« Is 2008 like 1971? | Main | Justin Lin »
Plus ça change, plus c'est la même chose
A French court has ruled in favor of the French Bookseller's Union that Amazon's free shipping policy violates a law forbidding booksellers from offering discounts of more than 5 percent off the list price. Amazon was told to start charging for shipping within ten days or pay a daily fine. It must also pay €100,000 to the French Booksellers' Union.
Amazon CEO Jeff Bezos, however, is refusing to charge for shipping and is taking the case to the French public. Way to go Jeff! My advice? Tell the state, laissez nous faire!
Hat tip to A Chequer-Board of Nights and Days.
Posted by Alex Tabarrok on January 20, 2008 at 09:46 AM in Economics | Permalink
Comments
That should be "Laisser mes livres faire!"
N'est ce pas?
Posted by: heedless at Jan 20, 2008 10:10:10 AM
The verb "laisser" is used in the 2 person plural, thus requires the "ez" suffix. It should read: "laissez nous faire!".
Posted by: Martin at Jan 20, 2008 10:16:32 AM
The case isn't nearly as clear cut as you seem to suggest.
I agreed with you in the first instance when I first saw the news, but after reading more comment I've changed my mind.
I know I find it a lot easier to find interesting books by accident - i.e., ones I wasn't recommended or wasn't specifically looking for, or are out of print - in physical bookshops, particularly second-hand bookshops. What if those bookshops become unprofitable because relatively high volume recommended books (e.g. college texts) and bestsellers are sold at a discount by large corporations (such as supermarkets), or online?
Amazon's recommendation system is both the best and worst thing about it: it's the worst because it's precisely where it's weakest in comparison to the physical store, yet it's strongest, because it's a focus of development that sets it apart from the field.
Posted by: Barry Kelly at Jan 20, 2008 10:26:46 AM
What if those bookshops become unprofitable because relatively high volume recommended books (e.g. college texts) and bestsellers are sold at a discount by large corporations (such as supermarkets), or online?
So I should pay more for for every book I buy so that you have a better chance of randomly stumbling upon books you like? And this makes more sense than you learning to efficiently browse Amazon, or otherwise acquire book recommendations.
Yes, the case actually is as clear cut as it seems.
http://bastiat.org/en/petition.html
Posted by: Dave at Jan 20, 2008 10:33:38 AM
Martin, corrected - although sources differ on what was actually said.
Posted by: Alex Tabarrok at Jan 20, 2008 10:41:55 AM
It's always interesting how stupid interventions look so much more obviously stupid when they are some other country's.
Posted by: Daniel Klein at Jan 20, 2008 11:04:13 AM
Brick and mortar bookshops in big cities are doing well. I'm not worried about them.
Small booksellers are just delaying their inevitable transition into the only activity for which they stand to have a comparative advantage, ie expertise and advice.
The original idea for the "unique price" for books was to promote the existence of a vast distribution network, based on independent retailers. The intention was also to prevent predatory pricing strategies and excessive concentration in the industry. We all know what economic theory tells us about that. The law, however, is now over 25 years old, and in desperate need of renovation to account for what is without doubt the biggest innovation in book distribution in recent years, e-commerce.
I've read some comments on the Amazon petition from people afraid that concentration in the hands of Amazon would lead to higher prices but - get this - a lack of selection, death of culture and the ultimate reign of the bestsellers list. As of now, Amazon is the only place I can get the books I want. Small bookshops just can't afford to stock them, big bookshops don't want to, and complete lack of selection is only found in our "grandes surfaces" (where a disconcertingly high proportion of people buy their books..). Another interesting comment was that small independent retailers don't charge shipping for books you ask them to order.
Obviously things aren't that simple either but basically, Amazon's fault is being on the Internet.
Posted by: Chris at Jan 20, 2008 11:17:16 AM
Barry,
I'm afraid I'm with Dave on this one.
Here in Germany we have fixed book prices - no discount whatsoever (although Amazon's free shipping is deemed o.k., which some people criticize). The main argument given for this is that this policy allows book publishers to cross-subsidize "culturally important" books using the profits from bestsellers.
I used to think this is a good argument. But in effect this is saying that some people should decide what other people ought to read - at the expense of people who like more popular stuff. If you think about it, this is a rather gross thought.
(This reminds me of when German theatre director August Everding was asked why the taxpayer should subsidize theatres and he answered along the lines of "Because people have an inherently bad taste and need to be educated!" I shiver.)
