New Israeli Law Mandates Price Controls for Books, Minimum Payments to Authors — Here's What Happened to Sales After Just One Year

A new Israeli law controlling the price of books and mandating guaranteed minimum compensation for writers has had the complete opposite effect of what lawmakers had intended, with book sales now in a free fall just one year after the law went into effect.

It’s called “The Law for Protecting Literature and Books,” but the impact on the industry has been so devastating that the head of a prominent book publisher has taken to calling the new mandate, “The Law for Hurting Literature and Books.”

The way things used to work in Israel was that the two main booksellers – Steimetzky and Tzomet Sfarim – would offer massive discounts on books, often selling new titles at two for the price of one or even four books for 100 Israeli shekels, or about $25.

But under the new law’s dictates, any new book that’s been on the shelf 18 months or less may not be discounted. During the same time period, Israeli authors are guaranteed to earn a minimum of 8 percent of the price of the first 6,000 books sold and 10 percent of all subsequent books sold, the Jerusalem Post explained last year.

The left-wing Israel newspaper Haaretz, which usually writes in favor of “social justice” issues, conceded that the law “has had the opposite effect its backer promised it would bring.”

Publishers told Haaretz that the law “has upset the entire literary food chain” with sales of new book titles down between 40 and 60 percent and down 20 percent for books overall.

Israel’s Channel 2 television on Sunday visited booksellers who said that after their customers see the newly elevated prices of children’s books, they head straight for the toy department. Booksellers say they’ve experienced a 25 percent drop in children’s book sales in just one year, according to Channel 2.

Though the law aimed to encourage people to read more and to offer a livable wage to writers of fiction, nonfiction and poetry, ironically, another unintended consequence is that toy sales at bookshops have grown in the past year, booksellers told Channel 2.

Israeli lawmaker Nitzan Horowitz of the socialist-leaning Meretz party, who introduced the legislation, told Israel’s Army Radio last year that “we passed this law because of a market failure” and that the aim was “to ensure that consumers, readers receive good, high-quality books and that their authors will receive appropriate compensation.”

Boaz Arad, the head of the Ayn Rand Center’s Israel branch, said multiple reports issued before the law was passed – including one penned by a government agency - concluded that the book market was working just fine.

“It was unnecessary and only caused damage,” he told TheBlaze Monday, adding that the law should be abolished.

Free market activists were so opposed to the legislation, they organized a “Memorial Day for Israeli Literature” timed to the date in February last year when the law took effect.

“We knew it would cause a lot of damage,” Arad said. He even made his case to the Knesset committee which examined the issue before the bill was passed.

“When you consider the cost of living - which is a major issue in Israel - it’s the most illogical law when everyone is struggling to lower the prices in Israel, here comes the government and is actually raising prices by law,” Arad said.

Those who came to the “Memorial Day” event, organized by the Ayn Rand Center and the libertarian Israeli Freedom Movement, were asked to bring their own books, which were then put on sale at deeply discounted prices.

“We did it as a provocation,” Arad recalled.

Free market activists put their own books on sale in protest of the new law fixing prices of Israeli books. (Photo: Boaz Arad/Ayn Rand Center, Israel)

Arad compared the Israeli book law to the fierce debates in the U.S. over raising the minimum wage.

“When you enact a certain level of wage you immediately put out of a job everybody who can’t be more productive than the value of that wage,” he explained. “In books, it’s hurting the new writers who are the weakest. In the job market, it will hurt the weakest workers.”

For example, Arad said, “If I can produce at the rate of $5 an hour – that’s what I’m worth to my employer - maybe I’m not disciplined, maybe I’m disabled, but if you enact a minimum wage of $6 an hour, it means my employer will lose a dollar on every hour he will have me so the next day I’ll lose my job.”

“One of the methods to marginalize and drive away the weak in the population is to enforce minimum wage laws,” Arad said, noting that the Israeli law “is a killer of every new book of new writers.”

Publishers have been hesitant to bank on new writers under the government mandate, because they don’t want to take the financial risk on books they’re not allowed to put on sale. And from a consumer perspective, those looking for new books are less likely to drop some $25 on the debut novel of a writer they’ve never heard of.

“Almost the only way for unknown writers to become popular is to put their first book on sale, even to give it for free if possible, to publicize their name and get their audience and eventually make money from their writing,” Arad said. Thus the new law has been particularly devastating on new authors who can’t get their work to the public.

Arad lamented the fact that lawmakers ignored the outcome of similar legislation in France, Germany and the U.K., which had similar effects on their literature sales.

“It’s no surprise that we face a book market struggling and suffering and it’s the most unbecoming situation for the ‘People of the Book,’” Arad said.