An International Challenge to Amazon? From Spain?

Those of us here in Europe have long been puzzled by Amazon’s go-slow international policy. I live in Stockholm, a wealthy city with a population that seems to be fond of their gadgets. Fancy laptops are everywhere, iPhones are ubiquitous, and iPads are becoming popular, despite high taxes and relative cost.

I have friends in Amsterdam, Warsaw, Munich, Prague, and Dublin who say the same thing. Only in London have Kindles started to make an appearance.

In Europe, the Kindle has only been officially launched in the UK and, just over a month ago, Germany. There, the Kindle is 50% more expensive than in the US. Plus, they haven’t bothered to translate the menus or instructions from English.

If you are outside the UK or the Amazon Germany countries, you must order from the US, pay customs surcharges, and it gets shipped with a US plug.

There are several issues holding back the growth of e-books in Europe, but instead of fighting them, Amazon is adding to them.

On top of the tax on e-books that Amazon is compelled to levy (which is 15% across the EU as Amazon can apply Luxembourg rates), they also add a $2 Whispernet surcharge if you are outside the official Kindle countries or Ireland.

This is added whether you own a Kindle or not. To all e-books. This kills the 99c market, and the lack of availability of cheap e-books holds back the e-reader adoption rate. And, of course, this charge is native to Amazon. Customers who purchase off Kobo, Smashwords, Sony, or Apple don’t have to pay it.

You would think this leaves the field wide-open for their competitors. However, most have been strangely slow to exploit this.

Barnes & Noble seem to have no interest in the international market. They don’t allow international self-publishers to upload direct to their store. Even stranger, they don’t allow international customers to purchase their books. You must have a US credit card.

Apple are selling a lot of devices in Europe. However, they seem to have little interest in actually selling books. When the first iPad was released, it wasn’t even shipped with the iBooks app – you had to go to the app store and download it separately.

It was only when it became the most downloaded app that they relented. Towards the end of 2010 they included it with all new iPads.

Even so, in their latest figures announced this week, the iBookstore has only sold 130 million books. That might sound like a lot, but it’s not. First, Apple have sold over 25 million iPads in the US alone, and over 100 million iPhones worldwide. Second, it includes free books.

Sony were early leaders in Europe, but have done little to maintain that position, and have slipped back considerably.

Until yesterday, the only company that seemed keen on contesting the international market was Kobo. They have made inroads into Australia, New Zealand, and Hong Kong, and have begun a roll out in Europe of local language e-bookstores in Germany, Spain, Italy, France, and the Netherlands.

Plus, they are shipping their e-reader with translated menus and instructions.

I know Amazon have a lot of balls in the air at the moment, but their international strategy seems all wrong. They have a wide open, fast-growing, largely virgin market, and they are ignoring it. I have long felt that a smart, fast-moving competitor could do them damage.

Some news from yesterday might wake them up.

Telefonica move into e-readers and e-books

Spain’s largest telecoms company, Telefonica, have announced the launch of their own e-reader and e-bookstore.

The e-reader will launch next week. It has a 6″ touchscreen, making it the same size as the Kindle 3 (and half the size of the iPad), and 2GB flash. The Wifi version will retail for 169 Euro or around $250. A 3G version will follow.

So why is this a big deal?

First off, the Spanish language market is huge, encompassing not just Spain, but every country from Mexico down to Argentina (excluding Brazil and Belize), totaling around 380 million people.

Telefonica might not be that well known in the US, but they are a huge global player – the 5th largest telecoms company in the world, with more subscribers than AT&T and Verizon combined. They own major carriers, broadband companies, and fixed-line operations across Europe and Latin America.

They are huge in South America, and own the second-largest carrier in Mexico, making them by far the biggest player in the Spanish-language market. They are also big in the Brazilian market (almost 200 million people), and have large operations in the UK, Ireland, Germany, and Eastern Europe.

The e-book market in Spain is very small, and the e-reader of choice is a smartphone. But a device this size, at this price, could change all that.

Now we have a telecoms company, with a huge network of stores across Europe and Latin America which will be pushing this e-reader, exposing e-books and e-readers to a whole new wide-ranging demographic.

However, Telefonica’s approach is not without its flaws. First off, it appears that this device can’t be used as a phone, and in any event, it’s probably a little large for comfortable calling.

If I was Telefonica, especially with Spain as my key market, I would have looked to develop something a little larger than an iPhone and a little smaller than a Kindle. I think somewhere in there is a sweet spot where you could have a killer device that could be phone, camera, e-reader, and browser, all-in-one.

