Pricing system offers scant protection as Amazon Japan hacks away at bookstores’ benefits

by Philip Brasor and Masako Tsubuku

Special To The Japan Times

Until the early 1990s, when the asset-inflated bubble era ended, Japanese consumer prices were commonly thought to be substantially higher than those in other developed countries. Thanks to more than two decades of deflation, that’s no longer the case, but one sector has remained dear: publishing.

Books, newspapers and magazines are still relatively expensive thanks to the government-imposed resale price maintenance system, generally referred to in its abbreviated form, saihan seido. According to this system, all prices for publications (including CDs) are fixed for as long as they exist in the marketplace. Retailers cannot charge less for an item under any circumstances, no matter how long it remains in stock — no cutouts, no remainders, no bargain sales.

The ostensible purpose of saihan seido is to eliminate competition that could drive out smaller publishers, a situation that would threaten the public’s right to information. Regardless of the validity of this theory, it was actually the internet’s impact on news distribution, not to mention the growth of media conglomerates, that destroyed smaller publishers and regional newspapers in the U.S., where there is no price maintenance.

For sure, saihan seido has guaranteed the survival of a variety of publishing-related entities in Japan, even as sales of books and periodicals decrease. Newspaper delivery agents’ entire existence hangs on printed matter, and without guaranteed prices they would go out of business overnight. As a result, circulation would drop and periodicals could no longer charge high advertising rates.

But what has been the trade-off? Freelance journalist Tetsuo Jinbo is the most vocal critic of saihan seido. He says that along with the press club system and the cross-platform nature of Japan’s media industry, saihan seido prevents mainstream newspapers from thoroughly interrogating the authorities. He claims the mass media feel beholden to the government, because without seihan seido it would be every newspaper and magazine for itself.

That’s also why the media has never liked Amazon, whose online retail system allows it to flout saihan seido. Amazon has to sell Japanese books at their cover prices, just as bookstores do, but Amazon Marketplace offers an outlet for thousands of independent book vendors who sell supposedly used books at bargain prices. The national chain Bookoff does the same thing and the publishing industry tolerates it. Amazon is more of a concern since it is right there on your PC or smartphone, and Marketplace editions are sold alongside new editions and Kindle electronic books on the Amazon site, thus providing instant comparison shopping.

On the Amazon page for the book “Dentsu and FIFA,” a study of the relationship between the Japanese advertising giant and the world soccer authority, published as a paperback in February, the regular Amazon price is ¥821, the Kindle price is ¥734 and the lowest Marketplace price is ¥297 plus ¥257 for shipping. This price-ratio hierarchy is fairly representative of most newer books sold on Amazon. The older the book, the cheaper the Marketplace price. There are, in fact, a lot of books that are sold for only ¥1, meaning that, with shipping, you end up paying ¥258. The regular Amazon price will always be the one on the cover plus tax, and the Kindle price — if a Kindle edition is available — will usually be slightly cheaper than the fixed price.

Until Kindle editions became available, the main advantage bookstores had over Amazon was the option of browsing. Theoretically, readers could go to a bookstore to browse and then return home and order the book they found online, but in that situation the only cost advantage to consumers would be if they bought a used copy on Marketplace. It made no sense to buy the book online at the same price they could have paid in the store earlier. However, Amazon offers points for purchases of almost everything, including books, which effectively means the buyer receives a discount for anything sold on the site. So far, the government hasn’t seen this practice as a violation of seihan seido.

The clearer advantage of Amazon is that it offers books that aren’t browsable in bookstores. Before online shopping, if you wanted a book and your local bookstore didn’t stock it, you’d have to order it sight unseen and pay for it. Then you’d wait up to two weeks to receive it. Amazon carries everything, and delivers the book you want straight to your door.

Kindle made the situation for bookstores even worse, since Amazon offers free samples — usually a chapter or a few pages — of Kindle editions. (They also do that for print-only books, but not many.) Now, it could be argued that there’s no need to go to a bookstore at all. Initially, some publishers withheld their books from Amazon, but the online retailer is just too big to ignore, so the only way they can confound online browsing is by refusing to license their books for Kindle editions.

Last month Amazon.jp introduced its Kindle Unlimited service, which offers subscribers downloadable versions of more than a million foreign-language books and 120,000 Japanese books for only ¥980 a month. To drum up interest, Amazon offered the first month for free. Apparently that did the trick, because, according to an article in the Asahi Shimbun, many more people signed up for the plan than the company expected.

This was a problem. To get as many publishers as possible to participate in the program, Amazon had offered to pay more for these publishers’ books during the first year of the service than it normally would. But since so many people signed up for Kindle Unlimited, Amazon calculated that it would lose money if all these subscribers downloaded a certain number of books and Amazon had to pay the publishers for all of them. The Asahi reports that a week or so after the service launched, Amazon started removing some of the more popular books from the Unlimited list, though the newspaper doesn’t say exactly how many.

Amazon isn’t the only online entity to offer the text equivalent of streaming. Mobile carrier Docomo has DMagazine, an app that offers a selection of periodicals, mostly weeklies, for only ¥500 a month. Not all the articles in a given magazine are available, and the service focuses on current issues, though a few titles offer recent back numbers too. The clipping service is also limited, but for people who go to bookstores and convenience stores to read a specific article or two because they don’t want to buy the whole magazine, DMagazine is very attractive.

It should be noted that saihan seido doesn’t apply to foreign-language books if they are published overseas, so if they’re expensive here it’s because of the distributor and lack of competition. The good thing about Amazon.jp’s foreign books is that Amazon imports them itself and the Japanese prices are pegged to the prices overseas, so if they sell it at a bargain there, it’s probably a bargain here too.

Yen for Living covers issues related to making, spending and saving money in Japan on the second and fourth Sundays of the month.

The section of this article regarding the Kindle Unlimited service was revised on Sept. 13.