Free Enterprise, French-Style

In planning my history book budget for this year, I came across a bit of news at No Pasaran that reminds me yet again to be grateful that I don’t live in France: may not offer free delivery on books in France, the high court in Versailles has ruled.

The action, brought in January 2004 by the French Booksellers’ Union (Syndicat de la librairie française), accused Amazon of offering illegal discounts on books and even of selling some books below cost.

The court gave Amazon 10 days to start charging for the delivery of books, which should at least allow the company to maintain the offer through the end-of-year gift-giving season. After that, it must pay a fine of 1,000 (US$1,470) per day that it continues to offer free delivery. It must also pay 100,000 Euros in compensation to the booksellers’ union.

Retail prices, particularly of books, are tightly regulated in France.

Evidently, this kind of economic justice is par for the course. Free enterprise appears to be strangled on a regular basis in France. Here’s another dead body:

It’s not been a good month for U.S. e-commerce sites doing business in France: last week, the French auction regulator sued eBay France for breaching rules on the conduct of auctions. The regulator said that eBay’s failure to comply exposed consumers to the risk of fraud. In its defense, eBay France maintained that it is not an auctioneer and that it has “invented another way of buying and selling” not covered by the rules.

In France, “inventing another way” of doing anything is frowned upon…and fined out of existence.

Be sure to check out Joe Nouri’s new blog header for No Pasaran. Not that you’d be likely to miss it.


14 thoughts on “Free Enterprise, French-Style

  1. I am an e-bay buyer for my business and occasionally that includes France. There’s been no mention from e-bay that I know of yet, but this will be interesting. It is not generaly recognized that French businessmen are well above-average precisely because eveything is made difficult for them, so it will be interesting to see what actually happens with thie next bad idea from Frogland.

  2. The Book Depsitory probably will be affected, too.

    Don’t worry. France is a *lot* less bureaucratic and backwards than it used to be, according to David Landes (“Wealth and Poverty of Nations”).

    This is peanuts.

  3. Actually, Dymphna, if you lived in France, this court decision (which can still be reversed) would make no difference to your budget.

    Since the price of books, by law, cannot be discounted by more than 5%, any book costs the same at Amazon, at your small corner bookshop or at your giant, out-of-town supermarket (within that 5% margin).

    Except that if you order online, you have to pay the actual, supplementary service of home delivery.

    Since this seems to be a learned, literate blog, as opposed to a bone-headed, dogmatic one, let me try and explain why this law is justified and positive in France, whereas it might not be necessary or even positive in the American market.

    First of all, note this difference in Amazon’s policies. In the United States, you have to pay for the delivery of books (unless your purchase reaches a certain amount). This rule is the same for books and any other merchandise sold on Amazon (trainers, electronic gear, etc).

    In France, the delivery of books is free whatever the amount of your purchase. This rule is valid only for books and only for France. (I have not checked their policies on other foreign markets, but this single difference is enough to explain the problem.)

    It is no accident that this rule is applied only in France, where book prices are fixed. It is obviously a way to undercut all other bookshops, big or small, offline or online, by offering what is in effect an illegal discount of 10, 20 or 30%.

    Cheaper books delivered for free are obviously sold at a loss.

    This is evidently an attempt by Amazon to push all their competitors out of the market through unfair practices. You cannot have one player insisting on rugby rules on a field where everyone else is playing football.

    Now for the reason why this law is justified.

    In a nutshell: in order for important, more difficult works to exist, books need to be protected from cut-throat price competition.

    If it were not for this law, most French independant bookshops would go under. Only supermakets and chainstores would remain. The latter have no long-term interest in providing advice to readers, or giving shelfspace to slow-moving books. Worldwide, marketed best-sellers à la Harry Potter would slowly push more confidential books out of existence.

    Now this might not be true for the United States, because of a) the enormous size of its domestic market, b) the fact that their domestic language is the world language.

    In other words, it might be profitable in the United States (indeed, I suppose it is) for behemoths such as Barnes and Nobles to offer a vast amount of shelfspace both to marketed best-sellers and to more obscure, confidential, learned books, of the sort the webmistress of this blog might look after in order to perfect her historical knowledge.

    And the size of the American market might still be big enough for independant bookstores to be profitable in some places, despite price competition (I am not sure about this).

    Also, you have to consider the general background of growing illiteracy in the Western world (France and United States included), which makes books a less and less desirable product.

    It is quite possible that in a not-so-distant future, being able to read whole books from cover to cover, other than self-help books or chick-lit, and writing anything with more depth that short, matter-of-fact business reports will be the preserve of a small elite, not unlike monks in the Middle Ages.

    The United States have the means of resisting this trend. Even if they were by and large engulfed in a cesspit of illiteracy, with the bigger part of the population totally ignoring books in favour of the Internet, movies and videogames, your country would still be able to nurture elite islands of culture.

