Between the Mountains

The beginning of May traditionally marks the start of spring in the alpine idyll that is Switzerland—but for the Swiss book trade, the beginning of May 2007 brought a life-changing decision: the end of retail price maintenance (RPM) for books in the German-speaking part of the country. The Swiss supreme competition court had decided that RPM was anticompetitive. On that day, the major Swiss book retailers, such as Ex-Libris, Orell Füssli and Weltbild (owned by the Catholic church) took just minutes to get up the billboards announcing discounts of up to 30% on bestselling titles.

This year, the beginning of May brought together some 150 industry professionals from Switzerland, Germany, France, the U.K. and other European countries for a symposium on the consequences of abolishing RPM. And nobody had many good things to say about developments in markets without RPM.

Switzerland, which has four distinct language areas—German, French, Italian and Raeto-Romanic—is in a unique position when it comes to the sourcing of books: publishers from the neighboring countries control around 90% of the individual language markets, and the country has witnessed the changes brought about by abolishing RPM in the French-speaking areas in the west of the country since the 1990s. The most important development was the move by the French book retailing giant FNAC, which established a stranglehold on Swiss import of books from France, leaving independent Swiss retailers with a discount disadvantage of 20% to 30%, which had the inevitable result of killing off more than half of the independent retailers in that part of the country.

In the German-speaking part of Switzerland, which was affected by last year's decision, the consequences have not been that drastic—yet. But Marianne Sax, president of SBVV, the Swiss book trade association, noted that while a tiny fraction of mass market titles have been discounted heavily, other books have become significantly more expensive. She warned that large retailing companies are using heavy discounts for a minuscule number of titles to price independent competitors out of the market.

Diogenes, by far the biggest Swiss publisher, confirmed this warning from its own experience. Over the year, the company has seen orders by large retailers increase significantly for four or five titles, while orders by independents were reduced by almost the same amount, an observation echoed by many other publishers.

British book market analyst Frank Fishwick, drawing on the U.K. experience since the end of the Net Book Agreement in 1995, confirmed this tendency. Fishwick, who had been an ardent supporter of the ending of the NBA, now concludes that the free market ideology behind the move has only led to massive concentration and thus served to minimize competition.

In the end, the symposium did not find many things to cheer. Maybe the intervention by a member of the right-wing CVP party during the discussion could solve the publishing world's problems: “Publishers simply have to start publishing bestsellers only.” With such wisdom in politics, what can go wrong?