This seems to be more a lesson in the difficulty of bottling a solution that works in one country and reusing it elsewhere.

Because in France and Germany, the exact opposite happens: the profits of bestsellers are being used to cross-subsidize new books and new authors. This is in fact one of the rationales behind both countries having price-fixing laws: namely, to preserve the profit margin for bestsellers to make such cross-subsidies possible.

You can argue whether that is fair (I know there are plenty of French and German readers who'd rather have cheaper bestsellers instead of books by new authors that they may never read), but both countries have a healthy book publishing industry.

So, while this may not have worked in Israel, in France and Germany plenty of books are being published, bought, and read. In fact, Germany publishes more books per capita and year than the US, even though German publishers can't easily sell to the much bigger international English language market.

[1] http://en.wikipedia.org/wiki/Books_published_per_country_per...