The case for territorial restrictions – a reader responds
By Paul Biba
It’s rare that I’ll make a full article out of a comment, but this comment raises issues that need to be looked at. It is unusual that we get the perspective of a small country. Martin Taylor is the Director of the New Zealand Digital Publishing Forum and publisher and Managing Director of Addenda Publishing. In response to criticism of territorial restrictions which has been published here, Martin responds:
Territorial rights are important to preserve. They allow countries to develop their own economically sustainable publishing industries and to reflect the specific dynamics of each market. The profits from country-specific international editions help sustain the infrastucture needed for local book publishing that is important both economically and culturally. Local pricing, and the ability to profit from locally generated sales and marketing initiatives are also important parts of this.
Language/translation rights can be a useful alternative to achieve this but only if you have a unique language. If, for instance, you’re a small English language market like New Zealand, it’s no barrier. The only way to have a chance of developing a local market is to have territorial rights.
It’s too easy to be swamped by large foreign players with their massive scale economies so that the local industry has no chance to get effectively established. It’s especially irksome when those overseas sites evade local sales taxes, too, giving a further opportunity to stymie a local industry.
We’re trying to grow a sustainable industry here in New Zealand and the last thing we need to see is the rapid arrival of large US sites taking the publishing profits from international bestsellers out of this small market through global rights deals. If this happens, we’ll be relegated to a tiny, weak cottage industry. Give us a break.
September 19th, 2009 at 9:38 am
While I empathize with Mr. Taylor’s position, it also fails to address the fundamental issue, which is that once again the principles of print publishing are being applied to electronic publishing without regard for the inherent differences in the two.
By insisting that territorial rights must be applied to protect local industry, Mr. Taylor places himself and the New Zealand publishers in the position of denying NZ authors the ability to market their ebooks where they live.
I, as do most of the independent publishers I knew who use Fictionwise and other third parties as sales channels, publish authors from all over the world. These talented individuals might or might not have managed to be published in their own country, but that is moot–they were published in the US.
However, because they were published digitally, via on-demand and ebook, they can still reach their local readers at reasonable cost. At least, they could until this business of enforcing territorial rights arose. Hopefully, the fact that Zumaya acquired world English rights to avoid this very issue will prevent that, but the more likely scenario is that the vendors, lacking time and resources to determine which publishers have what rights, will do a blanket lock.
And, of course, there are the customers, who spent money in good faith and are now unable to access their purchases. Is subsidizing the local industry worth alienating thousands and perhaps millions of customers? Customers, I shouldn’t have to add, who are already angry that the publishing industry seems more interested in its bottom line than in customer service.
Customers who will reject the legal channels that are now being restricted to serve that bottom line in favor of pirated goods? And who will reject those of us who have done our best to provide them what they want at a reasonable price and without unnecessary restrictions along with the rest?
In other words, in their vaunted goal to protect their industry, this latest ploy could result in doing just the opposite–driving companies out of business because their customers will go where they can get what they want for free.
There is a biblical reference about the inadvisability of putting new wine into old bottles. The mainstream publishing industry needs to think about that, and whether in the process of trying to prevent leaks in one place they’re causing a huge crack to open somewhere else.
September 19th, 2009 at 9:50 am
Now I get it. It’s the failed model of tariffs, dragged out yet again.
September 19th, 2009 at 10:43 am
As Elizabeth Burton correctly points out, this discussion seems to be running on two non-intersecting tracks; the protectionist aspects (valid or not for dead treeware) are, frankly, irrelevant to ebooks distributed electronically, since there are minimal costs associated with distributing ebooks and it is one arena where there are essentially zero economies of scale accrueing from the size of the publisher (to the contrary, the big bloated multinationals are hampered by their own irrational desire to protect their expensive glass towers).
As a result, ebook publishing and online retailing *favors* small, properly managed publishing houses that keep an eye on the quality of the product and provide added value.
Territorial limits favor the publishers that lock up the larger markets to the detriment of smaller market publishers who are prevented from competing for their natural (talent-based) share of the larger, global pie.
