Binding Agreements

“In Germany the cultural definition of the ‘book’ as a major source of intellectual, scientific, economic, and aesthetic self-improvement has carried the day over the capitalist notion that a book is a commodity and therefore deserving of no special considerations. The book as such is sacred,” writes Michael Naumann, editor of the German magazine _Cicero_ and former CEO of the American publisher Henry Holt.

In the late 19th century, German publishers and booksellers created a price cartel, a voluntary arrangement whose terms “resembled a prenuptial agreement between both sides, based on trust, notarized by a lawyer’s office, and armed with expensive sanctions.” At the heart of this compact, enshrined in law in 2002 and since revised to cover Internet sales, Naumann argues, is the Germans’ reverence for the book.

The shoestring-budget political or literary publisher benefits, as do houses churning out romances and thrillers and those that stay afloat by mixing “commercial tastes with classical literary ambitions.” Readers can choose from a variety of works, including translations. Because Germany’s 2,000 publishers issue a total of 90,000 titles annually—four times as many per capita as in the United States—competition is ensured; in Europe, only Iceland and Finland have lower average book prices. (France, Greece, Italy, the Netherlands, Austria, Portugal, and Spain also have fixed-price agreements for books.)

Whereas U.S. giants such as Amazon and Walmart routinely hawk bestsellers at steep discounts in order to attract customers, bookstores in Germany count on profits from popular titles, using the revenue to keep worthy but low-selling works in stock. The stores also receive government help in the form of a tax advantage that allows them to write off up to 90 percent of the value of unsold books. More than 3,500 bookstores exist in Germany today; Berlin alone boasts 300. German booksellers, who must undergo an apprenticeship of up to three years and are trained in cultural history and economics, enjoy “social prestige.”

Germany’s fixed-price law is under attack by European Union antitrust regulators, but for the moment, the EU has bigger financial headaches than the German publishing industry. The more immediate threat to booksellers comes from the onslaught of direct-from-publisher Internet sales and online bookstores. Traditional bookstores have seen their share of annual sales decline; it currently stands at 50 percent. Germany’s rising Pirate Party, a new political group campaigning against strict intellectual property rights, has put fixed prices—indeed, any prices on communication materials, even books and music—in its sights. Finally, books themselves, those romantic objects made of paper pages inscribed with ink and stitched together with thread, may soon be replaced by their digital doppelgängers: Kindles, iPads, and other e-readers.