Posted by: LemmusLemmus at Jan 20, 2008 11:19:10 AM
What was supposed to be a law written to protect booksellers from the competition of supermarkets and hypermarkets is now used to protect booksellers from the evolution of the cultural industry (books are sold at a fixed price, discounts greater than 5% are forbidden).
I used to support this idea when the competition came from large corporations that where susceptible of reducing the offer of available books.
Now, Amazon has more references than any physical store could offer (as far as I know). Most of the books I buy are in the long tail and I would have a hard time to find them elsewhere than amazon.
So, applying this law to protect the diversity (we call it the "exception culturelle" in France, meaning that culture should not be left to the laws of the market; other measures include subsidies given to French movie studios...) is not really meaningful anymore.
Moreover, between the lack of competition for French booksellers and the low exchange rate of the dollar, books are often 2 to 3 times cheaper If you buy them in English instead of in French.
Posted by: Norikazu at Jan 20, 2008 11:24:46 AM
Aaahhh...Nit-picking: my second favourite activity.
The expression is spelled "Laissez-nous faire".
If an imperative is followed by a pronoun, you should
intercalate a dash. As in
"Réveillez-vous Say, Bastiat et Cournot: ils sont devenus fous!"
Thanks for the wonderful blog and its awesome comments.
Posted by: Attila Smith at Jan 20, 2008 11:30:32 AM
So Amazon has to pay a one-time fee of €100,000 and €1,000 a day in daily fines? If I were Jeff Bezos, I would charge it to my advertising budget and rejoice.
Posted by: at Jan 20, 2008 12:11:24 PM
Now, Amazon has more references than any physical store could offer (as far as I know). Most of the books I buy are in the long tail and I would have a hard time to find them elsewhere than amazon.
Sounds like France needs a Ministry of the Long Tail to correct this.
Posted by: BlogReader at Jan 20, 2008 12:29:27 PM
i'm with Norizaku, the law made sense when it defended cultural products from generalist big distribution pricing and helped mantaining diversity of offer.
but amazon doesn't have a limited shelves policy.
The Virgin Megastore on the Champs-Elysées spent its first year or two paying a weekly fine for opening on sundays until they and other retailers (or rather other areas) got derogations.
Posted by: nu at Jan 20, 2008 12:41:24 PM
The best part of Amazon is the customer reviews. Some good recommoendations occur there.
As in "if you like this, you'll want to check out xyz." or "A much better treatment of this topic is abc."
I'm not as interested in finding obscurity as in finding ultimate excellence. Time is scarce.
My investing reading list alone is up to over 100 books. This is for a very narrow type of investing. I try to keep it down to only the best. Some of these are obscure. I found most of them on Amazon. I find other books from the obscure book shop.
On the other hand, this little fine would be easily circumvented. Discounts are mostly apparition. Shipping is just a cost. Other shippers overcharge for shipping. There's little stopping Amazon from saying all shipping is 5%. Free shipping is 5% off. Politicians dumb enough to make such a law, probably aren't too swift at enforcing it.
I don't really understand the workability of this law. What if the authors of this website wanted to clear out their inventory? Would they not be allowed to discount their books?
The problem with books is you don't know how good they will be until you try them. For me, the money cost of a book is so minimal in relation to the time cost and the opportunity cost. By lowering the money cost of the book, I am more likely to give a marginal book a shot. If the objective is to provide a shot to obscure works, then lowering the cost is a good long-term option.
Posted by: Andrew at Jan 20, 2008 1:05:50 PM
Thinking of it, does it make sense that Amazon is forced to charge the customer for the shipping cost but that the book store is not forced to charge the customer for the cost of shipping the book from the wholesale to the store (which the book store pays for indirectly)?
Posted by: LemmusLemmus at Jan 20, 2008 1:40:44 PM
Moreover, between the lack of competition for French booksellers and the low exchange rate of the dollar, books are often 2 to 3 times cheaper If you buy them in English instead of in French.
And now we know for sure that it won't be too long until this law is changed and why ;) If this law is, in any way, even indirectly, having the effect of promoting English at the expense of French it is doomed.
But is it illegal for French citizens to order discounted books in English from American or British web sites? (Am I remembering correctly that t the English version of one of the Harry Potter books reached the top of the French best-seller list?)
Posted by: Slocum at Jan 20, 2008 1:56:49 PM
Do no French people read Bastiat? (By the way, can someone point me to a good English translation of The Law? The online version seems old and stilted.)
