You can't sell books like cartons of eggs

VS Naipaul's works sell respectably, but they will never be stocked in Sainsbury's

Deregulation has altered and, in many areas, improved our lives. The freedom from rigid structures in business has often increased competition, quality and choice for those who want to use the end product. But this result doesn't mean that deregulation will always have this effect. In some areas deregulation can have the opposite effect, will damage the freedom of choice and ultimately benefit nobody.

Deregulation has altered and, in many areas, improved our lives. The freedom from rigid structures in business has often increased competition, quality and choice for those who want to use the end product. But this result doesn't mean that deregulation will always have this effect. In some areas deregulation can have the opposite effect, will damage the freedom of choice and ultimately benefit nobody.

The book industry is a peculiar one, and books cannot, quite, be sold as any other consumer product. The latest proposal, from a major retailer, seeks to sell books in the same way as any other consumer good. Borders, the book chain, has proposed that the Recommended Retail Price be abolished, and book shops and supermarkets be free to set whatever price they think appropriate.

Of course, at the moment, they are free to set the price, and in many cases do. Since the abolition of the Net Book Agreement in 1995 books need not be sold at the RRP, and bestsellers are frequently discounted. You might think, in these circumstances, that the RRP is all but meaningless.

Nevertheless, in practice the RRP serves various useful purposes. It shows the public how much the price of a book has been reduced. It also effectively prevents a retailer from balancing the low profit margins that are received from a strong seller by raising the price of slower-selling lines above the RRP.

Without the RRP, booksellers would surely raise the price of slower-selling books. The net effect would be to create a two-tier system, in which this month's fashionable novel was selling at a loss and classics, mid-list authors and solid, important books of a definite local appeal were stocked, if at all, at an off-putting price. The result, in the end, would be to diminish consumer choice, and booksellers would increasingly concentrate, as supermarkets now do, on 200 or so titles, stocked in such bulk that the tiny profit margins build up.

It's not much realised how little profit for the publisher derives from a massively discounted bestseller. In an important article, Antony Beevor, the chairman of the Society of Authors, says that supermarkets which stock books "claim that they do not ask for more than 65 per cent discounts, yet by the time they have charged a non-returnable contribution of £50,000 for 50,000 returnable paperbacks, the true discount is really closer to 85 per cent, or even higher if there is a heavy rate of returns". In this situation, the publisher is receiving as little as 65p per copy, which barely covers printing and distribution costs.

The proposal to abolish the RRP would necessarily involve the abolition of the current system of authors' royalties. Instead, a system of payment based on "net receipts" would be imposed, with predictable results. Effectively, the book industry would become much more like the film industry. Literary agents would simply attempt to achieve the largest possible advance, ignoring any future income from net receipts. As Beevor says, this would be like 19th-century publishing, in which authors basically sold their copyright to publishers.

What would result is a catastrophic erosion of the present ethos in publishing, in which authors have time to establish themselves through a series of books, building up a readership and, ultimately, a steady stream of income through sales of their previous titles. Authors who never achieve a huge bestseller nevertheless provide a good income for themselves and their publishers because of the system of royalties, propped up by the RRP.

Many such authors are very much more interesting and important than the 200 or so titles that supermarkets stock. For instance, Picador is currently republishing, very handsomely, all of the books of V S Naipaul. I expect they sell respectably, without setting the Thames on fire. They are never going to be stocked in Sainsbury's.

But a writer of that significance can only be justified to accountants with the support of the RRP and the royalty statement, which show how sales go on steadily over years and decades. Without that, it would be difficult to explain why a Naipaul edition is what Picador should be doing, rather than publishing yet another footballer's autobiography.

Of course, this will not trouble figures like Naipaul, since there is enough propriety and decency in the publishing world to make that possible in the face of any kind of deregulation. But where are the Naipauls of the future to come from? In the past, some of our greatest novelists have never sold in five figures, but the protection offered by the structure of bookselling has made it possible to justify publishing great books. On a more philistine level, others have published five novels which sold no more than 3,000 or 4,000 copies before getting into their stride and producing a million-seller. That, in the future, is never going to happen.

Books are not cartons of eggs, and cannot be sold as if they were. Before making this change, people should reflect that the printed word is one of the very few art forms that needs no public support. In the future, a publisher wishing to bring out a brilliant novel of perhaps limited appeal by a young author may find himself having to ask the Arts Council for financial support. That would be a tragedy. Before the industry divides into hucksters and curators it ought to think again, very carefully.