    Universities such as Harvard and Yale are so much awash in money that they could soon, if they wanted, offer to take in for free all students, except the top 5% wealthiest of the nation.

    When you enjoy such a state of prosperity, you are confident you will be able to fund even the most obscure academic books in the future, whatever the competition.

    Not so in France.

    Here, books are written and read in French. The whole budget of all state universities (meaning most of them) is roughly the same than Harvard’s endowment fund. The supposedly prestigious Sorbonne cannot pay its toilet paper.

    There have been rumours that the biggest book chainstore in the country, Fnac, might get out of the book market altogether. (These rumours might not have any substance, but I mention them because the very fact that enough people lend them credibility for them to circulate is significant.)

    Since I very much want to be able to read as many books as possible in French before I die, and since I think this is in the best interest of the nation, too, I strongly support the French law which forbids price discounts on books.

    In spite of the fact that I believe France badly needs freer markets as a whole, less regulation and a leaner government.

    I might also mention that I am happy to buy books from all channels, including Amazon. I have benefitted from free delivery on their site. Of course, I have been glad to receive books at home, for the same price I might have paid in a bookshop. But I consider it a windfall benefit, a too-good-to-be-true offer.

    I want to be still able to buy from independent bookshops, run by passionate booksellers, in ten years’ time. That is why I am ready to pay extra for delivery, just as I paid for the delivery of some jeans, shirts and underwear I just bought online from Lands’ End, Dodgeville, Wisconsin.

    My best wishes for a happy and learned New Year.

  4. Robert, with all due respect I’ll present you a puzzle:

    Here in Denmark (Danish is a somewhat smaller language than French) we just gave up the fixed-price policy.

    The result exceeded our expectations: Best-sellers became the subject of intense competition and got lots of marketing, both commercial and free (as in newspaper articles). Public interest in purchasing books surged.

    The rumour of the death of the printed book seems somewhat exaggerated: I’ve been through real bookstores this Christmas. Waiting in amazing lines with my 5-year son, too.

    Crisis? What crisis?

  5. As a bone-headed, knuckle-dragging free market advocate, I have a few thoughts about Mr. Marchenoir’s comments and the French governments “protectionism”.

    “In the United States, you have to pay for the delivery of books (unless your purchase reaches a certain amount).”
    Not necessarily. delivery fees can vary depending on value, weight, quantity or competition. There is no law regulating delivery fees.

    “Cheaper books delivered for free are obviously sold at a loss.”
    And so? The merchant may wish to unload old or unpopular merchandise at some loss, rather than take a total loss. He may also want to introduce himself into a new market to expand his business.

    “This is evidently an attempt by Amazon to push all their competitors out of the market through unfair practices.”
    There is nothing unfair about open competition. Only regulated markets are unfair.

    “You cannot have one player insisting on rugby rules on a field where everyone else is playing football.”
    Exactly, France is insisting on it’s own rules in the global marketplace.

    “In a nutshell: in order for important, more difficult works to exist, books need to be protected from cut-throat price competition.”
    Just who determines which works are “important”?

    “If it were not for this law, most French independent bookshops would go under.”
    They are obviously not independent if they must be protected by the state.

    “There have been rumours that the biggest book chainstore in the country, Fnac, might get out of the book market altogether.”
    Perhaps the state imposed lack of competition has some bearing on this.

    If France continues to “protect” French book sellers as is now being done, there may soon be very few books sold in French or any other language due to the fundamental necessity to make a profit.

    Cordial wishes for a happy and profitable New Year.

  6. I’m glad to see your post, Henrik. I know more than one person who DOES NOT read books of any kind. I also know more than one person who reads only in one category, like fantasy or science fiction. I’ve had people over to my house who, confronted with my admittedly large cookbook collection, tell me that I have more cookbooks than they have books of any sort. As a voracious reader with several thousand books covering every category of the Dewey Decimal system, the growing illiteracy of America’s population is more than a little troubling.

    Now, take a moment to reflect upon other cultures, Islam in particular, where women are intentionally kept illiterate. It requires no great leap of imagination to understand just how damaging it might be to a given society when a mother cannot even read a bedtime story to her children. Consider how much simpler the task of subjugating women is when they cannot read a book or pamphlet. Ignorance is not the sole evil that arises from illiteracy.

  7. Multiply Mr. Marchenoir’s long and civilized explanation for a single rule by several hundred thousand rules and get a peek at the French State.
    Tocqueville–The French are a flock of timid and industrious animals, of which the government is the shepherd.

  8. Henrik, I’m very interested in another country having experienced both fixed-price and free markets for books.

    Of course best-sellers would be the subject of intense competition in this case, and the consumer would profit.