The fear of online bookstores destroying real bookstores is based on the obvious changes to commercial information markets. Fewer bookstores represents a change, and a gain not a net loss, to the amount of information available to us.
We are moving to a new type of communication, beyond mass or interpersonal communication to coalescent communication. Coalescent communication is the interaction between you and the aggregated, choice-selected media available in large scale information systems. My Netvibes pages brings me a selection of blog postings, images, video links, and news pages based on my selection criteria. As online systems are better integrated this will become more automated, based on my searches and page clicks rather than me having to make raw selections. It will go well past 'if you liked this book then you'll really like...'
Bookstores will still exist; Every form of the media still does. I can still buy carved stone tablets-- a medium over 14,000 years old. But the actions of a nationalist commercial cartel hoping to stop the tide of changing information markets will be as successful as me becoming younger instead of older this year.
Posted by: The other Eric at Jan 20, 2008 3:17:35 PM
"The problem with books is you don't know how good they will be until you try them. For me, the money cost of a book is so minimal in relation to the time cost and the opportunity cost. By lowering the money cost of the book, I am more likely to give a marginal book a shot. If the objective is to provide a shot to obscure works, then lowering the cost is a good long-term option."
I'm not sure you meant to say this. If the cost of the book is relatively insignificant to you, it should to matter whether it costs $10 vs. $15. I believe you would prefer a high cost and an extremely large variety that would allow you to choose a book that more fits your needs/wants.
Posted by: Chris at Jan 20, 2008 3:39:45 PM
Note to self: buy more books from Amazon.
For some years the garden centres in New Zealand have had a similar battle going with the government over holdiay trading laws. You see in New Zealand it is illegal for most businesses to open on Easter Sunday, and this is a populat time for gardening (its generally one of the last good patches of weather before winter).
For years several garden centres have opened anyway. Every year they are busted, sentenced to the maximum fine and gladly pay it, as they make far from from opening that day than the cost of the fine.
Posted by: James at Jan 20, 2008 3:41:04 PM
Thanks for the email fellow readers. I downloaded the free audio version of The Law to my iPod. (I'm certain this violates a French law in some way.)
It's at www.freeaudio.org.
Posted by: The other Eric at Jan 20, 2008 4:38:31 PM
The problem with the French is that they have no word for "entrepreneur".
Posted by: Chuck at Jan 20, 2008 6:52:22 PM
Can anyone tell a French-challenged person what the title means?
Posted by: Tim at Jan 21, 2008 1:39:36 AM
The more things change, the more they stay the same.
(the more it changes, the more it's the same).
Posted by: Chris at Jan 21, 2008 2:31:01 AM
"Sounds like France needs a Ministry of the Long Tail to correct this."
That made me smile. :)
Posted by: Erik at Jan 21, 2008 4:06:29 AM
"I'm not sure you meant to say this. If the cost of the book is relatively insignificant to you, it should to matter whether it costs $10 vs. $15. I believe you would prefer a high cost and an extremely large variety that would allow you to choose a book that more fits your needs/wants."
I did mean it, though I admit I didn't communicate what I meant very well. What I am saying is that, similar to a recent post on this site, I don't consider a high cost (or popularity) to equate or correlate to quality. Amazon, by being a low cost provider, is able to provide a high variety AND a low cost. So, if I get a few cues that a book is going to be good, but if it costs $15, I still might not buy it, because I can get another book for $15 bucks that I have even more cues will be a great book. But, if I can get 3 books for $30 rather than 2 for $20, I'm more likely to give the third book on my priority list a try.
Basically, the cheaper and easier it is to get books, the more books of all kinds will be had. Innovation will do more to support the long tail than legal interventions.
Another thought. Popularity of a book, to me, is only a positive cue for fictional works. There is a network affect with fiction because people want to be able to talk about the same books at their dinner parties. I don't much care about fiction books myself, or at least their popularity, but it seems like trying to fight this effect is misguided. Popularity for non-fiction books is more of a long-term cue. For example, it may take 50 years for the top book on a subject to rise to the surface. Although I am certainly not implying we need a bureau to decide and enforce the top book on a subject (it has to be worked out in the market) making sure there is a lot of variety in non-fiction books, where my main concern is more having the best source rather than a lot of sources, is counter-productive.
Posted by: Andrew at Jan 21, 2008 6:38:44 AM
