On the prevalence of bookstores in Berlin

My American hometown, Washington, DC, has been bleeding bookstores for a while now. There are only two real independent bookstores left, and even the big chains are struggling: Borders recently closed down, as did one of the city’s two Barnes and Noble locations. One by one, they’re being undone by the dominance of Amazon (expected to control half the U.S. book business next year) and the growing popularity of e-books (earlier this year, e-book sale overtook paperback sales in America for the first time).

My German hometown, Berlin, by contract, has a bookstore every few blocks (and, occasionally, as many as three bookstores on a single block). What accounts for this vast discrepancy? It’s not just that Germans read more (though they certainly do). Government policy contributes to the phenomenon in two important ways.

First, the Buchpreisbindung. Started as a voluntary agreement among booksellers in 1888, the Buchpreisbindung was adopted as national law in 2002 and enforces uniform book prices. This means that no retailer — physical or online — can undercut the competition by charging €10 euros for the latest Harry Potter book when everyone else is charging €20. This may not seem like a big deal, but compare it to America. Take DC’s best-known bookstore, Kramerbooks. It’s paying premium rent for its Dupont Circle location, and it has a well-informed (and presumably well-compensated) staff that takes the time to select and arrange books topically on the store’s various tables. This makes Kramerbooks a great place to discover books of interest — customers can access the store conveniently and quickly find books of interest — but not necessarily an ideal place to buy them. Because a big box store out in the ‘burbs or an online retailer doesn’t have this kind of overhead, and so it can afford to sell books at steep discounts. What’s to stop a customer from discovering a great new book at Kramerbooks (or Labyrinth, or at any good independent bookshop) and then ordering it at half price on Amazon? Nothing — it happens all the time.

With the Buchpreisbinding, however, the incentive system is different. If you pop into one of your many local bookshops in Berlin and find a great book, there’s no reason not to buy it on the spot.

The second policy is related to e-books — and taxes. Most countries in Europe have a high value added tax (VAT), a consumption tax of up to 25 percent. (In Germany, it’s 19 percent.) E-books, like most goods, are subject to this tax. But print books, thanks to lobbying by the powerful book industry, are taxed at a much lower rate. So in Germany, you’d pay a 7 percent tax on a print book and a 19 percent tax on the electronic version of the same book. (The gap in the UK is even bigger: a 20 percent tax on e-books, and no tax at all on print copies.)

Compare that to the United States, where print books are subject to state sales taxes, while e-books are exempt if the retailer does not have a physical store in the state (and some states, like New York and California, exempt e-books from sales taxes altogether). So a book purchased at Kramerbooks, in addition to the built-in costs from the store’s high overhead, will see its price increase by an additional 10 percent (DC’s absurdly high sales tax), while a DC resident can buy the book on Amazon tax-free.

That’s not to be a luddite — e-book sales account for only 1 percent of book sales in Germany, and it’d benefit both the publishing industry and the environment if this figure rose. But it’s really a joy to pass (and stop into) so many bookstores every day, and it’s one that can only be maintained with some help from above.

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One Response to On the prevalence of bookstores in Berlin

  1. Pingback: Germany’s bookstores, doing really well « Das Berlin Blog

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