The VAT problem solved?

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The Web is buzzing with the news that the EU has finally sanctioned member states to apply the same VAT rates to e-books, audio-books, and digital newspapers and magazines as apply to printed media.

In the UK this would mean a reduction from 20% VAT to zero, but the UK government has not been enthusiastic about making the change, and, now that it is lost in the idiocy of Brexit, will probably never find time even to decide what to do.

The Bookseller, the trade magazine in the UK, reports the CEO of the Publishers’ Association, Stephen Lotinga, as saying:

“The government must act now to remove this unfair and illogical tax on e-books, magazine and newspaper online subscriptions. It makes no sense in the modern world that readers are being penalised with an additional 20% tax for choosing to embrace digital. We should not be taxing reading and learning.

“We are leaving the EU but today’s decision from the ECOFIN committee removes a major obstacle for the UK Chancellor, who should now do away with this tax at the earliest opportunity – namely the Budget on October 29th. The government’s preoccupation with Brexit should not delay him – if the UK does not act quickly it risks the UK digital policy falling behind its European competitors. This act would show the world that the UK is really serious about building a forward-thinking digital economy.”

Well, it didn’t figure in Mrs May’s conference speech today, and I very much doubt that it is on the government’s agenda at all.

However, it is generally welcomed; the joint Presidents of the European Booksellers’ Federation, wrote:

“Whether a book is paper or digital, ordered online or bought in a shop, different tax treatment that hampers access to books should be avoided. From now on VAT rates on paper books and e-books will be aligned (if Members States so wish), a measure which will boost the e-book market and will further stimulate reading.”

In other words, the notion that an e-book, or audio-book, or indeed any digital version of print content, is a “service”, rather than a product, has been abandoned. Perhaps commonsense still exists after all.

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Amazon in Sweden?

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Good E-Reader reported a few days ago that Amazon is in talks with various delivery firms and that it is about to launch the Kindle in Sweden.  Good E-Reader comments:

Amazon launching in Sweden will be a boon for the local publishing industry and give them a wider reach to sell audiobooks, ebooks and print.  There are a number of digital bookstores in Sweden such as Adlibri  who launched its own e-reader Letto in 2010. Elib and Kobo also have a strong presence, in addition to Storytel and Axiell Media, who distributes over 20,000 titles from 650 publishers to about 300 libraries in Sweden and Finland. It is very likely that Amazon will quickly take over the market because they will have a strong name and be able to quickly attract all of the top publishers to sell digital and print content.

This does not exactly correspond to our own findings, reported in Books on Screens, which suggested that existing digital bookstores believed that they had a strong enough position in the market to withstand any intervention by Amazon.

PostNord‘s communications director commented to a local source (Breakit):

“De har kontaktat oss och vi har pratat om leveranserna, men de har inte avslöjat när de kommer till Sverige. Vi har ju redan tidigare sagt att vi tror att de kommer under 2018 och jag är fortsatt rätt säker på att det blir så.”

[They have contacted us and we have talked about deliveries, but they have not revealed when they will come to Sweden. We have already said that we think that they will come in 2018 and I am still pretty sure it will be.]

A related news story in Breakit is that Amazon had to pay 6 million kroner for the domain name Amazon.se, which was owned by a one-woman advertising company, Amazon AB.

Figuring out the market

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We get all kinds of news about e-books, although my sense is that the amount of news has been declining over the past year: I don’t seem to find as many items to post to our FlipBoard site.  Whatever the amount of news, however, one thing is certain: there is total confusion as to whether e-books are on the slide, or are growing, or standing still, or moving to a different planet.

This confusion is caused by two closely related things: first, most of the news concerns the USA, and secondly, that news depends on statistics released by the Association of American Publishers, which, although representing about 1,200 publishers, does not represent all, and, crucially does not include Amazon’s sales in its statistics.

An article in the Observer last year looked at this issue () drawing upon data from AuthorEarnings, whose latest report notes that in the last three quarters of 2017, the value of e-book sales in the USA was just over $1.3 billion – that hardly looks like a market in decline 🙂

Another source suggests that the global e-book market will grow steadily through to 2024, while Statista suggests that for Australia, the revenue growth rate will be about 3.8% between now and 2022.