    But the real question is: what will happen in the long term to the broader catalog of books, and to other, valuable Danish books which cannot and will never become best-sellers? Will they still get published, sold and bought?

    Long queues at tills are not, per se, reason to rejoice. If people queue up to buy only Harry Potters, celebs’ biographies and self-help books, it won’t bode well for the book market.

    Is there a debate about this issue in Denmark? How do publishers stand on this? And bookshops? How are books sold in Denmark? How healthy is the publishing and retail market?

  9. Robert Marchenoir argues that the French should not try and imitate the US in subjecting their book market to the rules of free trade because English is a big language and the US a big market, while France is a small market and French is a smaller language than English.

    Yet if an author of an unprofitable work deems it too important for the world to miss out on, he or she still can give it away in digital form on the internet, and so it is not like his or her work would not have a chance to be discovered even if so-called independent book stores were to disappear. The author of said unprofitable book may not make much a profit out of their book by putting it online, but at least it will be available to mankind. A really slow moving book will never make much money anyway, so why care?

    This would be the worst case scenario that Robert Marchenoir was considering. Now, that worst case scenario is unlikely to happen and Robert’s reasoning is deeply flawed: small book stores that sell “difficult” books offer different kinds of books than supermarket chains do, so supermarkets and small book stores cannot be said to be in direct competition against each other.

    If there is a market for difficult books now, there will be a market for them tomorrow too. And if people ever stop buying them, that will be because they are not interested in buying them any more, in which case those books will not be published or sold any more, regardless of whether the state continues to subsidize or regulate the book market or not.

    The kind of reasoning Robert Marchenoir follows is used in all sectors of the French economy to make a case for protectionism.

    Meanwhile, the failure of French protectionism is obvious across the board, and the intervention of the French state in the publishing sector has not prevented the decline of French literature and it has certainly even precipitated it.

  10. Sondongnigh, you were so quick to fire your free-market guns from the hip that you did not really pay attention to the case I was trying to make.

    You have misunderstood me when I wrote “In the United States, you have to pay for the delivery of books.” I was not alluding to laws. I was speaking about Amazon’s policy. This is presently Amazon’s policy in the US.

    You write: “The merchant may wish to unload old or unpopular merchandise at some loss, rather than take a total loss.” This is not the case. My comment explains clearly that Amazon has this policy of free delivery in France on all books, new and old, best-selling or slow-moving.

    It is not about getting rid of old inventory. It is about getting rid of competitors by selling brand-new products at a loss, using unfair and illegal practices.

    Anybody suggesting that Amazon will keep offering free delivery in the long term, in case their plan succeeds and they get to have a quasi-monopoly on the French book market, is utterly naïve (or is an Amazon shareholder trying to fool everybody else).

    As for old or unpopular books, they may be — and are — heavily discounted in France. There is a whole market of beautiful, first-hand and formerly expensive art books which can be snapped up for a song. This is perfectly legal.

    Regarding the issue of avoiding a total loss on non-selling books, this is taken care of by the usual agreements between publishers and retailers in France. The retailer has one year during which he can return books to the publisher, and be refunded.

    You write: “France is insisting on its own rules in the global marketplace”. No. The market for French books is not global. It is mainly French. And the law about the price of books relates only to French books on the French territory. I am sure you are not suggesting that American laws should apply in France.

    You ask: “Just who determines which works are “important”?”. Answer: the readers.

    You write: “Perhaps the state imposed lack of competition has some bearing on this.” [The rumours about the country’s biggest bookstore possibly getting out of the market.]

    No. In practice, the law is conducive to higher margins for the biggest retailers. The selling price is fixed, but the buying price is not. The big retailers can negociate better buying prices with wholesalers — and they do, of course.

    As a matter of fact, the fixed-price law has encouraged the big hypermarkets selling mainly groceries to diversify into books. Since they do not have to compete on price and they can pressure publishers to get big discounts, books represents incredible value to them. One foot of books on shelves brings them huge profits compared to one foot of nappies or beer packs…

    Please note that this does not mean you cannot find cheap books on the market. There are regular-price books, cheaper pocket editions, and super-cheap editions at 1 € or 2 €.

    The only thing is, it is the publisher who gets to set the final price, not the retailer (not the state either, mind you…). I know this is anathema to free-marketeers, but, hey, you cannot have everything your way worldwide…

    By the way, it is also anathema to the Brussels Eurocrats, generally speaking (books are an exception).

    You write: “[Independant book retailers] are obviously not independent if they must be protected by the state.

    We can always play on words. No economic agent is independent from others. Any business is dependent on its suppliers and its clients. Obviously, the bigger you are, the more you can throw your weight around.

    You can, if you will, replace “independent” with “small business, owned by someone who accepts to earn little more than the minimum wage, and certainly less than the guy selling vegetables on the neighbouring street market, in exchange for the pleasure to advise his clients about books which are not necessarily best-sellers, but which he likes and they like.”

