Books in Brazil are expensive. They are expensive because the average print runs are small. Print runs are small because there is little demand. There is little demand because the habit of reading is very little spread in Brazil. Even less widespread is the habit of buying books in bookstores. Why? Why books are expensive.
As publishers are businesses, they need to make a profit to operate. That is, revenue must be greater than costs. From the publisher’s point of view, it would be great to print larger print runs, because economies of scale would allow books to be sold at a lower price. But there is no point in printing too many copies, because they will be stuck in the warehouse, which also has a cost.
As with any business in a market economy, the supply curve needs to meet the demand curve. There is an “ideal” price, above and below which revenue decreases. If the publisher increases this price, demand decreases, and vice versa. But it may be interesting to increase the price when demand is higher than expected, or give discounts when it is lower.
Furthermore, when bookstores need to make cash or make room in stock, they offer discounts. With the discount, the book becomes accessible to more buyers. Sales increase. Even if the unit price is lower, the total revenue of bookstores and publishers can grow, because it is better to sell 500 books at R$50 than 100 books at R$100.
All of this is obvious, any Economics freshman understands. In fact, you don’t even need to be a freshman in Economics: you just need to know the basic operations of mathematics, have half a dozen neurons and a little common sense.
Anyone understands – except, apparently, the legislator. Because I read that Bill 49/2015, now called the Cortez Law (in honor of the bookseller José Xavier Cortez, who passed away in 2021), is advancing in the Senate. Authored by a PT senator, PL 49 was deservedly archived and remained so in previous legislatures, until it was resurrected by another PT senator.
Well, what does PL 49 propose? Institute a “national book price fixing policy”, that is, establish rules for marketing and dissemination, defining infractions and penalties.
The PL’s menu says: “Every book will receive a single price from the publisher for a period of 1 year, from its launch or import. The non-equal treatment of intermediary traders and the offering of books at prices lower than those established constitute infractions.”
In other words, giving discounts is prohibited. What was already bad will get worse. “Ah, but in France there is a similar law…” My friend, in France people read, and there are thousands of small, centuries-old bookstores that are part of the country’s cultural heritage. We are in Brazil, there is no way to compare.
Furthermore, these comparisons with other countries are useless, because there will always be examples to confirm any theory: suffice it to say that, in the United Kingdom, a similar law, now repealed, caused the price of books to rise by 80%. Why wouldn’t it be like this in Brazil?
In practice, this involves the imposition of price adjustments by the State. Remember the failed economic plans of the Sarney Government
Bill 49/2015 simply prohibits chains like Amazon – which already accounts for around 50% of book sales in the country – from selling new releases at a discount.
But not only that. The PL also prevents publishers from changing the price of the book according to variations in demand. Now, this happens all the time: the sales of a book are surprising, causing new and larger print runs to be printed in the following months, allowing the price to decrease. Now it will no longer be possible to do this: the cover price will have to be the same, for 12 months, with a maximum 10% discount.
In fact, as I understand it, the price of the digital book will have to be the same as the physical book – which would be another stupid measure, which reveals total ignorance of the meaning of digitalization and the rudiments of the market.
This is, in practice, good old pricing, price control by the State. Remember the failed economic plans of the José Sarney Government: the difference is that, at the time, the pricing was to prevent products from being sold at a lower price. higher to the table; now it’s the opposite: the table is for prevent prices from falling. It’s surreal and scary.
The PL starts from a false premise. The legislator seems to imagine that the market is something static, as if consumer behavior did not vary, was not dynamic.
The legislator seems to think like this: if today a certain book sells 10 thousand copies, if we prohibit giving discounts, everyone will win, because sales will remain the same, but the revenues of bookstores and publishers will increase. Right? Wrong.
Furthermore, without having the advantage of a discount on Amazon, the reader will look for physical bookstores. Wrong once again.
Like the Minister of Finance, who was recently reprimanded for liking to read, I am an avid book buyer. But the legislator is completely mistaken. Because many people – myself included – are only willing to buy certain books when they are at a discount.
Prohibiting discounts will not make me leave the house to buy the same number of books that I buy today, at a higher price, in physical stores: prohibiting discounts will only make me buy fewer books.
But let’s go to the first article of the Bill:
Art. 1st. – This law establishes the national policy for setting the price of Books in all their formats, with the following objectives and guidelines:
I – Promote books as cultural assets;
II – Ensure that your offer is accessible to the general public by encouraging reading, plurality of points of sale and greater availability of goods throughout the national territory;
III – Guarantee equal conditions for bookselling entrepreneurs;
IV – Establish the fixing of the book’s sales price to the final consumer, aiming to ensure a wide supply of copies and points of sale, setting a single price for its sale;
V – Allow the exercise of free competition and prevent abuse of economic power, market domination, arbitrary increase in profits and consumer protection.
