A story in the New York Times explains that in Germany booksellers are legally prohibited from discounting books below the price set by the publisher. Itâ€™s not clear from the story, but it thus seems that Germany has a legally-mandated system of minimum resale price maintenance. Not surprisingly, this favors small bookstores. “In the United States chain stores have largely run neighborhood bookshops out of business. Here in Germany, there are big and small bookstores seemingly on every block.” The Times story goes on to explain that a similar system in Switzerland has recently been abolished, and now Swiss booksellers are selling books into the German market, undercutting the German booksellers.
The Times story provides very few details, and so itâ€™s difficult to draw conclusions about whatâ€™s really going on here. Does the publisher have complete freedom to set the resale price? If so, given that US booksellers havenâ€™t found RPM to be in their interest, why would German booksellers be any different? Why not just set the RPM price so low that even discounters would be selling above the RPM price? Or does the German system somehow facilitate a publishing cartel?
One indication that this might be the case emerges in the Times article. “Last year 94,716 new titles were published in German. In the United States, with a population nearly four times bigger, there were 172,000 titles published in 2005.” Again, itâ€™s hard to tell, but if the publishers are making monopoly profits on books, perhaps theyâ€™re competing some of those profits away by publishing more titles in an effort to capture a larger share of the market. Compare how the airlines, when still regulated, competed on quality.
By the way, one thing is clear: at least for popular books, prices are a lot higher in Germany than in the US. You can buy the English version of Harry Potter and the Deathly Hallows from Amazon in the U.S. for $19.24, but the German version from Amazon.de in Germany costs EUR 24.90, or about $35.81. Part of the disparity is due to the current weakness of the dollar, of course, but even if the dollar and euro were of equal value, the German version of the book would still cost about 20% more.