Bill would protect Israeli authors' royalties

JERUSALEM – In the land of the People of the Book, the discounted book may soon be a thing of the past.

Israeli authors have launched a battle to stop the country's two leading bookstore chains from discounting their works, claiming the price slashing has cut into their royalties. With support from Prime Minister Benjamin Netanyahu, they persuaded an influential committee of government ministers to back their call for tough limits on discounts. The parliament is expected to approve a bill enshrining the limits.

A similar debate has played out around the world, as publishers, authors and book retailers all struggle to capture their piece of a hypercompetitive market. Several countries, including France, Germany and Mexico, have all passed laws that bar booksellers from cutting prices in a bid to protect their local publishing industries.

The issue has touched a sensitive nerve in Israel.

Jews are known as the "People of the Book" because their identity is rooted in the Bible. But literary books are also a big part of Israeli culture.

Last year, the country produced 6,302 new Israeli titles, according to the National Library of Israel. For a country of fewer than 8 million people, that is a strong number, roughly on par with the U.S., Germany and Britain in per capita terms, according to data compiled by the U.N. cultural agency UNESCO. Some of its authors enjoy worldwide reputations, with one Nobel literature laureate, S.Y. Agnon, to its credit and contemporary novelist Amos Oz a regular contender in recent years.

Price-slashing is a common feature of the competition between Israel's two largest booksellers, Steimatzky and Tzomet Sfarim.

The deep discounts — as low as $6 a book as opposed to catalogue prices ranging $15 or $20 — have been welcomed by consumers and benefited younger, unknown authors.

But the low prices are anathema to the established authors, publishers, editors and others in the book-making food chain who find themselves sharing a shrunken purse, an especially difficult situation given that the domestic market is relatively small and the market for Israeli literature in the original Hebrew is thereby limited.

Pricing is a contentious issue in the book business worldwide at a time of major changes in the industry, with big competition from e-books. Amazon's deep discounting of top-selling e-books in the U.S. led publishers to set the prices themselves instead of leaving that to booksellers, a move that prompted a government lawsuit accusing publishers of price-fixing.

E-books have also been a main driver in the decline of brick-and-mortar bookstores. Bookstores have been an essential part of the publishing ecosystem, where people often stumble upon new books as they browse and chat with other readers, and their precarious state is of concern to publishers, booksellers and writers, many of whom fear a future market dominated by e-books.

In Israel, the move to e-books hasn't affected the local market, said Amnon Ben-Shmuel, managing director of the Book Association of Israel. "All we care about is that people read more books. We don't care if they are e-books or traditional," he said.

Instead, he said, the issue is the concentration of the market. Steimatzky and Tzomet Sfarim capture 80 percent of all book sales here, according to government data. Critics of the discounts accuse these booksellers of destroying the Israeli publishing industry by putting their profits above all considerations, a charge the booksellers deny.

"The competition between the two main booksellers is the problem," Ben-Shmuel said. "Authors are sick of working for free. That is why the industry is facing difficulties here."

The uproar has taken center stage as Israel marks its annual celebration of reading, the Hebrew Book Week, when book fairs are held across the country. Earlier this month, 10 leading Israeli authors, including Oz and David Grossman, said they did not want their books sold at a discount at the fair, saying, "We can no longer participate in the humiliation of our works in particular, and Hebrew literature in general."

The bill, which is expected to be approved in parliament in coming weeks, would bar retailers from slashing the marked price on new books for the first 18 months after they are released. Royalties would be set at a minimum of 8 percent of the book's marked price for the first 6,000 sold and at least 10 percent for all books sold after that number.

The bill, according to a statement put out by the prime minister's office, "is designed to protect literature and authors in Israel."

"As the People of the Book, we are committed to maintaining the income of the authors who create our cultural treasures," Netanyahu said.

In a statement, Steimatzky's chief executive, Iris Barel, welcomed the new legislation and said her company would comply with whatever is decided.

"The Steimatzky chain has worked incessantly in the last two years to promote a law that promises proper compensation for Israeli authors and a variety of original Hebrew books to the Israeli public," she said. The company declined further comment.

David Gilo, director of the Israel Antitrust Authority, had opposed the bill, arguing that the government shouldn't intervene in a competitive market and warning that prices might go up to the point that customers won't buy.

But Culture Minister Limor Livnat predicted free market pressures would compel publishers to keep books at "reasonable" rates.