Frankfurt Book Fair Image via Wikipedia
The next big market for e-books? Brazil, India, China? Wrong, it's Europe!
What is rather odd is that all the buzz at the Frankfurt Book Fair is about Brazil and India. Big markets to be sure,and countries that are part of the famous fast growing BRIC group rocking international trade.
Incidentally, we have to leave China out of the discussion because it is essentially a closed market: they've shut out Google and set up their own Amazon-like etailer. So, although China is potentially the biggest and fastest growing, from a globalized digital book market standpoint, it doesn't count. Not yet and perhaps never.
There are really two facts to keep in mind when analyzing the global book market. One is the number of people who speak and read English. Two, is the degree of alphabetization and education.
On both, continental Europe scores very high, ahead of anyone else in the world. English, we all know, is the language that is most widely spoken around the world, but especially so in Europe. And continental Europe has far more readers than anywhere else, Brazil and India included.
Yet, the European outlook doesn't look rosy. A recent survey commissioned through Rüdiger Wischenbart Content and Consulting, provides a broad picture of emerging e-book markets across Europe, Brazil and China, taking the US and UK markets as benchmarks. Rather than using forecasts, they have examined local factors and the unique defining traits of each market — from market sizes to tax and pricing regimes to cultural choices.
They have been able to document that the breaks to market expansion in Europe include everything from a "supposed tendency" to prefer printed books to "sticky" unfavorable prices.
I'm saying a "supposed tendency" because that is always something invoked at the beginning of e-book penetration in the market - the case in Europe where it is far behind the US. According to the Rudiger survey "in 2015 in Germany, e-book penetration of between 10 and 15% of the book market is conceivable; this number is considerably lower — around 8 to 10% — for Italy or Spain ..."
And e-book prices are "sticky" in the sense that they are not open to free competition. They are constrained by a variety of factors, chief among them legislation that fixes prices for books (for example in France) and European VAT tax that hits e-books unfairly compared to printed books because they are not considered a "product" but a "license".
In short, the European institutional environment is not favorable to e-books. But that could change. The European Commission is aware of the VAT problem and has shown signs of a willingness to fix it. Also several national laws that fix book prices are presently under attack.
What is more surprising are the breaks to expansion applied by Amazon itself. In America, it has systematically adopted aggressive sales strategies that have effectively promoted and supported its market expansion, chief among them, low-cost e-readers. The Kindle Fire is but the latest example of this policy: the Kindle Fire, unlike other tablets, is very likely to prove a winner against the iPad.
But, as pointed out by David Gaughran in his excellent analysis of the European market (to read it, click here)Amazon has adopted policies that, if anything, seem to be designed to slow down market expansion...
First, and most disappointing, there's no Kindle Fire available in Europe and it doesn't look like it's coming anytime soon.
Second, Amazon e-readers are systematically more expensive than in the US, to the point of discouraging potential buyers. Consider this as reported by the Wall Street Journal: " There was more anger from those who went to check Amazon’s European websites. U.K. customers found a new advertisement filling the front page introducing the “all-new Kindle for only £89.00.” This is the lowest-specified model that ships for $79 in the U.S. The U.K. cost includes 20% VAT, so the tax-free price would be £74.17 or around $115. That makes it over 45% more expensive in sterling than in dollars at current exchange rates." (bold highlight added)
But the disappointment with Amazon doesn't stop there. Actually, and from the start, Kindle books have been systematically more expensive outside the US: Amazon charges $2 to "whispernet" an e-book to a customer (i.e. deliver it via Internet - which of course costs next to nothing). Plus it slaps on a 16% VAT tax because Amazon has elected to be headquartered in Luxembourg. Why go there? The VAT rate is lower there than elsewhere in continental Europe but it's still... 16%!
As far as I know, its competitors in the US don't do that: it looks like Apple, Sony Store and Barnes and Noble charge the American price to people who live abroad. But I'm not sure and please let me know if you, the owners of iPad, Nook or Kobo, are paying more than 99 cents - the price I set for the first book in my Fear of the Past Trilogy ( I meant that as a "loss leader" - my next books are priced $3.99 in the US market which I feel is more in line with the amount of work I've put into them and with what I believe is their quality)
In any case, the big player in the market is Amazon and if others are charging less, the effect won't be noticeable. And Amazon really seems to be taking its time to enter the European market, perhaps creaming it first...until it actually gets into the market with a Kindle Store!
That's when things start to change. The infamous $2 surcharge has reportedly disappeared from Germany and France the minute Amazon opened its Kindle Store there - yet it's still on in Italy and I believe in Spain too, even though Amazon has just arrived there too.
Why the delays? I have no idea.
Also, Amazon does very little to support its English-language authors in those newly-opened European markets. For example, you have to set up your author page on Amazon.fr and Amazon.de because it is not automatically transported there by the US-based Amazon.com. These are small things to be sure, but discouraging.
Also new ideas to spread the market do not seem to be taken into consideration.For example, Amazon could consider setting up cheap translation services for its authors that could be based on the free Google translation function. All that would be needed are a few editors to verify that awkward turns of phrases are taken out and replaced by more appropriate language. That's much faster and cheaper than using a full translation service but no one is offering something like that (either inside of Amazon or out).
What a pity. A globalized market is just out there for the taking!
If Amazon is too slow, surely that opens the door to others for the taking. It seems that Germans have woken up to the possibility and I've heard there are plenty of German e-book offers outside Amazon and already some German e-readers in the market at very low prices. I haven't seen them and don't know how good they are but if you have, please let me know.