Israel’s New Book Law Boosts Readers, Authors and Businesses Alike

Don’t believe others’ fuzzy math: Under the new law, books are sold for their content, not based on an incentive to the seller.

Tomer Appelbaum

Nehemia Shtrasler claims that three MKs who are not running for reelection but helped pass the Law for the Protection of Literature and Authors have caused “enormous destruction.” It’s sad to find that an economist is forgetting his math. I don’t know if his argument that new-book sales have dropped 35 percent since the law went into effect a year ago is right, but let’s assume it is for some publishers.

Before the law was passed, the average retail price for a book was 35 shekels ($9), while today it’s double — between 64 and 79 shekels. Even before we do the math, it’s obvious that publishers whose volumes have dropped 35 percent but whose prices have climbed more than 100 percent are better off.

And the 35-percent volume declines reflect books that were basically given away in promotions: three or four books for 100 shekels. With the new law, books once offered in promotions aren’t in stores; their absence has freed up space because before, books on sale took up every possible spot. A greater selection is just one benefit of the new law.

But let’s return to the math. Let’s assume that before the new law a best-selling author sold 30,000 books at four for 100 shekels. Revenues to the publisher would be about 15 shekels per copy for a total of 450,000 shekels. The new law bars books from being sold below the cover price for 18 months, except for special periods.

And let’s assume that with the new law the cover price is 68 shekels and the book is sold to a chain at a 55-percent markdown. The publisher reaps 30.60 shekels per copy sold. If volumes drop 35 percent under the new law, 19,500 copies are sold. At 30.60 shekels per copy, the publisher takes in 596,700 shekels — and who would believe it? — 32.6 percent higher than before the new law.

And what about the royalties our author now earns? Previously he would get one shekel per special-offer book, so 30,000 books would bring in 30,000 shekels. But the new law guarantees him 8 percent of the cover price on the first 6,000 sold and 10 percent on every book thereafter. So on 19,500 books he gets 32,640 shekels for the first 6,000 books (5.44 shekels times 6,000) and 91,800 shekels (6.80 shekels times 13,500) on the rest. That’s 124,440 shekels compared with 30,000 shekels before the law.

Before the law, after the author’s royalties, the publisher is left with 420,000 shekels (450,000 minus royalties of 30,000). With the law, the publisher gets 472,269 shekels (596,700 minus 124,400). In other words, the publisher’s revenues rise nearly 10 percent.

And what about the bookstore chains? Before the law, chain retailers would get 10 shekels per copy at four for 100 shekels. On the 30,000 copies sold in our example, the retailer reaps 300,000 shekels. With the law, the retailer gets 37.40 shekels per copy (at a cover price of 68 shekels and a publisher’s discount of 55 percent off the cover price).

Assuming that now 19,500 books are sold, the retailer gets 729,300 shekels, so the bookstore chain’s revenues climb 62 percent despite the lower volumes without the promotion. And if the new cover price tops 68 shekels, revenues and royalties are even higher.

From this we see that the new law benefits everyone in the book business. A provision should be added to the law, however, limiting the cover-price markdown that retailers receive from publishers to 45 or 50 percent. This way, retailers won’t make so much more than publishers; that would be unreasonable.

Where did Shtrasler invent the argument that publishers aren’t willing to publish new Israeli authors? New books by original authors are being published all the time by many publishing houses.

Shtrasler also contends that children’s books aren’t being sold. As far as I know, in recent years, children’s books have been selling better than books for adults. With the new law, instead of publishing any manuscript pounded out on a computer, publishers should return to the approach of the distant past: They should take pains with their selection so the books don’t flop.

Books will always be sold at various prices. And now, to beat the competition, content, design and interest in a book are what spark the secret of success. Before the new law, during the big special offers, many publishers produced whatever was available — that too was an anticultural act. Now that consumers are paying, they must receive a proper return for their money. That’s the basic rule of good publishing.

The book law doesn’t bar incentives for the sale of books in a store as a whole. And some chains actually give incentives to their salespeople on the sale of new books, because, small wonder, they know their math. They’ve discovered that new books are more profitable.

The new law bars incentives for specific books. Books have to be sold for their content, not based on an incentive to the seller. That’s another achievement of the new law.

In his column, Shtrasler didn’t note that he has a book published by Kinneret Zmora Bitan; not just good math but also fair disclosure is desirable. After all, if it weren’t for the law, who knows? Maybe Kinneret would be giving sellers an incentive of a few shekels for selling Shtrasler’s book instead of others. But then his royalties would decline even further.

The writer is the chairwoman of the Book Publishers Association of Israel and the publisher of Schocken Publishing House.