When it comes to buying ebooks, a retailer server in New Zealand is no different than a server in Brussels and both have access to the entire planet and it can sell its product everywhere. It can sell to Americans, Britons, australians, chinese, or Puerto Ricans.
What better way to fortify local culture than to extend the reach of local authors to the whole of humanity? How is limitting your product to 4 million customers better than exposing/selling it to billions?
Why ghettoize your own people?
The 19th century is long gone and by now wecknow that free movement of ideas and information is not a zero-sum game.
Time to get past xenophobic fears and show just how good your creators are.
Peter Jackson’s crew can hardly be the sum total of Zealander creativity, why not let the rest of the world share in what your people have to offer?
Why not let the rest of the world freely show you what *they* have to offer? What’s to fear? That your people might learn a crative trick or two?
Its a flat world online, where only talent matters.
Instead of defending antiquated regimes, small market publishers should be screaming to tear down the walls; instead of paying obscene licensing fees to outside publishers for the right to wrap *their* product in dead tree pulp, small market publishers should be cultivating their own local content and locking up creative content wherever they can find it.
Last I looked, American specialty publishing houses had no problem signing up south african, australian, or european authors for world-wide electronic distribution; surely Zealanders can do the same, no?
The electronic road called Internet runs both ways; it brings the world to you but it also takes you out to the entire world.
Why not use it?
September 19th, 2009 at 11:51 am
This ties in perfectly with my earlier reply to the geo-restriction post. They’re trying to protect the local distribution chain. That said, I’d like to comment on a couple of things:
1. Language barriers works both ways. You may not be able to use it to block imported books, but you can certainly take advantage of it to market NZ authors overseas.
2. I’m not familiar with the specifics of how sales tax works in NZ, but at least here in Norway you pay the same sales tax as a consumer whether you buy something from a local store or import it. Whether that’s applied to downloaded digital content is then something you’ll have to take up with the NZ government. New legislation and/or trade agreements may be needed to compensate for such a difference. If no sales tax is applied for content downloaded from overseas, it seems unreasonable to enforce it for local suppliers of the same content.
September 19th, 2009 at 3:46 pm
Hmmm Would the same arguments work for the Hawaiian Frozen Lamb Leg Producers Association, cause I know they’d like to talk to the Kiwis about this kind of thing. Maybe NZ could give HI a few tips.
Curiously,
Jack Tingle
September 19th, 2009 at 5:39 pm
Hah. Well, Hawaii and food have some similar issues to the NZ situation here – a geographically isolated island and all whose inhabitants suffer from price hikes, transport monopolies, etc. With such predation from local companies imports from countries that are less protectionist than the USA can undercut them.
“We’re trying to grow a sustainable industry here in New Zealand and the last thing we need to see is the rapid arrival of large US sites taking the publishing profits from international bestsellers out of this small market through global rights deals. If this happens, we’ll be relegated to a tiny, weak cottage industry. Give us a break”
You have relegated yourselves to being tiny and weak – and realistically, population says you always will be in that sense.
Where are the NZ ebook shops open to the world with lots of kiwi authors? The international level talents signed from other countries? You have local talent – and this is the only product that people can’t get elsewere.
Exactly in most cases as they are in Australia. Completely non-existent. None of you have gotten off your arses to actually sell anything, in general – although there will be some isolated cases of course. Instead you are even sorrier cases of follower/wait and see/only do it when we are in trouble than your Northern Hemisphere counterparts.
Your ‘break’ comes at the expense of your citizens, where books that are twice as expensive as elsewhere means they are supporting your foreign competitors with a lot more money than they should be, if buying locally.
So you are basically arguing to take money out of the NZ economy that could be spent there in general, to support a largely non-value adding middleman repackager/reseller of books role.
September 19th, 2009 at 5:48 pm
Wasn’t the ban on parallel importing into NZ lifted in 1998? Are territorial restrictions on book publishing still legal in NZ? I don’t think they are.
I’ve never been convinced by the claim Martin Taylor makes; that the monopoly rent obtained through these international trade restrictions is an effective way to subsidise the production of local books. I concede that it would help local printers to achieve some economy of scale, but this is entirely irrelevant to ebooks.
