On May 26 2011, just a few months before the 30th anniversary of the 1981 Act on Book Pricing, the Act on E-book Prices was promulgated after a lengthy parliamentary procedure.
The act is the first legislation of its kind in the world, but is still imperfect, as members of Parliament have observed. The act anticipates the future emergence of the e-book, which currently represents less than 1% of the French market.
The act defines an 'e-book' as a "homothetic" book, meaning that the legislation will apply to books which are marketed digitally and which either have already been or may be released in printed form. For such purposes, the book's "content and composition" will be taken into account. The definition should therefore exclude multimedia e-books which combine text with audio or video content. A decree will subsequently determine more precisely the characteristics of an e-book.
The most controversial issue arising from the legislation pertains to its territorial scope, since the leading e-book sellers to date are not established in France. Parliament was concerned on the one hand to avoid enacting provisions that would ultimately impose restrictive pricing measures on French companies only, and on the other to ensure compliance with European competition law.
The senators argued that e-book distributors in France should apply the price fixed by the publisher; but the deputies replaced this so-called 'extraterritoriality clause' with a framework that would recognise existing contractual schemes between French publishers and foreign distributors.
Finally, the Parity Commission of Parliament (composed of an equal number of members of the Upper House and Lower House) agreed upon the senators' proposal, at the risk of flouting European Commission warnings with regard to competition rules.
The act thus provides that:
- all publishers established in France must determine a unique price for the (single or bulk) sale of e-books; and
- all distributors (whether French or foreign) offering e-books to buyers located in France must apply the price determined by the publisher.
The obligation for the publisher to determine a fixed price will not apply to e-books which are licensed (rather than sold) and are intended to be used collectively, which should take account of practices in place in the educational sector.
The act further provides that the price may vary "according to the content of the offer and the methods of access and use permitted". This appears to grant the publisher a fair amount of control over the offers that distributors may make to the public. A decree is expected to delineate more precisely the freedom that distributors will enjoy in making such offers.
The act also provides that premium sales are allowed if they are offered simultaneously to all distributors and under identical conditions.
Finally, Parliament has approved the inclusion of new provisions in the IP Code with a view to protecting authors. These provide that authors' remuneration for the sale of e-books should be "fair and equitable", and that the publisher should report the corresponding calculation of royalties in "an explicit and transparent" manner. It will fall to case law to confirm whether the new provisions can achieve their objective of protecting authors' interests and what impact they will have on the drafting, negotiation and performance of publishing agreements.
The rate of value added tax levied on e-books has also been reduced from 19.6% to 5.5%, in line with printed books, as of 2012 (if this reduction remains unchanged).
The Act on E-book Pricing takes inspiration from its predecessor legislation with a view towards encouraging the development of the market while preserving cultural diversity. Some studies suggest that e-books could represent up to 17% of the market by 2014. The act provides for the establishment of a committee to assess annually the impact of the legislation on the diversity of offers, the remuneration of authors and cultural diversity.
For further information on this topic please contact Philippe Allaeys at Nomos by telephone (+33 01 43 18 55 00), fax (+33 01 43 18 55 55) or email ([email protected]).