If I was predominantly selling to a market where smartphones are the e-readers of choice, that would have been a major consideration.

Second, the choice of books is extremely limited. As Mike Shatzkin explained in a very thoughtful article yesterday, the history of bookstores shows us that the one with the biggest selection wins.

Telefonica is hoping to partner direct with the three largest Spanish publishers (Planeta, Random House, and Santillana), with the aim of building a catalogue of 1,500 books by September. The books are expected to be priced between 3 Euro and 12 Euro ($4.50 t0 $17.50)

That’s a tiny selection, and the books are priced way too high. Plus, the fact that they haven’t got these deals tied down yet is worrying for Telefonica.

Those same three publishers are combining to form their own e-bookstore which will operate both in Spain and across Latin America – in direct competition with Telefonica.

I can’t help but feel that if Telefonica had taken a more open approach, and allowed small publishers and self-publishers to upload directly, they would not only vastly increase the selection of titles available (and push down the prices), but they would also prod the Big 3 Spanish publishers into moving a little faster.

Competition is a spur, no doubt.

Hot on the heels of this news are rumours that Amazon is finally about to launch the Kindle in the Spanish language market (they are said to be hiring at the moment).

But why have they been so slow? Why do they willingly cede market share to competitors?

In terms of e-books, I don’t see either Telefonica or the Big 3 Spanish publishers’ combined effort becoming a big player. A closed system will never beat an open system. Amazon, Apple, and Kobo will just kill them on selection and price alone.

However, the e-reader could be very popular, and they have a global bricks-and-mortar retail network to push it. Time will tell.

Overall though, it’s great for readers. More competition will drive down prices, and should force Amazon to rethink its cautious international strategy.

Oh, and don’t forget, it’s more new markets for writers. Now, I must dust off that South American novel.

The Never-Ending Blog Tour

I dropped by fellow indie author Mary Pat Hyland’s diner for a chat this morning. Looking back at some of my answers, I think she might have put something in the coffee. Make your own mind up here.

EDIT: Telefonica changed the name of their carrier (and retail outlets) in Spain to Movistar, but the Telefonica name remains on many of the subsidiaries, and is still the name of the global holding company – just in case there is any confusion.

About David Gaughran

David Gaughran is Irish, living in Prague, and the author of Mercenary, A Storm Hits Valparaiso, Let's Get Digital, Let's Get Visible, and this here blog.
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30 Responses to An International Challenge to Amazon? From Spain?

  1. josephinewade says:

    Dave,

    Great article. Even if Telefonico can’t compete with a large inventory at least they’re in there competing. It is strange how much of the world is ignored in this new market — a US credit card really? Makes you wish you had a few million to invest (ok I always wish I had a few million). I know Americans are rather blind to what happens outside of the US, but I assumed that large businesses with a global market would be wiser.

    I have a question I often hear (via blogs and message boards) from those who live in Australia and New Zealand that they have trouble accessing ebooks put out here in the states. And conversely we have trouble accessing their books. I know there is a huge YA ebook market there just by following the commentors on YA blogs, but I’m not sure how to hurdle over this or even what the hold up is any ideas?

    The WordPress comment box changes on a daily basis here and at other blogs it is like entering into a universe that is just off by a few degrees every day. Yeah, I didn’t get much sleep last night.

    I enjoyed your interviiew. I can’t wait for your novel to come out.

    Like

    • The restrictions you mention are only with regard to trade published books. Writers sell books to publishers by territory and/or language. So, I can sell a book to a UK publisher, and then separately to a US publisher. Amazon will show UK users that version of my book. However, before I do a deal with the US, the UK publisher is not allowed sell the book there, because I didn’t sell them the rights.

      Self-publishers don’t have that problem.

      I do know that some people in Asia can’t order my book, but I’m not sure why that is – I have the global rights to it, and that’s what I told Amazon when I uploaded. But I send all those people to Smashwords anyway to avoid the $2 Whispernet Surcharge.

      Like

      • josephinewade says:

        It would appear that Smashwords has a definite in where other markets don’t, but I’m not sure why that should be true being smaller. I can’t believe that the whispernet surcharge would be worth losing all those sales either to Smashwords or people who just say it’s not worth it.

        I’ll have to keep my eyes open. There are a couple of Aussie estores that are looking into becoming their own epublishers, but it’s going to take time if they decide to cross that hurdle.

        Thanks again.

        Josie

        Like

  2. This is interesting news, indeed. I am sure there are English speaking people (or bilingual people who like to read in English) in these countries who would buy English books. Too bad we indies can’t upload to their store. Silly on their part. I wonder if Smashwords or some similar store will get involved in this market so we can?