If the aim is to subsidise the production of NZ literary culture (something I think is a worthy aim), then let it be done in above-board way by paying authors salaries, advances, bonuses, literary prizes, etc.
September 19th, 2009 at 5:53 pm
Well said, Elizabeth. Australian small bookshops and publishers have also been fighting last decade’s battle on importation restrictions recently. All of the arguments about importation restrictions being good for Australian book industry are predicated on printed books and make no sense for the ebook market. Small publishers like the Kiwi poster are shooting themselves in the foot. Eventually antipodean ebook authors will simply route around antipodean publishers and publish ebooks in the USA to avoid importation restrictions.
September 19th, 2009 at 9:19 pm
The ban on parallel imports of CDs was lifted in Australia several years ago, to the usual cries of doom and gloom for the local music industry; but as far as I know the revenues of music producers have not declined by one single cent as a result. The evidence to support import bans is just not there. When CDs (and books) are cheaper, people buy more of them — local as well as imported.
September 19th, 2009 at 9:28 pm
“If this happens, we’ll be relegated to a tiny, weak cottage industry.”
Martin Taylor, you should read (or reread) The Wealth of Nations by Smith.
Is it in the interest of the New Zealander to subsidize an independent publishing industry in a small English-speaking country?
What about the long term effect on literacy and local talent of more expensive books?
September 19th, 2009 at 9:40 pm
Sorry Martin, but I really think you are missing the point. As others have pointed out, it works both ways. I am a Canadian and live in Canada, but I went to New Zealand for a year in graduate school and read a few local authors. Now, I am back in Canada and I can’t read any of these people. Okay, so you are preventing your countrymen from buying Harry Potter or Dan Brown, good luck to you with that, if you can manage it. But where are the e-versions—for Kiwis or from anyone, really—of Fiona Kidman or Elizabeth Knox? Come to think of it, where are the PRINT versions for non-Kiwis? If you commit yourselves to getting in the game—for real—you may find that you gain more than you lose. Market your local authors effectively—both at the local level and otherwise—and you can nurture your industry in New Zealand AND abroad, and everyone wins. Whether a Kiwi can buy Dan Brown over the internet is not going to make one dollar of a difference in sales to Elizabeth Knox, trust me. The are just completely different things. What you need to be doing, instead of focusing on ebook or pbook or whatever, is focusing on marketing Elizabeth Knox (for example) to people who like that sort of thing—irrespective of where they might happen to live.
September 19th, 2009 at 9:45 pm
Further, when parallel import restrictions on books in Australia were made much less onerous (and we could get the American variety), the industry boomed – according to them, anyway.
Exact same complaining as per music industry at the time.
The major publishers are mostly interested in money and volume – as independent bookshops don’t get the same discount as the larger chain shops do, at least in Australia (or anywhere, in general). If supportive of local writing they perhaps wouldn’t do this. Y’know, if truly concerned about such things and not the overseas parent’s bottom line where they have one.
It is pretty staggering that no-one in either country has thought to take the opportunity to sell the authors only they publish to the world in easy to use formats – something they would have become famous for and be a point of difference to the bigger Northern Hemisphere oligopolistically desperate DRMers.
But no, apparently they’d rather wait and hope to sell rights on or whatever than engage in anything forward-thinking. Taking risks on crappy books apparently ok, taking risks on trying out evolutionary business models? The horror. Couldn’t do that.
Chance gone now most likely, at least with their current thinking, and relegation to even weaker cottage industry may be a foregone conclusion.
September 20th, 2009 at 5:48 am
It’s good to see some robust discussion. We all need to think hard about the pros and cons of the territorial issue. Most posters seem to be against territorial management here but there’s a lot of confused thinking around this issue.
1. A common source of confusion is that, by supporting territorial rights, I’m proposing to restrict publishers and authors and cripple their global potential. But it’s actually the publishers and authors who make the territorial decisions, including a single global edition if they want it. I’m only suggesting that we have mechanisms to respect these decisions once they’re made. There are many good reasons, even in the online world, why authors and publishers want different territories to have different arrangements. This is not just a case of, as @Elizabeth Burton puts it, “once again the principles of print publishing are being applied to electronic publishing without regard for the inherent differences in the two.”
