The European Market: What’s Slowing Growth & What’s Driving It?

With the opening of Amazon Spain last month, the French Kindle Store last week, and strong rumors of more to follow, I thought it was a good time for an overview of the European e-book market.

While most of the events and companies (and writers) driving change are American, and while the US is far ahead in terms of e-reader adoption rates and e-book sales, the book business is a global trade (which some estimate at $90bn per year), of which America is but one, albeit significant, market.

As the situation is less developed than in the US, there is less hard data and quality analysis, so forgive me if this is a little spotty. If anyone has better sources, information to add, or corrections to make, please make a note in the comments.

VAT

The European version of sales tax is known as VAT and (in the EU at least) it is levied on the sale of all e-books (and at far higher rates than print books). Each country has different VAT rates, but the rate that is applicable is that of the country of the retailer.

Amazon, for example, is headquartered in Luxembourg for tax purposes, which also happens to have the lowest VAT rates. As such, all Amazon sales to EU customers will attract the Luxembourg rate, which is 15%.

Unlike the US, under EU law, the price displayed to the customer must be inclusive of sales tax, so all prices EU customers will see on Amazon will be inclusive of VAT.

Self-publishers should keep this in mind when setting their prices in the French, German, and UK Kindle Stores as Amazon will add the VAT to the price you set.

For example, the minimum price you can set in France and Germany is EUR 0.86. With VAT, this brings it up to EUR 0.99 (about $1.35). For the 70% royalty rate, the minimum qualifying price you can set is EUR 2.60. VAT will bring this up to EUR 2.99 (about $4).

In all cases, you will receive royalties based on the price you set (i.e. EUR 2.60), you do not get a chunk of the gross price which includes VAT (i.e. EUR 2.99).

In practice, this means that readers pay slightly higher prices for self-published work, but your royalties per sale will be higher too.

The situation is similar for the UK, but very different elsewhere.

Customers outside of the UK, France & Germany

While the UK Kindle Store doesn’t serve additional countries, the German Kindle Store serves several others: Switzerland, Austria, Luxembourg, and Liechtenstein; and the French Kindle Store serves Belgium and Monaco as well. Self-publishers will receive a 70% royalty rate on all qualifying sales to these customers.

All other European customers (e.g. Italy, Spain, the Netherlands, Ireland etc.) are redirected to the US Kindle Store where VAT is automatically levied at 15%.

Delivery costs and import duties for e-readers are significant. For example, the cheapest Kindle a customer outside of countries served by the UK, French or German Kindle Stores works out to around $170.

But these customers also face additional charges when it comes to buying e-books. For all countries not served by a European Kindle Store (with the strange exception of Ireland), Amazon apply a $2 surcharge to most e-books.

This is applied before VAT is calculated, so the real cost to the customer is an additional $2.30 on most purchases. It should also be noted that it’s even applied to free e-books.

Needless to say, none of this money is passed on to authors or publishers. In addition, Amazon only pay a 35% royalty on all customers in the surcharge zone (plus Ireland).

What this means, in effect, is that if your book is retailing for $2.99, a customer in, for example, Sweden, will see a price of $5.74. Of that retail price, you receive $1.05, VAT is responsible for $0.74, and Amazon pocket a whopping $3.95.

This bizarre (and unfair) policy is changing. The surcharge was removed in Ireland last year. And when Kindle Stores opened in the UK, France & Germany, the surcharge was abolished along with it. Some European customers, however, may be waiting some time to get equal treatment from Amazon.

Every time I mention this surcharge, I get some push-back from people who claim it is down to higher operating costs, taxes, or some other such nonsense. If that’s your view, I suggest you read the link above, where it is all explained in great detail.

E-Reader Adoption

European markets are behind the US for a lot of reasons. One huge factor is the relatively higher price of e-readers.

Even in countries served by an official Kindle Store, there are no ad-supported models, and the prices work out to around $140 for the cheapest device (partly because of VAT), and about $30 more again outside of those countries.

