Bertelsmann to sell discount books in Japan

Reviewed By Hitoshi URABE

Article:
"Bertelsmann to sell discount books in Japan"
http://sg.biz.yahoo.com/020616/1/2zl7s.html
Yahoo/AFP

Comments:
The article reports that a German media giant Bertelsmann AG is planning to form a joint venture with Japanese publishing houses to sell discount books in Japan.

When, in November 2000, Amazon.com started its business in Japan, many people anticipated that the Internet bookseller would break the ice of a traditional practice called the resale price maintenance system which prevents books and newspapers to be sold below the prices set by the publishers. The expectation did not materialize, however, and presently Amazon.com is selling books at the same price as a small bookshop around the corner, at the price stipulated by the publishers.

Japan's antitrust law generally prohibits a seller to bind the price at which the buyer resells, to, say, a consumer. But certain items, such as books and newspapers, are listed in the law as being exempt from observing the general rule, and retail prices of these items could, if contracted accordingly, be dictated by the publishers. It in fact certifies the long time custom developed in the days when the power relationship between publishers and retailers was tilted very much to the side of publishers. There used be many items on this list of exemption, and it has taken decades to shorten the list to the current six items, namely; newspapers, magazines, books, music phonograph records, music, tapes, and music CD's. (It might be interesting to note that videos, tapes and DVD's, are not on the list, so they are sold at a discount everywhere.)

Publishers claim that if they were not allowed to have legal powers to control resale prices, "vicious books will flush out good books" and that the people living in remote areas would be charged high prices, effectively depriving their right to access culture and knowledge.

Opponents argue that the resale price maintenance system is a result of publishers' propaganda to maintain monopoly. They also argue that the topic has not become a theme of public debate because the publishers have been utilizing all their publicity powers, their regular vocation, to deflect and conceal the issue.

The plan by Bertelsmann should generate a new phase of discussion, as the publishing industry has been suffering from sluggish sales and many within the industry believe something needs to be done. Currently, the ratio of books returned to publishers as unsold reaches 40 percent of those originally shipped out, and they are doomed to be destroyed because selling them at a discount would be a breach of contract. This should be a good opportunity for the industry as a whole, including retailers, to review their strategies as to what could be done to sustain their business while providing good books and information to people.