E-books - The European Market

Hi all,

If anyone is interested in the European market, I have blogged about that today, covering the market share of e-books there, the factors restricting growth, why Amazon is not as dominant as in the US, and the additional challenges facing European self-publishers, and all writers selling books in Europe.

For those that don't want to read the whole thing (it's about 1500 words), here are some quick takeaways:

1. E-book market share is about 5% in the UK and Germany, very low in Spain and Italy, but growing everywhere.

2. Sales tax on e-books in Europe is huge, over 20% in many cases, but very low on print books.

3. Kobo and Apple are making big moves.

4. European self-publishers face additional barriers to entry to the US market.

5. Small publishers and self-publishers have restricted access to distribution channels.

6. European publishers are being investigated for price-fixing.

7. The Agency Agreement could be deemed illegal in the UK very soon.

8. Amazon only pays 70% royalties for sales to UK readers, 35% for sales to customers in all other European countries.

You can read the whole thing on my blog, but I want to place a health warning on the figures in the post. European numbers are much harder to come by and are less reliable, for example, e-reader market share is often determined by small-sample self-reported customer surveys and e-book market share is often announced by publishers associations without accompanying data. I am happy to correct any of the information in the post if any errors or omissions are brought to my attention in the comments, or by email, or in the posts below, or by PM. I am also happy to alter any of the suppositions based on those figures, if they are found to be flawed.

Full post here:

European Publishers Double Down on America's Mistakes

Dave

movieman said:

I was wondering that, because an author selling ebooks in the UK was complaining about VAT. Print books in the UK are VAT-free, so I don't understand why ebooks are different?

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Technically, printed books are not VAT-free, but have a 0% VAT rate. I'll explain.

The EU designates which products and services are eligible for which rates of VAT, but members set their own VAT levels. So, for example, they will designate essentials (like milk, eggs, newspapers, children's shoes, and printed books) as being at the lower rate, and other items (like legal fees, televisions, and computers) at the higher rate.

Some countries, like Ireland and the UK, have a lower rate of 0% but a higher rate of 20% or more. Other countries, like Spain, have a lower rate of 4%, which is applied to books (and milk and eggs).

In the early day of e-books, the EU classified them as services rather than products. Member states weren't allowed to put them on the lower VAT rate (which in some countries like Ireland is zero), and they were obliged to charge the higher rate.

However, since 2009, the EU ruled that members could now apply the lower rate too e-books, but they weren't compelled to do so, it was up to the individual country.

In France, they are moving e-books to the lower rate in 2012. Spain is trying to do this to. In the UK, there have been noises from one party (Labour) about doing the same, but nothing has happened yet.

In Ireland, where I am from, the situation is terrible. Not only are e-books charged 21% VAT, and VAT is scheduled to increase to 23% by 2014, but they have signalled that they will be looking to apply this 23% rate to printed books too.

What a stupid idea!

Dave

It's not impossible to sell in big numbers, Stephen Leather, for example, has been huge in the U.K.

But it is something that you should factor into your sums (and your pricing if you have any influence over that).

I found out today that Amazon actually add a $2 service charge to every single download down through your Kindle if you are outside the U.S. (but I don't think this applies if you download through your computer).

It's not all bad news.

Apple are really giving Amazon a run for their money in Europe.

Kobo are going to launch big their in the summer, offering all sorts of stuff that Amazon don't (local language e-readers, support, and e-bookstores).

Amazon had it easy up to now, there was no big website to challenge them in Europe.

All this new competition means Amazon will have to raise its game. Which is great for readers, writers, and publishers.

That is massive news - third largest book market in the world after all.

And yes, it means they won't add the stupid $2 Kindle delivery charge. It's the first dedicated Kindle store in Europe, outside the UK, and it should lead to a huge boost in Kindle sales, and e-book sales.

No doubt this is in response to the huge gains Apple have made in Europe, and the big plans Kobo have for this summer.

