Scary new world's uncertain Borders

Richard Flanagan

February 19, 2011

Book customers are being told to spend double the amount of vouchers for beleagured bookstores.

THE failure of Borders and Angus & Robertson has little to do with online selling and much to do with corporate stupidity and greed.

REDgroup Retail, the owner, was a typical early noughties business, created by a private equity firm, overly indebted, seeking to make up the growing difference between its mounting debt burden and its more humble income by using its businesses to fleece customers and suppliers.

Thus in 2007 came the unedifying and frankly disgusting attempt by Angus & Robertson, bearer of the oldest and one of the proudest names in the history of the Australian book trade, to charge small Australian publishers for simply stocking their books, demanding up to $20,000 to make up for their supposed reduced profitability.

While REDgroup's chairman, Steven Cain is now telling the federal government the company's failure is in part because of the government's decision not to open up the book market to parallel importation and thus, supposedly, cheaper books, that didn't stop the company routinely charging above recommended retail prices for its books. If it was worried about retail pricing, it wasn't reflected in its own pricing structure.

A&R's strategy was, I was told some years ago by one of their senior executives, to go to war with the publishers and win. They looked to retailers like Woolworths as their model, with their crushing of the suppliers and producers as the key to making more money.

Ugly as all this was and hubristic as it has proved, there is no comfort for anyone in the failure of the two chains. Together they are believed to represent about 20 per cent of Australian book retailing. The independent bookstores account for about another 20 per cent. Combined, they were the segment of book retailing in which many of the books that matter most to an Australian identity and culture were sold. It was also here that the books we think important to a larger idea of our world and ourselves - novels, essays, poetry and histories - were sold.

Publishers needed that critical mass to push many books that otherwise might have been dubious commercially over the red line into a small profit. It meant a first novel, a history, a book of essays might just be able to sell 3000 copies. But with Borders and Angus & Robertson in voluntary administration, with the independents struggling and more and more closing, those days are perhaps gone. Many small publishers we have come to see as vital - Text, Black Inc, MUP to name a few - must be looking today at their future publishing schedules with very heavy hearts, wondering how on earth they can continue to make it all work.

Many large publishers will continue the process already begun of sacking staff and slashing their Australian lists, telling authors that despite their promise or their record that the market has vanished. To survive they will concentrate ever more on the books stocked by the discount department stores - Kmart, Big W and the like: celebrity titles, overseas mass-market hits, cookbooks. Here today and gone tomorrow books, ephemera, massively discounted by the department stores, sometimes below cost, as loss leaders that might drag the punter into the shop to make some other more profitable purchase.

It is of course a perfect storm - the ineptitude of a major player in REDgroup, the global financial crisis that slowed retail, a society increasingly besotted by price rather than value, the refusal of the government to either get rid of the GST on books or charge it on online purchases, the rise of e-books and the growth of online selling at the moment the Australian dollar reached record highs.

But as well as the high Aussie, there are other reasons why books are now cheaper overseas. One is that they are so heavily discounted by publishers to players such as Amazon in Britain and the US that many writers there now, in effect, receive only a 3 to 4 per cent royalty on their books, as opposed to 10 per cent in Australia. And because our books may well have to end up at a comparable price to that available online, it may be that a similar royalty ends up applying here.

In Australia, where 20,000 sales is a bestseller, the maths on 4 per cent of an average UK-US price of $14 is sobering - $11,200 for two or three years' work. That is, if you get published. The maths is little better for the indie stores and small publishers whose fate may be as bleak as that of many writers. It becomes a volume game for big publishers and a handful of big retailers.

Some, increasingly more, books that should be published won't be. Some writers will give up. Some that need nurturing will never get a chance. Many good books will never be. In the great halls of Big W and Target you will still be able to buy the latest self-help book or cookbook, or the memoir of an English TV celebrity.

Those who think it's about infinite choice will drag the cursor a few centimetres onto the shopping cart and click on the new Franzen or McEwan, and think that's all there is and that's how it is, and we will once more be lulled into thinking it all happens anywhere else but here.

Some years ago I spent a few weeks in the great suburban swirl that is the Golden Corridor between Brisbane and the Gold Coast, where bush vanishes and suburbs seem to rise in the space of a weekend. As I drove down a new freeway, I saw a koala trying to cross from one new suburb to another construction zone, little knowing that there was no bush left anywhere for it to live.

The position of Australian writers, publishers and booksellers is not dissimilar. Disoriented, confused, hoping to get across the new super-highway before the next B-double wipes them out. I hope we make it, but to where and what, no one can say.