"BANDI/LUNI'S", a bookstore brand that many readers loved is closed forever. The reason is that the Seoul Book Center Ltd. which runs "BANDI/LUNI'S", failed to repay a 160 million ₩ they owed in bills. This has become a significant issue in the publishing industry because the company is known as one of the larger bookstores in Korea. Many factors made this happen. The deterioration in company management due to COVID-19 is one reason. An increase in the number of people shopping for books from online bookstores due to its convenience and using online as the primary way to buy used books is another. The recession in the publishing industry, to the point where one of the larger bookstores goes bankrupt, the public view on the issue is negative. It is because of the Fixed Book Price(FBP) system, which restricts the discount rate for books. The Fixed Book Price is a form of resale price management applied to books. After the FBP system was revised in 2014, the percentage of readers who read more than one hardcopy paper book or e-book decreased from 65.3 percent in 2015 to 55.4 percent in 2019. The remaining reading population is attracted to the used book market because it is not affected by the FBP. Why has the book price system given people a negative perception of the publishing industry?

The Fixed Book Price limit price discount attacks by large online bookstores and large publishers, allowing independent bookstores and small and medium-sized publishers to compete under the same conditions. Also writing books, which traditionally are the fundamental intermediaries for knowledge delivery, are not affected by market-oriented price competition. The FBP system in Korea has been in effect since 2003. The current revision of the system was in November 2014. It limits price discounts to 10 percent by default and up to 15 percent by using the point system[vj1] , regardless of new books or categories. The rule is expected to be in effect until November 2023. Other countries that have an FBP system are France, Germany, the Netherlands, Spain, Italy, and Japan. So far, the system has been implemented successfully in these countries. Yet, the system is causing a lot of problems in Korea. One of the problems is that the FBP system in Korea has grown a distribution system centered on large bookstores. According to the Ministry of Culture, Sports and Tourism 2019 National Reading Survey, 69.4 percent of adults bought books at large bookstores and online bookstores, but only 9.0 percent at independent bookstores. “Wholesale price” is the price or consideration paid by the bookstores to the publishers. Large bookstores buy books in a large numbers allowing them to pay less money for the wholesale price. In the case of independent bookstores, it's the opposite. They buy a small number of books making them pay more money to publishers. This makes it difficult for small independent bookstores to compete because they have to add extra costs to the retail price. According to a survey conducted by the Publication Industry Promotion Agency of Korea, major online and large bookstores only pay 59.3 percent for the wholesale price for books, but local bookstores were paying 73.0 percent. This means that if books have a price of 10,000₩, large bookstores can leave a profit margin of up to 4,100₩, while independent bookstores can only have 2,700₩ profit. The FBP only regulated discount rates but did not regulate wholesome prices to protect independent bookstores. As a result, the number of independent bookstores is decreasing due to a lack of profit. According to the Korea Federation of Bookstore Association, more than 1,200 independent bookstores have closed since the FBP system revision in 2014. In contrast, the large bookstores have been gaining huge profits. Sales of the six major bookstores in 2018 amounted to 1.825 trillion ₩, up 6.6 percent from 2017. Their operating profit tripled from 14.2 billion won in 2017 to 40.4 billion won in 2018 as stated by the Korea Publishing Copyright Research Institute.