I ask: how will preventing readers from having access to cheaper books encourage reading? Believing that the bookseller’s problem is the discounts offered by Amazon is just an illusion. It is also an illusion to think that setting a single price will ensure “a wide supply of copies and points of sale”.
Price control policies are not just harmless: they may be pleasant in the short term, but they soon become harmful for everyone
It is not how it works.
In practice, with the tabulation, even fewer books will be sold than today. Sales on Amazon will plummet. With lower sales, print runs will also have to be reduced. With smaller print runs, prices will increase. It will be more expensive for small bookstores to put books on the shelves. Everyone loses.
Another predictable risk: to protect itself from a possible increase in inflation, the publisher will set cover prices higher than it would if the law did not exist. Even so, in the face of an economic crisis, the prohibition of price corrections over 12 months could simply make the business unviable, leading to the closure of publishers and bookstores.
Not to mention the amazing control mechanisms that will need to be created: the PL foresees a complicated inspection bureaucracy, in addition to obligations and fines for agents in the publishing market who violate the rules.
Below are some more excerpts from the PL. Symptomatically, the space for infractions and fines (Article 13) is greater than that dedicated to “book dissemination” actions (Article 11):
Art. 3°. – Every book, whether national or imported, will receive a single price from the publisher for a specific period of 1 (one) year, from its launch or import.
Art. 4°. – The natural or legal person who composes, edits, reissues or imports books intended for sale must set for them, electronically and publicly, the sales price to the final consumer, which will be referred to as the cover price (… )
§ 3 The price of each work must appear on a public electronic list, issued by publishers and/or importers, and must serve as a reference for booksellers and resellers throughout the national territory.
§ 4 Under penalty of fine, the publisher or importer must maintain the necessary records and controls to prove the provisions of the previous paragraph.
§ 5 Private or autonomous edition will require the author to make data, information and price of the work available electronically to the public to the final consumer, in accordance with this law.
§ 6. The publisher and the importer must assign, through their sales or distribution network, the catalog or price list of the books in their editorial fund.
§ 7. It will be the publisher’s obligation to disclose prices to the public for its entire editorial catalog available in its unit or network.
§ 8. Booksellers who sell printed or electronic books via the World Wide Web will have the same obligation. (…)
Art.13 (…)
§ 2°. – The publisher and the intermediary trader will be jointly liable for the infraction with a penalty equivalent to 100 times the fixed price of the book per copy, multiplied by the number of copies of the corresponding edition.
§ 3°. – In the event of a repeat offense within a period of less than 12 months, the publisher and the intermediary trader will be jointly and severally liable for the infraction with a penalty equivalent to 150 times the fixed price of the book or books, multiplied by the number of copies of the corresponding edition;
§ 4°. – In the event of a new recurrence within a period of less than 12 months, counting from the first infraction, the publisher and the intermediary trader will be jointly and severally liable for infraction 6 with a penalty equivalent to 200 times the fixed price of the book or books, multiplied by the number of copies of the corresponding edition;
§ 5°. – In the event of a fourth repeat offense within a period of less than 12 months, counting from the first infraction, the publisher and the intermediary dealer will be jointly and severally liable for the infraction with a penalty equivalent to 250 times the fixed price of the book, multiplied by the number of copies of the corresponding edition ;
§ 6°. – New repeat offenses, starting from the fifth, in a period of less than 12 months, will suffer the imposition of a fine with the same value as that established in section IV above, increasing 20% (twenty percent) in each new occurrence.
In short, it is yet another Bill whose practical effects will be exactly the opposite of those predicted. This in a market that is already going from bad to worse.
According to this research, in one year sales fell 15.7%. In September 2023, Rede Saraiva closed a hundred stores, laying off thousands of employees; and the traditional Livraria Cultura is in judicial recovery and has already received an eviction order.
History demonstrates that price control policies are not only innocuous: they may be pleasant in the short term, but they soon become harmful for businesspeople and consumers.
Occasionally, it may even happen that a small bookseller in a specific municipality benefits if PL 49 becomes law. But ultimately, everyone will lose.
It’s amazing that, at this point in the championship, there are still bills like this, it’s amazing that bills like this are still moving forward. Brazil gets tired.