2. Related to this, a surprising number of posters mistakenly assume that supporting territorial rights means “closing the borders” and confining New Zealand’s publishers and authors to our 4 million domestic market. In fact, this doesn’t follow at all. Territorial rights don’t stop global sales happening, in fact they help it (see below). Ebooks present a huge opportunity for NZ’s industry to overcome the distance barrier and sell our publications globally and we’re planning to participate fully in the global market.
3. Online companies, just like offline companies, benefit from some control over their distribution channels, including territorial. I’d love to sell New Zealand authors in Canada but, whether in ebook or p-book, one thing I know is that I’ll have a much better chance of establishing them if I have a Canadian promoting them (just as Canadian publishers will be more successful in NZ with a NZ promoter). That option won’t be open if there’s no way for the Canadians to capture value from their local sales efforts because Amazon.com and every other site in every other country sells the same ebook to Canadians. Surely it’s advantageous to give publishers and authors more sales options to open international markets.
In theory, of course, the internet lets me dispense with the locals and do it all myself from New Zealand, in every country. That works sometimes but most people in business know that local sales and promotion are generally essential for real success. We’ll all lose this option (not just NZ) without some form of territorial and channel management. Territorial and other forms of rights restrictions will lead to more diversity in ebook availability and promotion, not less. Removing those restrictions will develop a small number of very large global players and probably less diversity. Take your pick.
4. Some posters suggest the reason consumers outside the US have trouble buying ebooks is because Amazon, Fictionwise etc don’t have global rights. But territorial rights will actually make it more, not less likely, that consumers will get good quality, country-specific ebookstores selling both local and international titles. Global rights isn’t the only way to get good online ebooksellers. It might take slightly longer this way but it will provide more diversity and more opportunities to promote both local and international ebooks in each market. Without this, we’ll have a small number of enormous global sites. I’m for more diversity, channels and choice, not less.
5. Nor will territorial rights stop retailers expanding globally. Amazon can still choose to compete by creating multiple country sites rather than a single global site. Territorial rights will give it more of an incentive to do this. Frankly, New Zealand would be better off with an “Amazon.co.nz” that reflects our market and promotes our books actively alongside international hits. And Amazon.co.nz could pay NZ sales tax like any NZ competitor rather than having an unfair tax discount.
6. New Zealand is 34th in per capita GDP at US$27000. The US is sixth at US$49,000. India is 136th at US$2600. Digital media, with its near-zero marginal cost, should give me the option to sell an English language ebook to NZ at $5, the US at $10 and India at $1 but with no territorial management, I would never allow a $1 edition, no matter how beneficial it might be. Is a universal global price the best system for everyone – authors, publishers, consumers, countries?
September 20th, 2009 at 7:47 am
The points to consider are:
1- ebooks are not print books. ebooks done right are not even paperless print books. ebooks are entirely different creatures. As such it would be reasonable to negotiate such rights under separate regimes. Want/need to protect treeware editions? Go right ahead; it will only encourage reader migration to ebooks.
2- A universal ebook market (to a large extent) already exists thanks to technological solutions like IP spoofing, fake addresses and user accounts, and cross border micropayment systems, combined, already allow pretty much anybody to buy ebooks from the US or EU. Those in the know can and do skirt the rules. Over time, more and more people will adopt those techniques. It roughly parallels the ‘pirate’ music distribution channel in adoption; first the tech-savvy, then ’somebody-who-knows-somebody’, then ‘everybody is doing it’. Cf, Napster circa y2k.
3- a universal ebook retailer market implies, by definition, universal pricing. Assuming that such pricing will be dictated by the lower income territories is a big leap, sir. An unwarranted assumption, as nobody will be aiming a gun to your head to force any specific pricing. That said, if low ebook prices are conceptually offensive, one would assume competitive content priced at zero would be even more so. That is, lack of convenient, kegal editions will drivecat keast some potential customers to try alternate purchase methods or, worse, ‘experiment’ with ‘piracy’. ebook ‘piracy’ is not currently epidemic as music ‘piracy’ was in times past. It would be nice if rational legal sales channels kept ebook ‘piracy’ from ever becoming prevalent.