No doubt.

But I've worked for a huge, international internet company, and sometimes, especially before rest of the world revenue grew bigger than US revenue, it was a struggle to get them to focus on anything outside America.

Plans are one thing, putting them into place requires manpower, resources, and investment. Competition can act as a great spur, that's all; plans can get sped up pretty quickly.

Kobo are launching local language stores with local language content in Spain (where there is no Amazon site at all) and Germany in May this year, to be followed quickly by France, Italy and the Netherlands (where there is no Amazon site at all), shortly after. They already have made inroads into Australia & New Zealand.

If anyone wants to read more about the launch of Germany's Kindle store, go here:

http://www.thebookseller.com/news/amazon-launches-german-kindle-store-fixed-prices.html

Key points:

1. German is the third largest book market in the world (pop. 80 million, plus Austria, parts of Switzerland, Liechtenstein, and one teeny tiny town in Italy).

2. The Kindle is finally on sale in Germany (officially), but still has English-language menus and instructions, and is priced at 139 Euro (US$200) for the basic model and 189 Euro for the 3G model (US$275). These prices are inclusive of sales tax, and show the massive price difference with the US ($61 more for basic model/$86 more for 3G model).

3. Prices are set by publishers with no Amazon discounting allowed.

Dave

KevinMcLaughlin said:

Sounds like distribution to Kobo and Apple might start becoming more important, too. Which makes me happy; one company with 70%+ of the market is not really healthy. And Kobo and Apple are both very easy to distribute to, so they are still good for authors and small publishers.

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Agreed.

And Kobo also have local stores in Canada, UK, Australia, New Zealand and Hong Kong. There are 25 million people in Australia and New Zealand alone.

Finally, Kobo are seeking to partner with a bricks and mortar retailer in the UK (maybe waterstones?), which would be very, very interesting.

The more competition the better.

Hey lvcabbie,

A lot of Germans I know read books in English - they like to practice, and have become used to doing it while waiting for translations - so I think you have a shot. Certainly play up the location in the product description (you probably have already).

If I was you I would consider listing on http://www.xinxii.com/

It's a German site, but they have just rolled out in English, similar royalties to Amazon and excellent payment options (for you - PayPal, and you get paid whenever you like!)

Yeah, I have heard from a couple of people listed on it that sales are small/non-existent, but they seem to have their social media running at top gear, and a smart CEO, they could be one to watch as their is a hole in the market.

And anyway, there are no drawbacks to listing that I have heard of, it costs nothing, and, it only increases your internet footprint.

Hi Torgo,

I heard Labour making noises in January about VAT on e-books. Did that hit a dead end?

In Ireland it's worse, now they want to bring it in on printed books too. God knows what that will do to booksellers and the small Irish publishing industry.

If they would just knock the VAT off e-books, the government wouldn't even notice the lost revenue, and it would be a huge boon to the industry. I can't understand why writers, readers, and publishers in both countries have not tried to band together. With a little pressure, I think something could be done here.

I wrote to my local MP last week. Yet to get a response.

Dave

P.S. Don't even get me started on the Digital Economy Act!

WRT to Germany - Amazon announced in a separate press release that they are opening up KDP to German & Austrian authors, and they will have access to the 70% royalty rate at the usual price points (for sales in Canada, America, UK, Germany & Austria).

Also, this means that authors across the world will receive these rates for German/Austrian sales.

Also, I heard rumours today that the Google eBookstore will be launching in Spanish soon. Google have only confirmed that they will launch in a "second language soon", but Google's appearance at the Buenos Aires Book Fair this week has led to increased speculation.

TheBigEasy said:

Oh I don't advise against listing with XinXii ... but don't expect much right now. Someone on another forum did some math and determined that the No 1 bestseller in Sci-Fi/Fantasy on that site did something like 10-15 sales ... Total.

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So with my extended family I could get the top spot then plaster #1 international bestseller all over my book...ha!