    Admittedly, it is a bit longer. And you could earn more by buying Amazon shares (or not).

    As for protecting markets and businesses, most countries do it to a certain extent, including the United States.

    You write: “If France continues to “protect” French book sellers as is now being done, there may soon be very few books sold in French or any other language due to the fundamental necessity to make a profit.”

    As I have just shown, the law is conducive to higher, not lower profits for publishers and retailers. The natural tendency on the market, but for the fixed-price rule, would be for price wars on the best-sellers (see Henrik’s comment on Denmark).

    The party who would arguably be offended here is the consumer, not the publisher or the retailer. My point is that the consumer ultimately benefits by the diversity which would disappear otherwise in the long term.

    Also, it is in the publisher’s interest to take advantage of increased sales permitted by lower prices. This is done by having different product lines positioned at different price points.

    As for non-French books sold in France, they are not subject to fixed prices, to the best of my knowledge. This does not seem to make them particularly cheap, by the way. English-language books sold in offline bookshops here seem very expensive to me. This might be because the market is small, because of freight costs, or because of the generally high cost of doing business in France.

    Finally: are you buying French books in France? Do you have a vested interest in it? I do. I would be more interested in learning from the good sides and bad sides of the ways books are sold in your country, be it America or any other one, than in being lectured in the way things should be done in my own, by someone who obviously does not know this specific market.

  11. Robert, I’m not an expert in market analysis. But the Harry Potter craze seems over, for now. It sure inspired lots of kids to go home, switch off their PlayStation and get to read.

    What I’ve seen topping the charts is a tome called “Luftkastellet, der blev sprængt” (sorry – extremely untranslateable doublepun). And just out is the intensely Islam-critical book “Islamister og Naivister” (“Islamists & Naivists”) in a €7 edition, reflecting its huges sales.

    For in-depth analysis, you’d have to go somewhere else. I just happen to be a book freak who likes to see what looks like a well functioning market.

    As an aside, I think we need to invest resources in translating various books into Danish. Otherwise the English language will invade our education institutions.

  12. Mr. Marchenoir,
    Thank for your response. Dialog is the lubricant of knowledge. I do appreciate your desire for maintaining a local supply of “difficult ” books. I still mourn the loss of my favorite bookstore in my hometown because it was the only source of books of small printings. Some of my most treasured books are those which had printings of only a few hundred copies. But we now have the internet and the whole world as a source of knowledge and I’m sure those authors would be publishing on the internet with perhaps thousands of readers.

    My point is that whatever Amazon’s policies are, they are Amazon’s, not any governments. As to getting rid of old inventory, that is still a matter of economics, I was not aware that in France, merchants were able to return un sold books. However, when it becomes illegal to discount any product to avoid a total loss, we are all the poorer for it, better to have the book sold at a discount than to be destroyed.

    Neither Amazon nor most merchants will offer free delivery on small purchases in the long term, that’s understood as a marketing strategy and inducement to buy now rather than later. If only books printed in France, in French are protected, what is the problem with free delivery of non-french books? At any rate, when a merchant at some point begins charging to deliver small orders, he is again on the same footing as everyone else. That’s just business in a free world.

    I maintain my stance that any merchant that is dependant on protectionism is not truly independent. The “little” merchant who is in whatever business because of the love of that business is a grand thing, but does he deserve protectionism by the state?

    I must say that I entirely missed the fact that only French published books in French are protected in France. Hopefully that will also make those “difficult” available to the whole world. And yes, the US is crtainly one of the greatest offenders of interfering in the free market. That does not make it right.

    Franc perhaps going out of the book business is still an economic decision for whatever reasons. That “the law is conducive to higher, not lower profits for publishers and retailers.” is only true for certain publishers and retailers, and obstructs the free flow of economics which will in the end stifle new products.

    I do apologize for the lecturing tone of my post. I was responding in the American cowboy manner to having a foreign country try to impose non competitive restrictions on an American doing business in the global economy. Being in business to make a profit, I’m sure Amazon will comply with French laws.

    My bottom line is that economic restrictions, no matter how well intended will only have a detrimental effect in the long run, depriving everyone of innovation, new ideas and new books.

    Cordially Yours.

  13. The bottom line is that the English-speaker once again ends up groveling before the French propagandist. Not that French propaganda victories make much difference in the real world, though, except maybe for making matters worse for them.
    It is a fact that Anglosphere-style competition, far from leading to less creativity in culture or to the disappearance of scientific writing or difficult books, has actually fostered these. Protectionism, on the other hand, is killing French culture in general, and it holds true for the print media too. (Wonder why the French blog so much? It is a way they have of escaping their pensee unique-ridden domestic media. Thank you America for free speech and the internet!)

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