4- ebooks aren’t casual consumption products like top-40 music and its consumers do not necessarilly behave as the ‘pirate’ music hoarders do. Given a chance, you will find that ebook readers will happily pay a fair price and not go trolling for ‘free’ pirate editions or super bargains from other territories, as long as content is readily available at rrasonable prices. As an example, I would recommend the Baen.com Free Library that added, at *customer request*, a mechanism whereby readers of the free books could contribute money to the Library and where, in many cases, customers will buy a paid copy of a book also available for free in the Library. Baen also uses several other advanced ebook retailing/marketing techniques to better serve their authors through the use of bundles, omnibus editions, ARCs, etc to bring their works to the attention of readers that otherwise would not encounter them. A happy medium *can* be reached; there is no need to treat your customers as thieves or grifters out to exploit you or your authors.
5- Finally, regional market protectionism is predicated on a serious fallacy; that other territories will *not* retaliate. History has repeatedly shown that, not only does protectionism hurt your own consumers, it invites retaliation by other territories. And retaliation will target the most competitive exports of the country, magnifying the pain by intent. The assumption that other countries will allow closure of a region to imports while gladly embaracing unbalanced exports is a fallacy on any extended scale. Societies that seek advantage by protecting a low-competiveness economic activity end up paying for it in the competitiveness of the society as a whole.
Adam Smith’s “Wealth of Nations” may be a tad dated, but David S. Landes’ more recent “Wealth and Poverty of Nations” details the history of economic development right through the 20th century in a fairly-balanced manner without advocating any specific theory. It might be worth some study as it makes clear that, while protectionism might provide some limited short term benefits initially, the long term effects are rarely worth it.
The best way for a society/industry to be competitive in modern times is to actually compete on terms of equality. The true wealth of nations is in the intellect and drive of its people. Hothouse industries *never* leave the hothouse.
Electronic media, like the internet upon which it rides, will always find ways around protectionism, just as it finds ways around censorship.
Alternatives exist and the alternatives *will* be more profitable than trying to stem the tide.
September 20th, 2009 at 11:59 am
But won’t ‘country-specific’ bookstores just drive up prices—for everyone? If I have to pay you in New Zealand to proof the book, convert it into whatever format your store is using, upload it, create and edit the webpage which allows your customers at your store-front to edit it etc. and then pay Ficbot in Canada to do the same for her local store, and David Rothman in the USA to do the same for his local store etc. Would it not be cheaper (and thereby increase profits to authors, by reducing overhead and getting the book out there quickly) to have websites wit global reach where one person is doing all the work for everybody? Thereby freeing up your time in NZ with getting more author’s works available?
September 21st, 2009 at 4:10 pm
Would you prefer a single store for the world? Not me. You make the process of selling to multiple stores more complicated than it needs to be. For instance, you don’t have to create a new format and edit a new edition for every country, you can use the same one. And, while a bit of labour is involved in updating multiple websites, I don’t see a problem with having hundreds or thousands of online bookstores dealing with ebooks in their own markets. In fact, I welcome their involvement in selling our books to their local readers whom they know best. That’s certainly worth paying a bit for and far preferable to the efficiency of just one or two global giants. Isn’t this one of the messy outcomes of competition?
October 6th, 2009 at 11:49 pm
It’d be nice if I could actually purchase eBooks in the Australian market, then I might actually spend money on books instead of finding them after they’ve fall off the back of a digital truck…
Nobody that I can find in Australia has sold the last 6 books I’ve gone looking for: Dan Brown’s The Lost Symbol, Iain M Banks – Transition and Richard Morgans Takeshi Kovacs series.
I managed to find a way to get some money to Richard Morgan for the ebook editions, but not the others.
So, I guess my point is that I might have some sympathy for local publishers if I could actually purchase ebooks from them.