Start writing a different chapter

The cancellation of the Net Book Agreement may open up exciting new horizons for the book trade; The unit cost of producing a book is tiny: less than 10 per cent of its retail price
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The Independent Online
Books are wonderful, and the collapse of the Net Book Agreement is, as far as this country is concerned, going to make them more wonderful still. Is it not astounding that the 500-year-old technology of the printed book remains a powerful entertainment medium - arguably the most powerful - despite all the challenges from visual media?

Perhaps even more important, books remain, as the US business magazine Forbes put it earlier this year, "society's dominant clearing house for ideas". If you want to instil an idea into the minds of everyone, from an American president to a Chinese peasant, write a book. No other product can leap across the boundaries of language, culture and nationhood with such speed and such precision. Books, be they good, bad or indifferent, have a way of finding their markets.

Understanding why the book is so enduringly successful is the key to seeing why it will benefit from the liberalisation of pricing - perhaps even more than the ending of the Net Book Agreement signifies.

The success of the book is built on two foundations. The first is that the basic product is still better than anything subsequently developed. If you do not believe that, try and read 100,000 words on a computer screen, or a lap-top in economy class. Technology, however, has had an impact on the book trade, holding down manufacturing costs and making it possible for large, organised publishers to match print runs to demand in a very sophisticated way. The minimum viable additional print run for a hardback is only a few hundred copies. So the standard practice is not to print too many copies but, if sales go well, then to dial up a few more.

The second foundation is that the book trade is supported by another vast army, which promotes, analyses and distributes its output. No other industry in the world has anything like this. Many puff their products: the motor industry buys space and airtime to promote its new cars; the film industry's public relations and product placement associates plug new movies; the travel industry flies journalists around the world. But no other industry has its products subjected to the same detailed critical analysis.

Compare the resource put into examining, say, a new wine shipped in by Tesco, with the review attention given to a half-decent book. Lots of clever minds examine the latter and, by so doing, add enormously to its value to the community.

It is this added value that enables books to dominate the intellectual life of the world and fight off the challenge from the new electronic media. Electronics can spew out vast amounts of what is called "information" but actually is mere data. Raw data is useless, and the more that data multiplies the more useless it becomes, unless it is sorted, evaluated and filtered. All industries have their "boosters", people who push products forward across the clamour of the marketplace to enable them to reach the minds of potential purchasers. But the book industry excels because it has the best, most sophisticated, most useful filters, too.

The industry is not, however, without its problems. Here in Britain we have stagnant sales, a squeeze on employment among both publishers and the book chains, the loss of independence by almost all UK imprints, and pressure on small booksellers. It was to help resist these pressures that the Net Book Agreement was maintained, the argument being that industry needed the protected margins it gave: there was a subsidy from the hot titles that helped to pay for variety among the cool ones. How will eliminating those cross subsidies affect the trade?

The rational economic view (and, to some extent, the experience of the United States) would be that prices will come down, particularly for the bestselling authors and titles, and that the sales of these will rise. It will also affect retail outlets, with the supermarkets taking a larger share of the total sales. And it will help large publishers who have the marketing clout to do the appropriate deals with the supermarkets.

It is absurd to deny that there will be some costs and maybe some loss of diversity. But this sort of static analysis ignores the dynamics of the industry. You could say that any product that has been around for half a millennium is not going to be seriously affected one way or another by a relatively modest change in its sales practice, but I think something bigger may happen. It is a surprising industry and may react in surprising ways.

Look first at the interplay of advancing technology and an outwardly unchanged, "unimprovable" product. The unit cost of producing a book is tiny: less than 10 per cent of its retail price. If we can drive down the price so that it becomes almost a disposable item, like a magazine, then whole new markets will be opened. Those of us who already buy books will buy more, not just because they are cheaper but because they will feel like a different kind of purchase. Just think of the success of the Penguin experiment of 60p and pounds 1 books. At that sort of price a book is competing against a magazine or even a newspaper. You buy it expecting to throw it away. As a result, would-be buyers will experiment more, buy titles and authors they would previously have shunned, take risks.

Cheaper books will force sellers to experiment. The supermarkets will apply their immense skills in retailing and maybe even product development, and act as a useful counterbalance to the dominance of WH Smith. Cheaper books will also allow the development of discount stores, as in the US, and push small retailers into adding services to compensate for a squeeze on margins. And I would expect to see the growth of book clubs. Ultimately it will feed back into the production and distribution process, maybe creating mail order services offering 24-hour delivery at a small premium. Perhaps there will be a surge in small, niche publishers so that diversity in the trade will end up being increased.

Finally, freeing up the distribution chain may increase the boosting and filtering activity that is so crucial to books' success. Selling in the supermarkets will self-evidently boost books. That will make a different group of people talk about them - and seek information and guidance - thereby increasing the demand for more filters. Above all, discussion of books will move from the slightly precious social territory it still occupies in Britain into the utilitarian scene of the US. I particularly like the US reviews that end by saying whether the book is actually worth what the publisher is charging: comments from "every penny" to "pass". We need more of that. And we will get it.