In Spain, in 2016, the market share for e-books was expected to reach double figures for the first time, up to 10% from 6% in 2015.

The journalists’ reliance on the data from the Association of American Publishers results in them not getting either the global picture or even a true image of the situation in the USA, and to move from this faulty data to claiming that the e-book is dead, is just abou a silly as the statements, a few years ago – from the same people – that the printed book was dead!

Final research seminar

Our project is now formally ended, with the publication of the monograph by Nordicom, and the holding of a final research seminar in Borås on the 24th November. We had invited other e-book researchers from the Nordic countries and around Europe, as well as colleagues from the University of Borås, and the audience totalled about thirty persons, including researchers from Croatia, Lithuania, the Netherlands and Norway.

The event began with a welcome by Professor Ann-Sofie Axelsson, Dean of the Faculty of Library and Information Science, Pedagogics and IT, and presentation of the monograph and a description of the publishing activities of Nordicom, by Professor Ingela Wadbring. This was followed by presentations on the project overall, by Lars Höglund, the authors, by Kersti Nilsson, the publishers, by Elena Maceviciute, booksellers and public libraries, by Birgitta Wallin, academic libraries, by Tom Wilson, and the readers, by Annika Bergström. There was a break for lunch during that first session and then presentations by Terje Colbjörnsen, Frank Huysmans, Zoran Velagić, Arunas Gudinavičius, and a final word, summing up his reactions to the seminar, by Adriaan van der Weel.

LarsHoglund

You can see the project presentation here, while, below, are synopses of the other presentations, with links to the PowerPoint slides.

Streaming books: Value proposition and competitive advantages in three Norwegian ebook and audio book streaming services.
Terje Colbjørnsen, University of Oslo.

While streaming remains a marginal phenomenon in the global trade book industry at large, a number of streaming services have emerged in later years and competition is fierce to attain favourable market positions. The paper compares three Norwegian ebook and audio book streaming services: Storytel (Norwegian version), Fabel and Ebok.no Pluss. The three services all offer an on-demand selection of digital books at a flat rate, but are distinctly different in other aspects of their offering such as size of catalogue and integration with other services. Storytel, as the service with the largest catalogue, is most clearly aiming to be a “Spotify for digital books”, but still lacks rights for titles from dominant Norwegian publishing houses Gyldendal and Aschehoug. Fabel is a service coming out of precisely these two houses and offers a smaller, more niche-oriented and focused service, with audio books only. Ebok.no Pluss, owned by publisher Vigmostad & Bjørke, comes across as a mixed offer, integrating its service with an ebook store while also aiming to be a broad, Spotify-like provider. In all the three services, we find that the business model and value proposition is closely related to the company’s corporate ownership and its institutional and historical positioning in the book industry. While the Norwegian Book Agreement aims at enabling a level playing field, the digital field of competition remains marked by consumer lock-in and lack of broad, universal offerings of the Spotify-kind.

Link to the presentation

Seminar

E-book lending through public libraries in the Netherlands: trends and experiences
Frank Huysmans, University of Amsterdam.

Under the new public library act of 2015, the Royal Library (Koninklijke Bibliotheek) of the Netherlands, in close collaboration with the public library sector, operates two e-lending platforms for Dutch citizens based on a ‘one copy multiple users’-model. First there is the national e-lending platform currently offering 16,000 titles. All 3.7 million members of the ca 154 public library organizations can make an account (the Netherlands have paid memberships for adults, whereas most children and youth up to 16 years can have a membership without cost). So far, over 400,000 of them have registered, of which slightly over 200,000 borrow at least one e-book per year. Second, the Holiday Library app can be downloaded by all citizens (both public library members and non-members). During the summer holidays, this e-library is ‘open’ and a limited number of titles (30 for adults and 30 for kids and youth) can be downloaded in-app and read for free). In the summer of 2017, around 800,000 accounts and over 2 million e-book downloads were registered.