    Also, I’m curious about having indie books translated into other languages. I’m sure there would be a market for our books in Spanish (French, German, Malay, whatever.), but the cost is prohibitive, I imagine.

    Like

    • Well, people can buy Smashwords books from everywhere in the world – they just don’t know it! The interface is a little funny, and demands a US zip code (note to US international companies, ZIP codes are native to the US) – but aside from that it works (plus there is no VAT, plus the writer makes more off 99c books).

      There are a lot of restrictions to distribution channels to Europe, not just for self-publishers, but for the smaller companies too.

      Re. translation, I know some people are looking into it, but the market is too small to make it worthwhile just yet for all but the handful at the top of the bestseller charts. That will change too, but there are a lot of people in those countries who enjoy reading books in English. The English version always comes out first, and in some countries, the quality of the translation is so poor, that they would rather read the English version anyway.

      Like

      • One note about US zip codes. Simply enter any random 5 digits. Usually a string of zeros works fine. Tricks out the system.🙂 Or you can use my old zip code: 97205.😉

        I assume if I were to sell my books on my own website that anyone anywhere could buy my book without any restrictions. Is that true?

        Like

      • I always use 90210.

        I am not a lawyer, not a tax specialist, and this should not be considered advice etc etc etc, but my understanding is that your only restrictions are in terms of the country/state where you are based. If you are selling books in Texas you will have to apply sales tax. In London you will have to apply VAT if the customer is based in the EU – not otherwise.

        Some states/countries have peculiar laws which make direct selling difficult and expensive, but in general, it’s a good idea. You can keep up to 95% of the price of the book, depending on your arrangements with PayPal or whoever. Lots of writers do it. I’m looking into it.

        Like

  3. I should note that the “US credit card” or “US bank account” only is a common theme with American businesses. I have to maintain a US bank account in order to pay my old student load back in the States. It’s ridiculous. The claim is that it’s to prevent money laundering. At least, that’s what they tell me when I query them. Though apparently Amazon has managed to avoid this money laundering problem.🙂

    Like

  4. wayob says:

    Thanks Dave for this great post.
    I think that this is a start, a slow and not so good start for ebook/eReader market for the Spanish language market, but a start at last. I think that the Spanish publishing companies have, still, to much power to let this grow and by the other side I see to much of respect as you say, by companies like Amazon, B&N, Apple, etc.
    The business is out there, and is eager to surge. Fernando Trujillo Saenz is one of the best Spanish language selfpub writer. It is not a surprising number like those Konrath and his Guest post at his blog say, but still with almost none marketing what so ever have managed to sell almost 10k ebooks through Amazon. I talk about him in my blog. Sorry I do not post a link but writing from the iPhone now.
    The market is out there and as it gets bigger and one of the big companies looks to the Spanish market in this case, it will explode and there will be people surprised. Good luck in Europe. Again thanks for your blog.

    Like

    • Hola Gustavo,

      I hadn’t heard of Fernando Trujillo Saenz before. 10,000 e-books is phenomenal in a market which hasn’t really started growing yet. I love these stories, and I would love to read more about him.

      Dave

      Like

  5. “I always use 90210.”

    Bwahahahaha! They’re probably thinking they’ve got LOTS of sales in LA!

    Too bad I don’t still live in Oregon. No sales tax.😉

    Like

  6. RDoug says:

    Another very good, very informative article, Dave. I, too, have been wondering why Amazon has been so reluctant to enter the European (or just international, for that matter) marketplace. English has become the de facto universal language in a lot of places, so you would think English-language e-books made available at low, competitive prices, would be a natural winner in many areas.

    Alas, Amazon was way behind the power curve on this one, and that’s not like them. Usually they’re in the lead and looking for ways to stay in that position.

    Like

    • My guess is that Amazon are facing a fierce fight at home, both in losing e-reader share to B&N, Kobo, and Apple, and e-book share to B&N and others, as well as taking on new fights in publishing and elsewhere.

      The executives are probably looking at the immediate bottom line and deciding that manpower and resources are better spent in the rich US market fighting to maintain their slices of all these ever-growing pies.

      However, the digital game is all about going to wear the puck is going to be, not where it is now. This is a global $80bn-$90bn business. The US is (currently) the biggest market, but it’s just one market. The German market has big potential, and the Spanish language market has huge potential.

      Maybe Amazon are gambling that the others can be the early entrants and do all the heavy lifting of educating customers etc. and then swoop in and kill the competition with selection and price.

