Trying to Woo Israelis Away From Netflix, Book Sellers Use Steep Discounts

Slumping sales and the end of the controversial Book Law have led to a sudden price war between two top retailers during Hebrew Book Week

A shot of this year's annual Book Week events.
Moti Milrod

Anyone who has stepped into an outlet of one of Israel’s two big bookstore chains these days can’t help but notice a small but significant difference: A year ago, book sellers were touting two books for 99 shekels ($27.60); now they’re offering three for 99 shekels.

That extra book is all about a bitter price war the Steimatzky and Tzomet Hasfarim chains have been waging during Hebrew Book Week, whose special runs through the end of June.

Tzmot Hasfarim was the first to undertake the aggressive discount, confounding expectations in the publishing industry that the retailer would offer the same kind of deals they did in 2017. Steimatzky, which was expected to offer slightly less attractive deals had no choice but to match its rival. Israeli publishers are also going whole hog in price cutting this year.

What enabled this to happen was the government’s decision to rescind the controversial Book Law.

The legislation, which had been approved when Limor Livnat was culture and sports minister and cancelled when Miri Regev took over the portfolio, barred discounting books in the first 18 months after publication, except for a 20% discount during Hebrew Book Week. In addition, the law set minimum royalties paid to Israeli authors.

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Three weeks ago, Regev rescinded the last two parts of the law that banned retailers from getting paid to recommend a certain title or for giving publishers better shelf space.

But the deeper reason for the deep discount is it’s the only way to lure Israelis way from their screens, said Avi Schumer, the CEO of Tzomet Tsfarim.

“The biggest problem in the publishing industry today is the competition from Netflix and the like,” he told TheMarker.

“Adults finish their day by watching the latest Netflix series, not by reading a book, as they prefer to sit their children in front of a TV for a few hours because ‘it’s the best baby sitter there is.’ If children aren’t in front of a TV screen they're looking at a smartphone screen – three-and-half hours a day they are attached to a phone, according to the latest research I saw,” Schumer said.

Schumer said book sales are no longer growing in Israel, which in effect means they are falling since the population increases at 2% annually. Children’s book sales are holding steady but sales of books for adults are declining.

This year, Israelis will buy about 12 million books, a third fewer than in the record year of 2009, even though Israel’s population has increased in the intervening years,

“In 2015 and 2016, sales were especially poor because of the Book Law, which banned discounts and caused prices to rise,” he said. “Since the law was rescinded, sales have risen but only marginally and sales are much lower than in 2009. Today a best-seller is 10,000 to 30,000 copies, compared to 100,000 in the old says.”

This year, sales at Tzomet Hasfarim are running at about the same level as in 2017. Overall turnover is higher, but that’s because of the non-book products it sells, like gifts, toys and writing implements. Today only 80% of Tzomet Hasfarim’s sales are books, compared to 98% four years ago, Schumer said.

Under their contracts with the publishers, Steimatzky and Tzomet Hasfarim pay them 24 shekels for each adult title they sell at a discount and 18 shekels for each children’s book. That means the three-books-for-99-shekels deal yields the publisher 72 shekels and the retailer 27.

The power of television in today’s book market is demonstrated by the fact that the book “When Heroes Fly” by the late Amir Gutfreund reached the best-seller list because it was made into a TV series by broadcaster Keshet. The late Esti Weinstein’s “Doing His Will” is also a top seller, because her daughter has appeared on the reality show “Big Brother.”

Steimatzky declined to discuss its rival’s strategy and how it responded. “Of course, now that the discounting is more aggressive, it’s hurting our profits, but Book Week sales are similar to last year’s,” said Eyal Greenberg, its CEO.

If readers are happy about the return of book bargains, but they may be missing a chance to buy the titles they want at super-low prices.

Rani Graff of Graff Publishing said when he learned of the last-minute price war between the two retailers he delayed releasing two titles scheduled for Book Week to the shops and is selling them exclusively at his stand at the Rabin Square book fair in Tel Aviv.

“They’ll arrive at the book stores in another month when prices have become saner,” he said. “I sell mainly children’s book and at Rabin Square I get a lot more money for each book I sell than the 18 shekels I’m supposed to get from the book stores.”