A Funny Old World

Peter Kilborn | 02/16/2010

The intervention of Apple in the e-book market – though in all the hullaballoo you need to be quite sharp-sighted to see that that is what the iPad represents – has set the cat among the pigeons in more ways than one.

There is of course no iPad in the UK yet. Reports are that it will be here in March, but without the iBook store and probably without wireless connectivity, so it may be some time before it becomes a serious competitor to the existing e-readers. But at long last we know for sure that it exists and is a plausible and powerful alternative platform to Amazon; and that is enough to stir up excitement among publishers. It would be naive, though, to suppose that Apple will be content to do the publishers’ bidding in a way that Amazon has so conspicuously failed to do in the matter of pricing, at least until this week’s spat with Macmillan in the US.

What is interesting about the events of the last few days is how the thinking in the publishing world of the last decade has been overturned. Suddenly the talk is all of ‘regaining control’ of content, by pricing or by delaying e-book publication. Yet for the past ten years or so, publishers have been obsessed with the volume of books they have sold, regardless of the cost and the discount levels and with a complete disregard for the well-being of independent bookstores.

The book trade here is still overshadowed by the Net Book Agreement, which until 1995 gave publishers the legal right to set the minimum price for their books. Though by modern standards a restrictive practice it maintained equilibrium in the trade which was probably good for the quality and breadth of publishing output and maintained a reasonably level playing-field for chain booksellers and independents. Its passing, engineered by W H Smith in collusion with a handful of major publishers, had all sorts of consequences, good and bad: of which the appearance of price competition and the arrival of Amazon.co.uk were among the most notable. Books became discounted everywhere and bestsellers became available in the supermarkets; and publishers and booksellers engaged in a frenzy of price cutting which remains with us to this day.

Suddenly, though, what was pretty obvious to observers has now sunk in with publishers: that price competition is actually bad for them; and that higher prices, controlled by them, are necessary for the long-term health of the industry.

Other oddities have been cropping up too: for instance, twenty-two new e-readers launched at the Consumer Electronics Show in Las Vegas last month but none of them apparently bidding for market leadership by competing on price; and Waterstone’s under its new management, having finally achieved its long-held objective of a virtual monopoly on the high street, talking of better range and better service standards – and by implication less discounting - rather than the ‘pile ‘em high, sell ‘em cheap’ philosophy which has prevailed under Gerry Johnson’s regime. It’s odds on that Waterstone’s will now start selling off underperforming stores.

As our former prime minister, Margaret Thatcher, memorably remarked when ousted from power: ‘It’s a funny old world.’

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