      But that’s weird because that’s not a tech company’s usual MO, and certainly not Amazon’s. I’m puzzled by it.

      Like

  7. This is very interesting. We’ve had Kindles in the UK for well over a year, but I never realised the issues with other European countries.

    I agree that it’s frustrating when you can’t get what you want. Personally I get really annoyed when I can’t get an ebook because of where I am, usually when they are released in the US first, or only. Hopefully, although I’m not hopeful, Amazon, and other publishers, will get the hint and release everything,everywhere, all at once.

    Like

    • Hi Claire,

      It’s all down to how publishers carve up rights by territories and language. If you sell the US rights to your book to a publisher, and only the US rights, they aren’t allowed sell it elsewhere because you haven’t sold them the rights. You can then sell the rights to a UK publisher, but they might not get the book on the market at the same time as the US publisher. This was fine in the past, but now with the world so connected, it causes readers frustration, and the writers and publishers get complaints. It’s not necessarily the publishers fault, the UK deal could easily have been struck a few months later than the US deal.

      It is becoming common, however, for publishers now to seek World Rights or World English Rights. This is great for the publishers, they can sell on Amazon and sell to anywhere. It’s not necessarily so good for the writer. The publisher with World Rights might look at the numbers and not be bothered doing a deal for, say, the Hungarian version, whereas if you had held on to those rights, you could have got a nice cheque out of it and a bunch of new readers eagerly awaiting your next book. Or if they had World English rights, they might be satisfied with making some money in the US and the UK, and decide it’s not worth bothering with Australia.

      It’s not really down to Amazon at all.

      Self-publishers, of course, don’t have these problems as they almost always on the global rights to their work.

      Ultimately though, I don’t know how the traditional method of carving rights up by territory will survive in the digital world, and is something that causes publishers a lot of angst. The carve up will probably survive in languages, but what does that mean for UK publishers?

      Like

  8. Iain Rowan says:

    Hi.
    I had read earlier in the year that Barnes and Noble were about to open up PubIt to international authors ‘soon’. I did email them to ask when that might be, but apparently their commitment to pretending the rest of the world doesn’t exist also extends to email.

    As you point out, there must be a rationale to some of the decisions being made by Amazon and others, but it’s very hard sometimes to work out what that might be.

    Like

    • Hi Iain,

      They said that in December too. I’m not holding my breath.

      Maybe Amazon are distracted with all the stuff going on in the US, or maybe they are waiting for the e-book markets to grow more. Either way, it’s not how they usually operate, and not a great strategy.

      Like

  9. I’ve had my Kindle for over a year now, purchased from the US. Fortunately I have a Canadian address (as I run my writing business from there – better to be self-employed in Canada than Spain) so I can get books that aren’t available outside off Canada and can avoid the insanely high taxes.

    I think the fuss is in the copyright problems. As someone above mentioned, publishers buy rights per country and most writers in the traditional publishing market make a lot of their money through selling international rights.

    As for Spanish-language ebooks, yeah, they don’t exist, anywhere. People stop me on the bus to ask about my Kindle and I explain to them that they would more or less be wasting their money to get one because they wouldn’t be able to find content. Hopefully that changes soon.

    Like

  10. Stefan says:

    For those who might be interested some information about a small country like Hungary:

    About a year ago, two big online-retailers (with publishing houses in the background) formed a joined-venture for ebook business, ekonyv.hu. This year in April they launched their ereader ‘textr (developed by a German company). The ereader comes with a Sim card that enables direct downloads from their webshop (through the T-Mobile network).
    The whole project has ‘failure’ written in capital letters all over it. Reason no. 1 is of course the price: ereader including Sim card go for HUF 100.000,- (that is around € 400,-). The high price is argued for by claiming that there won’t be any further costs for downloads. By comparison, my kindle3 (wifi version) was delivered to me from the US to Hungary for about HUF 35.000,-
    If there are any further reasons needed why it won’t be a success (I don’t think so), just have a look at their shop on textr.hu, which is kind of slow and not very customer friendly. They offer about 1.000 ebooks in Hungarian at the moment.

    On the other hand, there is also a group of kindle enthusiasts that formats Hungarian and international classics in Hungarian for kindle and makes them available for downloading for free. Right now, there are 250 ebooks listed there (kindle-téka).

    Like

    • josephinewade says:

      Stefan,
      I’m going to jump in and say thank you for this. I have to say Hungary YA readers are usually very vocal and enthusiastic on many author sites. You may be small country, but you must have a huge reading population.
      I’m curious other than Hungarian do people in your country read other languages?

      Thanks.

