This NYT story on the reimportation of cheap college textbooks from India misses the entire, delicious point: Americans line up as huge fans of globalization when the money saved goes to them rather than their employers (thanks, WGIIA).
Over the last few years, many American students… have been buying American textbooks printed in India, as word has spread of the larger savings available… The textbooks are printed legally in India under copyright arrangements worked out over the last decade by American and British publishers. Americans are huge fans of globalization — when they’re making the moneyUsing tax breaks and cheap labor, Indian companies publish the books in black-and-white, low-quality paperback editions, and sell them for as little as 10 percent of the cost of the same book in the United States. But under the licensing agreement, the books may be sold only on the Indian subcontinent and in surrounding countries…
There are no penalties for students who import books for their own use, under a 1998 Supreme Court decision that ruled that manufacturers who sell goods more cheaply overseas than in the United States have no protection against having their products sold back to the American market. [Link]
The other interesting point here is the same problem intellectual property publishers have been facing for decades: differential pricing is not sustainable in an efficient market. You can’t sell Microsoft Windows for 10% the cost in India because Americans will import the lower-price version. And you can’t sell it at full cost and expect decent sales in a developing country, only the rich will buy. All you can do is segment the market with a lower-featured edition.
And that’s exactly what these textbook publishers have done. The problem is, students are satisfied with the lower-quality editions because hardly anyone buys textbooks for pleasure, especially not at $150 a pop.
Related post: Stuck with the 50cc Bajaj