TFPD_02: ICC can only make money by high priced publications and hard protected copyrights – part 1 of 2
Trade Finance Paradigm #2: ICC can only make money by high priced publications and hard protected copyrights (1 of 2)
Then we move on to the next of the eight Trade Finance Paradigms: ICC can only make money by high priced publications and hard protected copyrights. Due to the length – it will be split into two parts. Part two will be out next Friday.
Of course the title is provocative. The purpose of this blog post is to illustrate that the current model used by the ICC to 1) create revenue, and 2) protect their copyright does not work anymore – and need be reconsidered. In addition I will offer suggestions as to alternative models.
The above being said – it is important for me to stress that I have the biggest respect for the work done by the ICC for the support of world trade. I acknowledge fully that the ICC must make a profit – this is the only way to grow. For sure I also fully acknowledge that the ICC own the copyright to their publications – and copyright must be respected!
I will share with you 4 examples to illustrate my point – all of them true and correct.
Example 1: The India / Denmark example
While working on this blog post I contacted a friend of mine in India, and asked some unusual questions. He was kind enough to share the answers with me.
The person in question (who’s identity I will not reveal) holds the position as “Senior Executive Document Checker” in a bank. He has a family – one daughter. And he is totally dedicated to the world of trade finance. He has this burning urge to learn more about this area that I have met so many times – mainly in the Middle- and Far East. From his bank he will get one copy of the UCP 600 and one copy of the URDG 758. The bank does provide access to trade finance textbooks – or for that matter access to the DC-Pro.
However this person is totally dedicated to trade finance, so the only option is to buy the books himself.
His monthly salary AFTER taxes is RS 28.653 – which is something like EUR 400.
If he wanted to buy – as an example – the “Guide to ICC Uniform Rules for Demand Guarantees (URDG 758)” by Dr. Georges Affaki, Sir Roy Goode that would cost him (from www.iccbooks.com):
Paper version – English: EUR 149,00
Priority Air Mail (cheapest possibility): EUR 44,70
Total EUR 193,70
This represents approx. 48% of one month’s salary after tax! 48% - almost half – for ONE book!
I have been doing the same calculation for a person with a similar position in Denmark. The salary after taxes could be something like EUR 3000. So for that person the price of the book would represent a bit more than 6% of one months salary after taxes.
In all fairness it should be added that the general price level in India is somewhat lower than Denmark (!!) But it should also be added that this person would (most likely) not have to buy such book himself! The bank would buy some (in this case few) copies and make available to those interested in reading them.
Just to keep in the example: The DC-Pro. The annual subscription is EUR 2500.
For my friend in India this represents more than 6 (six) months salary. For the person in Denmark this would represent 0,8 months salary! For 6 months salary in Denmark you would be able to buy a fairly good car! And cars are really expensive in Denmark ….
My friend also informs me that:
For the layman it is too costly to buy copies of UCP 600 and URDG 758 from the ICC and due to this, most of the beneficiaries do not have the copy of neither UCP 600 nor ISBP 2007. Therefore there is no awareness in India regarding this. Most of the seminars conducted by the ICC are not reaching the SME sectors because of the cost level. They are charging more than 10,000 RS to attend the seminar – and most of the bank employees are only attending in order to get PDUs for their CDCS re-certification.
In other words: Due to the pricing model the ICC rules do not reach as far as they “should.” The word “should” in this context means that the ICC rules ideally should reach all the actual and potential users of the rules.
For example all people that works with LCs – or consider doing so – should have their own (legal) copies of the UCP 600 and the ISBP 758.
Example 2: The Swedish example
The Swedish ICC is in many ways one of a kind. It is large - seems to have no financial challenges. Perhaps that is the reason they seem to be doing all the "right" things. For example they offer to the Swedish market translations of the various ICC rules. They translate almost everything into Swedish, which one can only envy.
One thing is however striking when one wants to buy a set of rules from the website of ICC Sweden. The price for UCP 600 is 440 SEK (approx. 51 EUR) - and the URDG 758 is 580 SEK (approx. 67 EUR).
The prices for the English paper versions (on www.iccbooks.com) are 25 EUR for UCP 600 and 30 EUR for the URDG 758.
The UCP 600 is even available in a leaflet version - where you can buy a bundle of 25 for 100 EUR - I.e. 4 EUR each.
This is some difference! But why is it so? It all comes down to the instructions and policies of the ICC:
- First of all the local ICC must pay royalties to ICC Paris for the use of their copyrighted rules.
- Secondly there are instructions as to how the translation must be made; I.e. involving at least 3 local experts.
- Thirdly there are instructions as to how it must be printed; I.e. in the same quality as the English printed book version - with the English text on the left page and the text in the local language on the right page. (I.e. the size of the translated version will be twice the size as the original version)
All in all this adds up to a sales price for the translated version that is more than twice the price of the English version.
It goes without saying that translated rulebooks for 50-70 EUR will seldom be bestsellers - especially when the English version is available for less.
It is a given fact, that the corporate customers are somewhat reluctant to buy ICC rulebooks (incoterms may well be the exception – and by the way the Swedish/English version of Incoterms 2010 cost 840 SEK – approx. 97 EUR!).
Prices at the level of 50 to70 to 97 EUR only increase the reluctance. Often the corporate customers will expect their banks to provide them the rulebooks they need - but surely a bank will think twice before placing an order for 200 or more to be used as giveaways to their customers.
What is interesting is that it is most likely the corporate customers that would have the biggest value from translated ICC rules - because of the technical language used. Reading the UCP 600 in a foreign language is not easy!
In other words: it is the corporate customers that would have the biggest value from translated ICC rules – but often they do not get the translated rules (even if available) because of the pricing model.
It must also be noted that for rules like the UCP 600 banks and corporate customers should have many copies available: At least one for each person working with LCs. So for a trade finance department with (as an example) 50 officers - the price for the local version would be 2550 EUR - and 1250 for the English version. For banks these are "cost focus times" and it is not hard to guess which vision they will choose!
It does make sense having these rules available in local languages - surely that would increase the interest, awareness and not least knowledge. So the fact that for example ICC Sweden translates ICC rules is indeed admirable ... But unfortunately the pricing policy limit the reach of those publications.
To be continued …. next Friday – which will include the “URDG 758 example,” the “eBook example” and offer some suggestions! Look out for it and meanwhile: take care of each other – and the LC!
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