      Like

    • Thank you for this Stefan.

      I’m always interested to hear stories like this. Most blogs out there focus on the US market, and to a certain extent, the UK. I’m Irish and living in Sweden, and I am keen to bring an international perspective whenever possible. I’m researching a piece (probably a series of pieces) on e-books in Latin America, but information outside of the US and the UK is much harder to come by.

      Anytime you want to post stuff like this here, please be my guest.

      I agree with your conclusions too. That effort sounds like it’s doomed to fail. HUF 100,000 is a hell of a lot of money for an e-reader. I was in Budapest a few years ago, and I remember the cost of living being pretty cheap (compared to Ireland or England). Unlimited downloads isn’t such a great deal when you only have 1,000 books to choose from, especially when a Kindle is a third of the price.

      Dave

      Like

      • Stefan says:

        Dave – sorry if I didn’t express myself clearly: what is included in the 100k is the transfer (probably 3G) of ebooks to the reader. Of course, you’d have to pay for the books…
        Thanks for the offer, I might take it up one day. Maybe when I manage to get an acceptable answer from amazon about the extra costs (at the moment we’re at stage 3, the “I don’t know the answer to this and will pass it on to people higher up” stage. Or is this 4 already?).

        Josephine – don’t blame me for the Hungarians, I’m just an expat living here. Hungarians & foreign languages is an interesting topic that would take up a lot of Dave’s blog space. Generally, foreign language skills in Hungary are much, much lower than in countries like Germany or Norway and maybe also the Czech Republic.
        I guess traditionally Hungarians put a high value on literature – mainly their own, but also in translation. Last year, turnover on the bookmarket was HUF 61.6 billion (around € 233m), which is not bad for 10m inhabitants (but 27% of this was for school and language learning books). Figures were down for the second time in a row, now by 4.5% compared to 2009 (not counting inflation of 4.9%). What might interest you is that the biggest drop was in children and youth books: 16.65%.
        Personally, my feeling is that Hungary’s younger generation doesn’t read a lot of books, neither in Hungarian nor in foreign languages (which nowadays means basically English). On the other hand, a survey I made among students at the college I’m working at had more than a quarter of the respondents claiming that they read books and newspapers in foreign languages in their free-time (as ‘reading on the internet’ was another possible answer, they hopefully realised that I meant printed stuff). So my feeling might be wrong.
        Last point: As there is a fixation on language exams in this country, pupils and students are more or less forced to learn a foreign language (“to learn” standing for “being able to master the requirements of a specific test”). So there would be a potential market of learners/readers, if good ereaders and books were easily available at affordable prices for Hungarian standards. To come back to the one I wrote about in my original comment: HUF 100k is quite close the average monthly income of 140k (after taxes)…

        Like

      • That makes a lot more sense. I thought it was some kind of subscription plan where you could choose a certain amount of “free” books per month or year from those 1,000. That makes it an even worse deal than I thought. Shocking!

        At least you got some response from Amazon – I got none, from either email.

        Like

  11. josephinewade says:

    Stefan,
    My impression from the author blogs I visited was that there may not be a huge market there, but the market that was there was very enthusiastic . It is a shame that the youth market is in decline because I think books are one way people feel connected around their community and around the world. A friend of mine called it a ‘common read’ . With places like Good Reads making it a continuum where you read what you like, but join in the discussion at any point . It changes the face of The Great Conversation from anything we’ve known in the past and to exclude youth from this sad.

    By the way, I’d never hold you responsible for the Hungarians. — that would be a big job!

    I understand about the language exams, it is amazing how testing can kill actual learning.
    Thanks for your answer.

    Like

  12. Pingback: Kobo Target Europe While Amazon Sleep At The Wheel | David Gaughran

  13. andrea says:

    I get the feeling that ebooks are taking off pretty slowly here in Spain. Since I moved here I get the feeling that publishers have somehow managed to keep prices of print books high and the few stores that sell ebooks are also pricing them accordingly (see http://www.casadellibro.com/ebooks ). The devices that I’ve seen at that bookstore are also on the expensive side and I get the feeling that people don’t think a lot about the Kindle because the Amazon store doesn’t have that many books in Spanish. It’s a shame because I think that people do read quite a bit, and the potential market for Spanish language books (you could include Latin America) is pretty huge…

    Like

    • The potential market is massive.

      I’d be very surprised if the Spanish market wasn’t next on Amazon’s list (followed by France). Spain is a good bit behind, but that will change.

      Like

  14. Pingback: Amazon Opens Kindle Stores In Spain & Italy, Abolishes Surcharge | David Gaughran

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