NBA pricing

I am quite often asked to explain why almost all bookshops display the same ‘Top 20’ blockbuster books so prominently in their windows and on front-of-store tables. Somewhat less politely, I’ve heard this referred to as the ‘W.H. Smith syndrome’. There are, of course, some magnificent exceptions, both in the independent sector and some of the chain bookshops, and I hasten to pay tribute to them. However, it is true that range bookselling is becoming rarer and more difficult to maintain in terrestrial bookshops, while, paradoxically, the so-called ‘long tail’ of publications from independent publishers and self-published authors becomes ever easier to access via the Internet. Both as a former bookseller who still believes in the power of being able to browse among shelves of print books and as an author who is published by a superb but still small independent publisher, this is a subject that concerns me greatly.

Incredible though it may seem to me, there is a generation of book buyers who have never paid prices for books that were subject to the Net Book Agreement [NBA]. In fact, anyone who was sixteen or over when the NBA agreement was abolished, in 1997, will be well into their thirties now. The NBA acted as the linchpin of book retailing for ninety-seven years. It was set up in the year 1900 by a group of publishers who were afraid that booksellers were discounting their publications so heavily that their businesses would become unviable and that so many bookshops would therefore be forced to close down that across the nation there would no longer be an adequate shop window to promote their titles. (This was, of course, decades before internet bookselling and also long before some publishers began to sell direct. The only alternatives to high street booksellers at the time were book clubs (which had a reputation for unscrupulousness) and, until the foundation of the public library service, paying to borrow books by subscribing to circulating libraries such as Mudie’s and Boots.) The NBA declared that no bookseller could sell a book at a price lower than that decreed by the publisher and printed on the cover. After the public library service was given its charter in 1932, an exception was made in favour of allowing booksellers to apply discounts of up to 10% to orders that they received from public libraries.

Also called Resale Price Maintenance, the NBA was effectively a restrictive trades practice. When it was first set up, it was among a number of such restrictive practices allowed by British law; when it was re-examined in 1962, it was one of only two remaining (the other involved the supply of certain products to the pharmaceutical industry). In 1962, it was declared still to be in the public interest. One of the main reasons for this ruling was that it enabled bookshops to stock a wide range of titles; in other words, it stopped outlets like supermarkets and other non-specialist retailers from buying up large quantities of top-selling titles at a discount and passing on this discount to the customer, thereby depriving proper range booksellers of their bread-and-butter income. Ironically enough, the argument for its validity began to disintegrate when Terry Maher, proprietor of the Dillons book chain, illegally began to apply discounts to some titles in 1991. The NBA was re-examined in 1996, when it was declared to be against the public interest and therefore outlawed.

The effects of this were not immediate, because both booksellers and publishers were cautious about dismantling wholesale an implement that had supported their industry effectively for almost a century. However, eventually booksellers began to demand higher discounts so that they could attract customers by offering loss leaders. Only the big publishing houses were able to offer significant discounts and then only for the most popular titles (it is one of the paradoxes of modern bookselling that the titles that are most heavily discounted are the ones that people are most likely to buy anyway). It has since become more and more difficult for small independent publishers to sell their titles into bookshops and, if they do succeed, they rarely manage to get these titles prominently displayed; the net effect of this is that the titles then sell less well than titles that are prominently displayed, which means that the bookseller’s next order to the independent publisher is likely to be even smaller than its predecessor. It’s a vicious circle, exacerbated by the relatively recent practice adopted by some chain booksellers of selling prime in-store display space to publishers. Naturally, only the largest publishers can afford to pay the price. Ergo the ‘W.H. Smith syndrome’ [a slightly unfair soubriquet, by the way, because a) Smith’s does not pretend to be a range bookseller and b) individual Smith’s stores will sometimes go to considerable lengths to promote local authors].

So, should we have allowed the UK’s Net Book Agreement to be first vilified and then murdered? Both France and Germany still operate some form of Resale Price Maintenance on both print books and e-books; both still have flourishing terrestrial bookshop chains and independents that offer range titles. It is also an interesting fact that e-books have been much slower to take off in these countries. Is it in part because RPM makes them more expensive than in the UK? Is this a good thing or a bad thing?

I was particularly fascinated when Apple came up with the agency model as a fair way of selling e-books. The agency model does not fix the price at which the book can be sold, but it does establish the minimum margin that must be made by the publisher. Effectively, like the NBA, it is therefore a form of price-fixing and has been declared illegal.

When you look at the legal reasons for abolishing Resale Price Maintenance of any kind, they seem to be entirely proper. But the argument about what best serves the need of the customer is much less clear-cut. Fine, if the customer wants to read only blockbusters, but for those of us who would like more variety in our reading diet, a mechanism that enables bookshops to stock less popular titles has been proved to be beneficial. Would the reintroduction of the Net Book Agreement therefore be ‘a good thing’? A difficult question, but one to which I am inclined to answer ‘yes’. I am quite certain, though, that, given the present economic climate, it will be a long time, if ever, before we are given the chance to find out.