France Stares Down Amazon Over Bookshops
(Quartz)
Ten years ago, it seemed as if the day of the paper book was coming to an end. The popularity of e-readers seemed to some a harbinger of a digital reading future, one in which the book as we knew it would become superfluous. So far, this has failed to materialize, and in the years since then there has been an increasing realization that books have intrinsic value that cannot be replicated electronically.
Amazon produces the most popular e-reader on the market, the Kindle. More important to the company, however, was the ability to utilize the power of the internet to undercut brick-and-mortar bookstores by selling real books. This has been an incredibly successful strategy. Books on Amazon are often marked down, the pot sweetened by free shipping for those who subscribe to their Prime membership plan.
France, however, has begun fighting back. Even before the digital age, the French government mandated in 1981 that books could not be discounted more than five percent. In recent years, their protectionism over the book industry has brought the country into conflict with Amazon and other large online book sellers. Online retailers sell about twenty percent of all books in France, and it has been argued that the market share of Amazon and other multinationals increased three percent from 2016-19. In 2014, France attempted to prevent the free delivery of books by large retailers, passing a law that banned shipping books for free. Online retailers found the ban simple enough to circumvent, instead shipping books for the token price of €.01.
The battle ratcheted up a notch in October, when the French National Assembly passed a bill to set a minimum price on book shipping costs. The price floor has yet to go into effect, as the French government must first decide where they want to set their price floor. Not only does the bill offer a helping hand to France’s 3,300 independent bookstores, who typically charge about €6 to ship a book, the law offers an example of governments’ ability to use the law to protect essential parts of our culture.
There is a certain elegance to the market and the desperate drive for greater efficiency and increased productivity. But one question is too often neglected: What are the costs of these gains? The rise of the internet has made plain the tradeoffs that come with the increase of digital business. Many local newspapers have been driven out of business or into financial hardship by the loss of crucial advertising revenue to online marketplaces. Instagram has added an in-app marketplace, while simultaneously fears have increased on the effect of social media on teenage mental health.
And, of course, internet retailers have pushed many independent bookstores into dire straits, who must compete with competitive titans to stay afloat. The local bookstore is hindered by its size; unlike online retailers, it cannot superscale itself and allow the powers of an increasing economy of scale to pull it along. The economic imperative is clear. If it cannot compete, then it should not exist. That logic, however, is not rooted in the reality of our lives. It exists in the dreams of Chicago or Vienna School economists, but it does not take into account the critical role that businesses such as bookstores play in the life of a community.
While bookstores exist to make money, they also serve another function: bringing people together. They offer the chance to hit pause for a few moments and browse the stacks, where you might just bump into someone you know. Many bookstores host poetry readings or similar events, providing a hub for artists and writers in a community to come together. Furthermore, independent bookstores inspire a sense of loyalty among their customers. While I have no emotional connection to my local Safeway, I would be upset if either of Davis’ downtown bookstores, the Avid Reader or Logos Books, went out of business.
The magic of a bookstore is the exact opposite of the experience of buying books online. When buying a book online, you have to have already chosen a book. There is no opportunity to poke around, as at a bookstore or library, in the process having your eye caught by a colorful cover and purchasing a book you had never heard of before. Bookstores offer the chance of discovery, while online retailers only allow for confirmation of previous knowledge or interests.
Whether intentionally or not, France seems to have grasped this. Although they do not specifically name the corporations who the law is intended to combat, it does not take Sherlock Holmes to understand who the targets are. Amazon, of course, is upset about the law, saying that it will make it harder for rural populations to purchase books and will lessen a consumer’s bang for their buck.
But what they are really frustrated by is their impending loss of market share. Over twenty percent of books in France were purchased online in 2019, a figure that seems likely to decrease as a consequence of the new legislation. Furthermore, Amazon is concerned that the French law will provide a precedent for other countries to follow suit and take similar action against the competitive advantages that Amazon has. Amazon’s original business model was undercutting brick-and-mortar book sellers through discounted books, cheap shipping, and digital heft. If other nations begin to take action, Amazon would no longer be able to use their book section as a loss leader, preventing them from undercutting the market and setting book sellers back onto a relatively equal footing. Moving forward in France, the book divisions of large online retailers will have to adapt. Once the price advantage is removed from the equation, what advantage does purchasing a book online have over purchasing one in person?
Of course, many people will continue to buy their books online. There is no putting that aspect of modern commerce back into its Pandora’s Box, and the existence of online purchasing is not in and of itself a bad thing. It becomes harmful, however, when bookstores, or local businesses in general, are driven out of business as a result. The internet is a powerful tool that can drive communities apart, and it is essential that we protect the spaces and events that bring us together and provide an anchor for us in these turbulent times.