The border closed the books – Newspaper Kommersant No. 63 (7508) of 04/12/2023
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Participants of the book market are afraid of higher prices for their products due to new problems in settlements with foreign copyright holders. Thus, banks have tightened the conditions for currency transfers for legal entities, which prevents them from paying for the rights to foreign books, which can make up to 70% of the range of individual publishers. To keep prices down, companies are looking for strategies to generally reduce the cost of products – releasing small pocket books, introducing significant discounts to retain the audience.
Alexei Ilyin, General Director of the Alpina Group, during his speech at the industry meeting “Book Trade in the New Reality. Problems and Challenges” announced on April 6 that the publishing house faced difficulties in settlements with foreign copyright holders.
The top manager explained that Raiffeisenbank, which “was the last transfer channel for many publishers,” raised the minimum payment amount to $50,000. Indeed, from April 3, the minimum amount of transactions that the bank will process will be 50,000 in US or European currency. (the minimum amount of funds transfer for citizens is set at $10,000). According to analysts, Raiffeisenbank now makes up to half of outgoing foreign currency payments from Russia (see Kommersant of March 22).
According to Mr. Ilyin, about 70% of Alpina’s books are translated: “It happens that with a large counterparty we have royalties of $50-100 thousand, but the main advances on rights are $2-3 thousand.” The publisher is looking into how to pay for the rights, he added, but “it’s highly likely that this problem will be another factor in raising book prices.” According to the Eksmo-AST group, the average increase in book prices in January-August 2022 was a record for five years, amounting to about 25%, Vedomosti wrote.
Some credit institutions, including Raiffeisenbank, have indeed raised the minimum payment and “crossed the border of the amount paid for foreign rights,” confirms publisher Fyodor Yeremeev (Comic Book Factory project).
However, the businessman emphasizes, “there are still a dozen banks with foreign capital, that is, publishers can definitely find a way to pay for foreign rights.” There are banks on the Russian market that have the ability to carry out such transactions, confirms Ilya Zharsky, managing partner of the Veta expert group: “In addition, during the sanctions, many small banks began to develop international payment business, their conditions and tariffs are like those of newcomers to this market may be more beneficial.”
But difficulties with transferring money abroad are only one of the factors increasing the cost of books, says Boris Kuznetsov, director of the Rosmen publishing house: “Any complications in transfers put a strain on the company’s finances. This, of course, will entail an increase in the cost of books, most likely by 1-2%. However, in general, we should expect a 10-15% increase in prices due to an increase in the cost of printing and materials, Mr. Kuznetsov added.
Mr. Ilyin noted that in 2022, the publisher’s sales increased by 4% in monetary terms, but at the same time, marginality fell by half. As a result, many participants in the book market are moving to a policy of deliberately reducing the price of the range: they release pocket books in a small format in paperback (pocketbook) or give a big discount on the range, the top manager says.
Retail book chains are also facing problems. Boris Mustashkin, general director of the Dom Knigi and Book+ bookselling network, also said during the meeting that they are more often forced to carry out promotions with big discounts: “They hardly work with small ones anymore, buyers have much less money. Readers either buy less frequently and selectively, or look for cheaper alternatives.”
Aleksey Adrianov, executive director of the Moya kniga bookselling network, clarified that the maximum discount during promotions can reach 40%: “We basically make discounts within 20%. Now bookstores have moved away from 10-15% discounts and are trying to get closer to competitive prices on marketplaces, adds Tatyana Larina, co-owner and commercial director of the Amital bookselling network. The main problem, according to her, is that publishing houses are still cooperating with online platforms, but should include assistance to book retail in their budgets.
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