Another problem is that the FBP system in Korea reduces the variety of book genres. FBP forces publishing industry to publish a book following popular trend. For cultural products such as music, movies and game, there is always a way to earn profits. Which is putting a big discount on products, making unsold assets contribute to sales activities. Yet, for books, the same thing cannot happen because of the FBP system in Korea. The Korean FBP system prohibits discounts outside its prescribed range and only allows bookstores to adjust the retail price after 18 months, which is a great amount of time in book sales. The financial situation for most publishing companies is unstable because there is no way to gain profit from unsold books. Large publishing companies, with its huge capital, solve such financial crises by advertising a book and large bookstores. But promoting a book for small and medium-sized publishing companies is difficult. As a result, they focus on genres that are already popular or sign famous writers to avoid financial pressure. The FBP has made it nearly impossible for these smaller companies to try out new authors or less popular genres of books. As a result, this reduces variety in the book market and makes it easier for large publishers to survive. People who favor the FBP system rebut the claim that publishers reduce the diversity of books genre, saying the number of publishing companies increased in 2018 compared to 2014. However, many other factors can affect the increase in the number of publishing companies, such as the fact that there was an increase in the number of independent publishing companies, due to recession in the publishing industry. It should be noted that it is easy for independent publishers to register themselves in district offices, but that doesn’t mean all the publishers are still actively publishing books. In fact, as of 2018, only 8,054 out of 59,306 publishers published a book, meaning that there might've been an increase in the number of publishing companies, but 86.4 percent of publishers have been inactive. This indicates that the claim that the FBP increases the diversity in book genres because of the number of publishers is false.

It is also a big problem that consumers are not buying hardcopy books due to the book price system. For consumers accustomed to various discounts, it's natural for them to have a negative opinion on the FBP system. Still, many countries have legislated the FBP price system. Why does it seem that Korea is the only country that the FBP has gained a bad perception? For all the other FBP systems in foreign countries, there is a way to loosen restrictions. Also, foreign publishing companies give consumers a choice by separating books with the same content by the quality of the construction of the books. In this way the publishing companies can differentiate the discounts according to the quality of the book. But in Korea not only does the nation's book price system ban such discount sales after 18 months, but it also makes it more difficult for consumers to have a choice. In Korea most of the nation’s publishing industry makes book luxurious by using good quality of paper and fancy book cover, making them more expensive.

According to the National Statistical Office's 2019 Social Survey, the average money spent on book per household decreased by 15.55 percent between 2015 and 2019. It is difficult to conclude that the impact of the 2014 system for book purchase costs is the reason reading rates per household have been on the decline. The influence of various new electronic reading mediums such as mobile phones cannot be excluded. Still, the decrease in book buys is a shocking figure in that paper books are paper books are still an overwhelming source for reading experiences. A public petition for the abolition of the FBP system filed in 2019 was signed by 200,000 people. Complaints about the 2014 book price system included labelling them as "evil laws."

The Fixed Book Price system in Korea is a bill that seems to exists for the benefit of large bookstores and the publishing industry. This is the opposite purpose for the reason why the rule was created. As many publishers pay no attention to unknown and new writers, these writers headed to the web novel field which the FBP system does not affect. The web fiction industry was only 10 billion ₩ in 2013, but it grew to about 400 billion ₩ in 2019. According to Kyobo Bookstore's 2019 statistics, only 6,928 hardcopy novels were published that year, down 30 percent from 2015. The number of hardcopy novel sales fell more than 10 percent from 2018. Consumers have also turned to online secondhand bookstores like Aladdin and Yes24, where the FBP system doesn't take effect. The number of people in 2019 purchasing books from "large bookstores" increased only 0.9 percent compared to 2017, while people who purchased books from "Internet bookstores, shopping malls" increased by 6.3 percent. These numbers show th at the FBP system is not having a positive effect on the book industry.

How did the book price system in Korea go against its original purpose and end up being the "evil law"? If the bankruptcy of the Seoul Bookstore is a side-effect of the FBP system, then what are the ways to correct the system? First, the law must be returned to it’s original intent. That was to make independent bookstores along with small and medium-sized publishers competitive under the same book sale conditions. To make that happen the bill must standardize supply costs, not discount rates. Another way is to apply a higher discount rate for local bookstores compared to large bookstores. Also, the book price system should allow higher discount rate of books. Like the FBP system in foreign countries, publishers should be able to adjust the price at any time and allow more discount sales to bookstores, after a certain period. Let's hope the FBP system is fixed as soon as possible to achieve its purpose and become a useful law for all people.

Hyunrim Kim  arnoldkim123@hongik.ac.kr

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