These developments are discussed in the context of commercial e-book subscription services and e-book sales. So far, there is no evidence for ‘cannibalization’ of e-book sales when the same e-book titles are available for e-lending through the library portal, although in general a window of 6 months applies. Also, the steady increase in the e-lending numbers can not completely compensate for the drop in the lending numbers of paper books in Dutch public libraries.

Link to the presentation
TDW
Overview of the Croatian e-book market
Zoran Velagić, Department of Information Sciences, University of Osijek, Croatia
Franjo Pehar, Department of Information Sciences, University of Zadar, Croatia

Zoran Velagić presented this jointly prepared outline of the e-book development in Croatia based on surveys of mayor e-book distributors and publishers’ attitudes towards e-books (using the instruments designed by the Swedish project). Four surveys of e-book distributors were conducted between February 2013 and February 2017, while two self-completed questionnaire surveys of publishers’ attitudes towards e-books were conducted in Spring 2015 and Spring 2017. The findings show that the number of unique e-book titles in Croatian language throughout the period is small (below 2000), while the access to English language production is rising. Around 50 publishers participate in the e-book business, and a majority have plans to increase their share of the market. The most popular e-book format is EPUB, the average retail price is EUR 5-6, but almost half of Croatian language e-books are freely-accessible thanks to government sponsored projects. Publishers are still not sure about the changing relations towards booksellers, libraries, and readers.

Link to the presentation

How much cheaper are e-books? The analysis of e-book prices in small language e-book markets
Arūnas Gudinavičius, Vilnius University, Faculty of Communication, Digital Media Lab.

It is believed that e-books should be much cheaper than printed books. And mostly they are cheaper, in spite of the fact that, in most European countries, the price of an e-book usually includes full VAT, rather than a reduced rate. But how much exactly are e-books cheaper, how much can a reader save if he buys e-books? And what is the difference between the prices in small language e-book markets such as Croatian, Finnish, Estonian, Latvian, Lithuanian, Norwegian, Slovenian, Swedish? How does this difference correlate with the reduced VAT for printed books, or with the number of e-book titles on sale?

A small research project was carried out to answer these questions aboved. The largest (with the most titles for sale) e-book retailer in each country was selected. Two shopping lists (one for e-books, another for printed books of the same titles) were created from the retailer of each country. If the particular largest e-book retailer had no printed books on sale, the largest print book retailer was selected. E-book best seller lists were used to create the shopping lists. If there were no best seller lists, lists of the new books were used. Books prices in national currencies were converted into Euro according to exchange rate of the research day. The percentage difference (with VAT included and VAT excluded) in e-books and printed books prices were calculated and compared between countries. Preliminary results showed that differences between e-book and book prices exist and vary between the countries. Different VAT regulations also affect final prices.

Link to the presentation

[Pictures by Helen Rosenberg and Tom Wilson]

Book launch

Today we had the launch of the book that has resulted from the project, under the title, Books on screens: players in the Swedish e-book market. The launch took place during our final research seminar in Borås, which was attended by participants from Sweden, Norway, the Netherlands, Croatia, and Lithuania—we’ll have a report on that event shortly.

You can now see the book details on the Nordicom site. As well as placing an order for the print version of the book, you can freely download either a pdf file or an EPUB file.

The decline in e-book sales is not universal

There have been reports from both the USA and the UK on the decline in e-book sales and the ‘resurgence’ of print, but, as usual, the Anglo-American situation of members of the respective publishers’ associations, is not repeated in other parts of the world.

Here’s an interesting example of that from Romania:

http://www.business-review.eu/news/survey-in-2017-1-in-2-readers-chose-audiobooks-and-e-books-152549

If that figure of 50% of book sales being made up of e-books and audio books is correct, it must be one of the highest proportions in the world, if not the highest.

Progress on the monograph

We’ve come to the end of the Project and are now busy on the final bit of work on the monograph we promised Vetenskapsrådet we would deliver.  It’s all written, coming to about 200 pages, and will be published by Nordicom, another survey agency at the University of Gothenburg.  We should be finished with the final copy-editing in the next few days and I imagine that the book will be published before the end of June.  A typical price for Nordicom’s publications is about 250SEK (€25, £22, $28), and there will also be an e-book version.  I will keep this blog open to report when the book is available, but it is unlikely that we’ll be posting much before then.

