of the publishers' receipts at current levels, and maybe more. The lower the publisher's price to the retailer, the higher the proportion the author would need just to stand still. Publishers would probably concede such levels only to the tiny minority of top-selling authors. Everyone else would see their income greatly reduced, if not halved.</p><p>The current fixed royalty rate has a virtue that is often overlooked. It acts as a stiffener, preventing publishers from accepting ludicrously high discounts. A move to net receipts, on the other hand, would force authors to contribute significantly to publishers' marketing budgets because costs would increasingly be factored into the dealer price negotiated. "Net receipts", as the film industry knows only too well, can become a very flexible definition. And how on earth will statements show an author's earnings if every deal is at a different price? The computer printouts necessary will be a nightmare for the royalty departments of publishers and agents alike. </p><p>Of course there could be a compromise stage, as a number of people have suggested. Royalties could continue to be based on a notional r.r.p. But it is hard to see such an arrangement lasting for long in the free-for-all that would follow the abolition of cover prices. And the idea that an orderly, industry-wide transition could be arranged is pie in the sky. The all too prevalent urge to steal a march on rivals would lead to chaos. Apparently, one major publishing house is already endeavouring to tempt brand-name authors to accept net receipts deals. </p><p>Predictable effect</p><p>The most serious knock-on effect is not difficult to predict. The abolition of the conventional royalty system would simply encourage literary agents to go for the largest possible advance and ignore any future income from net receipts. This, as any commissioning editor would acknowledge, would be very unhealthy for publishing as a whole. In some ways, it would be a return to the 19th century, when authors more or less sold their copyright to publishers. </p><p> Bestselling authors with powerful agents would be unlikely to suffer financially. But authors of the so-called midlist, who have not yet achieved a major breakthrough, would no longer be able to survive from their writing if they were reduced to accepting net receipts at a low level. Only a catastrophic short-sightedness could permit such a thing to happen. No more than the tiniest minority of writers--less than a handful a year--produce a bestseller first time, and then they often turn out to be a one-hit wonder. </p><p>Some book retailing chains tend to forget that the bestselling authors, who provide the vast majority of their turnover and profits, have nearly all needed to publish several books before they get into their stride. The vital process of apprenticeship will be destroyed if bookselling blindly follows the supermarket route of pre-determined promotion. And literature--to say nothing of publishers and retailers themselves--will be very much the poorer as a result. </p><p>A number of our most famous bestsellers have in fact started off in the doldrums, then suddenly been discovered by a felicity of timing and word of mouth: Longitude, Birdsong, Captain Corelli's Mandolin, for example. But now, the prospects facing any new book not written by a star author are far more daunting. Editors recount that it is deeply depressing to be offered an interesting but unpredictable book, the sort that takes off against expectation. Marketing departments will reject almost any title that does not look as if it will qualify automatically for a store promotion. This also means that a manuscript requiring some work to bring out its full potential stands little chance at the publisher's selection meeting. </p><p>The central buyers of retail chains want mass market predictability. This will mean even more derivative non-books, often commissioned from celebrities. Yet these are the sort of titles that all too frequently turn out to be expensive failures for their publishers. This is not just a question of dumbing down. The removal of diversity and unpredictability from the book trade will be self-defeating in commercial terms as well.</p><p>Stalking horse?</p><p>The abolition of printed cover prices on books would accelerate such trends in a drastic fashion. It must be significant that the US, which has the most sophisticated retail market of all, has not followed this route. Publishers in New York to whom I have spoken think that Borders wants to bring about the abolition of the r.r.p. in the UK so that it can be used as a precedent in the US. Fortunately, most publishers and retailers here are aware of the dangers and the chaos that is likely to follow such a leap in the dark, especially if the change is forced through unexpectedly out of sheer opportunism. </p><p>A number of authors, fully supported by the Society of Authors, Association of Authors' Agents and the Royal Society of Literature, have taken the first step against abolition by signing the declaration shown on page 29. It is now up to those publishers and retailers who have the long-term interests of the industry at heart, to declare where they stand and resist this move with every means at their disposal.</p><p></p>