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words, words, words

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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

When was the last time you read a newspaper article and just shook your head and signed “why?”  Well, this article in Calcalist is guaranteed to do that (click here for English).

MKs Limor Livnat and Nitzan Horowitz are proposing a bill that will make it illegal to discount children’s books more than 50% from the ridiculously high cover price.  Apparently the price set by the publishing companies, which does not take into account the basic ideas of supply and demand, cannot be discounted too much, less the authors receive too little.

My reactions are mixed.  On one hand, I think “this is what is bothering you? This demands actual time from a government so overwhelmed with expectation in the areas of finance, security, and culture that the Knesset will actually discuss this?”  One the other hand, I think “these people do not even know the first lesson one learns in economics – how can they be running the country?”

For starters, who is deciding that the authors receive too little?  The consumer?  Not at all, the consumer pays money to the store who pays the publisher.  It is the publishers who decide to pay the authors so little.  They are using an internal issue in order to force the consumer to pay more to them.  And what if this does not leave enough money for the publishers?  Then they will have to renegotiate with the authors and restructure their business.  This is all basic supply and demand.

You don’t have to be an expert in the area of selling books in order to understand this.  But in case you insist on only trusting one, Iris Barel, CEO of Steimetsky explains the real problem is “the issue of joint ownership” – meaning the relationship of the publishers to the authors.

The supply of books is high.  The demand is high too, but not as high as the supply, so there are more than enough books and the price drops.  If the price is too high, some will still buy, but on the whole people will seek alternatives like second hand books, borrowing from friends, printing offline, and the library.

And once people begin to buy less children’s books, other book sales will fail as well.  Book stores know that the main reason that many people come to the store is for kids books, which is why they are always kept in the back of the store.  The bookstores use the layout in order to force the parents to walk through the other books, in the hope that a parent will pick up something for the adults in the family as well.

But even if this action were to help book sales, what gives the Knesset the right to force parents to pay above market price?  Parents already have to compete with aggressive advertising toward their children, much of which is designed literally to brainwash their kid into annoying the parent in order to get something.  Studies show that parents will give into their kids if annoyed an average of seven times – and this is the goal of advertising towards children.  How problematic is it?  Well, according to the UK, Greece, Denmark, and Belgium, it is problematic enough that they have specific restriction on advertising towards children.  And in Quebec, Sweden and Norway, it is illegal altogether.  But not only does Israel not do a darn thing about advertising towards children; now the Knesset wants to force parents to pay even more for products, some of which the children were brianwashed into demanding in the first place.

Do not give into this.  Allow the book stores and publishers to suffer the price of their lobbying stupidity.  Hopefully, at the end of all of this, the Knesset will understand the very basics of economics.  I wouldn’t hold my breath, but I can still hope…

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