Friday 27 February 2015

Amazon, Kindle and book pricing in France

IP Finance is pleased to welcome the following guest post from Catherine Pocock (Research Assistant, Queen Mary University of London and Assistant Editor, Queen Mary Journal of Intellectual Property) on the repercussions in France of the launch last year of Kindle Unlimited, particularly with regard to its Loi sur le prix unique -- 'law of one price'):
Amazon’s ‘Kindle Unlimited’ found incompatible with French Law 
Following the launch of Amazon’s ‘Kindle Unlimited’ service in the summer of 2014, Fleur Pellerin, the French Minister for Culture commissioned a Report on the compatibility of subscription services which allow unlimited access to books with the Loi sur le prix unique.  The mandate for the Report was to determine the status of subscription services by answering two key questions:
  • Does the 2011 Law of one price apply to subscription services?
  • If yes, are subscriptions offering unlimited access to books compatible with the Law?
The expert Report by Laurence Engel was handed to the Minister on 9 February 2015 and published here on 19 February 2015. It found that such services were indeed within the remit of the 2011 Law, and that they were incompatible with its requirements.
In her press release (here) and in an exclusive (and extensive) interview to Le Figaro (here), Ms Pellerin called for Amazon and similar service providers to ensure the compliance of their services with the Law.

The Law; What Law? 
Law n. 81-766 of 10 August 1981 concerning the price of books was extended in 2011 by Law n. 2011-590 of 26 May 2011 concerning the price of digital books and its implementing Decree n. 2011-1499 of 10 November 2011 (see here for more details).
This Law was designed to enhance market diversity and growth by maintaining a stable economic environment. Article 2 of the 2011 Law gives the publisher control over the price of digital books within his repertoire. 
The appearance of subscription services allowing unlimited access to books has raised concerns over the publisher’s enshrined ability to determine the price of books, and its consequences over the remuneration of authors and valuation of books. 
Subscription Services 
In her Report to the Minister, Ms Engel heard evidence from over 30 organizations (all listed in Annexe 2 of the Report) and compared subscription services available in France to those available internationally. Annexe 3 sets out an interesting overview of these subscriptions worldwide, including those in the Germany, the UK and the USA.
As mentioned above, the Report concludes that service providers such as Amazon, Youboox, Izneo, Youscribe are not compliant with the 2011 Law. Further, the Report points out that subscriptions neither provide for digital market growth, nor do they fight piracy as they do not enhance cultural diversity, and completely ignore the question of fair and equitable remuneration of authors. 
Having said that, the Report notes that in principle streaming and subscriptions services are not incompatible with the Law. Indeed it highlights three types of subscription which would be legal provided the publisher can determine the price:
  • A collection from a single publisher’s repertoire: this would be a subscription where a single publisher offers a subscription for works from his own repertoire, and where he would determine the price of the subscription and consequently the price of books; e.g.: subscription by genre from a single repertoire.
  •  A credit system: a monthly subscription where the credit would entitle the user to a certain number of books. The publisher would be in control of quantifying the credit to book ratio and consequently the price of books.
  •  The bundle system where the user would select one of a number of bundles. The publisher would determine the grouping of books for each bundle (e.g.: by theme) and again remain in control of the price.
Next Steps 
Ms Engel, now Mediator, will set up a mediation group within the next month where government experts will consult with the service providers to assist them in the remodelling of their services in view of achieving legal compliance. Following this mediation, service providers (including Amazon) will have a maximum of three months to comply with their legal obligations (see here). 
The Bigger Picture 
In its conclusions, the Report praises the strong market regulation which prevails in the French publishing industry and is intended to preserve – not stifle – innovation. Indeed France is so far the only European country to have taken any formal steps with regards to such subscriptions. Significantly, Le Monde sets such statements in the European context where Brussels has already issued warnings to France regarding its overly protective market rules (see here).
So as well as asking WWAD (What Will Amazon Do), I wonder: WWBD (What Will Brussels Do)?

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