The real story?

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The previous blog post talked about biased news about e-books as a result of journalists failing to understand the nature of the data they quote.  Here’s a much more nuanced approach to the issue: http://www.chicagotribune.com/business/columnists/ct-hiltzik-ebooks-market-share-20170502-story.html

Michel Hiltzik has done his homework, and points out that, “The Big 5 — Hachette, HarperCollins, Macmillan, Simon & Schuster, and Penguin Random House — account for 37% of the overall book market, but only 26% of all ebook sales”.

Decline in e-book sales? Fake news?

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Once again the journalistic pencils are out, drafting articles about the decline in the sales of e-books, ignoring, once again, that the statistics they are quoting are partial, and biased towards the sales of the ‘big four’ – Simon & Schuster, Penguin Random House, Hachette and HarperCollins, companies that dominate not only the American market, but also the English-speaking market world wide.

And we know why their e-book sales have declined: it is because they derive all their profits from the printed book and they have no coherent business plan for making money from e-books and, consequently, are pricing them out of the market.  As one of our Swedish publishers said – and I have to paraphrase – “Publishing is run by old guys like me, if it was run by 20 to 25-year olds, things would be very different!”

These journalistic scribblers have no data on the sale of e-books by Amazon, or any of the e-book middle-men like Smashwords or Author House, or any other of the independent publishers that are not members of the AAP or the Publishers Association in the UK.

They also ignore the world picture – they report nothing of sales in Germany, France, Spain or South America, let alone Africa, Malaysia, Japan and China. In other words, it rapidly approaches fake news!

E-book sales keep on growing

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A few years ago, some commentators (high on something or other, perhaps) were forecasting the death of the printed book, now some (often the same!) are forecasting the death of the e-book.

This is all the result of reports of declining sales of e-books in reports from the Association of American Publishers, home of the Big Four, i.e., the same publishers that negotiated agency terms with Amazon in order to lift the price of e-books to the same level as their printed books. And while their sales fell, the sales of Amazon-published and independently published e-books continued to rise.

AuthorEarning.com has been monitoring all of this for some time now, and its February 2017 report makes interesting reading. It shows, for example, that in the USA e-book sales are now 42% of all book sales, in the UK and Canada, 34%, and in Australia 28% – so much for the “death of the e-book” – in the USA and the UK that amounts to 1.5 e-books per year per head of population. In the USA total sales of e-books was 487,280,000 in the year to February 2017 giving a total sales value of $3,177,000. So perhaps the Big Four got things wrong and, seeking to preserve printed-book profits (on which, remember, they recover ALL the costs of production for both formats), in effect gave up on e-books.

Well, one of the Big Four, Hachette, seems to have realised that it got things wrong and has now bought the UK e-book publisher Bookoutre (set up, I believe by a former Hachette manager). Bookoutre sold about six million copies of e-books last year, mainly through Amazon and Philip Jones on the Bookseller site comments:

Bookouture has profited from an e-book market many in the trade have misread. Amazon’s strong growth in Kindle sales from 2009 onwards led some to believe that digital sales would overtake and ultimately kill off print book sales; the threat level was later downgraded to trade titles, then to commercial books, and then finally to commercial fiction. But the big publisher strategies are still largely predicated on those early predictions, with agency pricing (fixed pricing for e-books) introduced first to stave off the likelihood of a print’s sudden collapse, and secondly to curb Amazon’s run-away growth. The strategy is to price e-books in line with their print equivalents so that the digital format does not gain a competitive advantage over what is for the major publishers the important physical market. However, such a rigid approach fails to take into account that some titles and lots of e-books appear to work better at lower prices; in short that the Kindle store is not the same as the physical book market. Rather than declining, the e-book market has splintered away from its print echo.

And goes on to say, “In buying a fast-growing e-book specialist Hachette is clearly trying to plug the gap it helped to create”. Can we expect similar acquisitions from the other big publishers? I expect we can, since, if they continue with their present strategy, they are going to find that the growth in e-book sales is not going to be to their benefit.