In addition, the touch devices aren’t available at all, and neither is the Kindle Fire. European customers can only purchase the old keyboard model or the new entry-level device, whether they are served by a local Kindle Store or not.

The result of this is a paucity of e-readers on view in Europe. Outside of the UK, and to a certain extent Germany, seeing a dedicated e-reader is a rare sight.

Stockholm (where I am living) is an affluent city with very high advanced literacy levels, whose citizens love their gadgets. I see iPads and iPhones everywhere, but have only spotted one Kindle in the last 12 months (and that was in the possession of a Dutch ex-pat who had purchased it while living in the UK).

I hear similar reports from friends in cities across Europe – with London being the obvious exception.

But, as Amazon knows, it’s content that sells devices and, in Europe, it’s not cheap.

E-book Prices

E-books are very expensive in Europe which limits the attraction of switching to digital. Countries not served by a local Kindle Store are worst affected: no access to free e-books on Amazon (they cost $2.30 a pop), and far higher prices for “paid” books because of the surcharge mentioned above.

This means that 99c books cost these customers $3.44, titles priced at $2.99 work out as $5.74, and $4.99 e-books become $8.04. Not such a bargain anymore.

With trade published e-books, prices are higher again. The larger European publishers are pursuing (by-and-large) identical policies to their American brethren, keeping e-book prices high to slow the digital changeover, thus protecting their effective monopoly of print.

For readers, this means astronomical e-book prices for their favorite writers. EUR 20 (or more) for a new e-book release from a popular writer is common (that’s about $27). Needless to say, the paper version is often cheaper.

In most major European markets book prices are fixed by publishers, and retailers such as Amazon are prevented from discounting past a certain limited percentage. In some cases, like in Germany, this is backed by a trade agreement, but in many cases, like in France and Spain, it’s actually enshrined in law.

The UK had a trade agreement to that effect, but it was ruled illegal in 1997 and abandoned. This has seen book prices plummet there as Amazon and powerful chain supermarkets like Tesco are free to discount as they please on print titles.

However, the major publishers in the UK are parties to the same Agency Agreement as the US which has led to a huge price difference between e-books from the larger publishers, and those from smaller publishers and self-publishers.

The astounding success of indie writers such as Saffina Deforges and Mark Edwards & Louise Voss indicate that there will be huge opportunities for self-publishers in these new markets when the pricing differential becomes apparent to readers.

As for the rest of Europe, the EU is investigating price-fixing, has raided the offices of several European publishers, and there is the possibility that the laws preventing discounting by Amazon (and the other retailers) will be struck down by the courts.

The Future

Amazon has been relatively cautious in its approach to Europe, only moving into a market once the content is in place. Now that deals have been struck to sell digital titles from the major publishers in Spain and Italy, we can expect to see Kindle Stores opening there soon (and indeed hiring for both has been underway for some time).

There is no doubt that opening a Kindle Store in any country will really drive the market. It reduces the prices of e-readers significantly, as well as the e-books themselves. It also acts a spur to the local self-publishing scene – as writers in the various countries will be eligible for the 70% royalty rate for sales to their countrymen for the first time (which can make self-publishing altogether more viable).

Some commentators argue that print books are more cherished artifacts in Europe (especially France and Germany) and that e-books aren’t as attractive as a result. I remember the same sentiments being expressed in the US and the UK, and it proved no impediment there.

In any event, to encourage skeptical customers, a reader (thanks, Stefan) has pointed out that Amazon are offering a 30-day refund on Kindles purchased from the new French store (a policy he believes was in place at the launch of the German store).

Despite all of the above drawbacks, the digital market in Europe is growing fast. The UK is by far the most advanced and about a year behind the US, followed by Germany and France about 6-12 months behind the UK, and then it’s a toss-up between the relatively small markets in Spain, Italy, the Netherlands and elsewhere.

But even in countries like the Czech Republic, with significant lower wages (and thus even more expensive e-readers in relative terms), some difficulties with internet infrastructure, and a very limited selection of local language e-books, retailers estimate the market at only five years behind the US.

In short, Europe’s future is digital, despite the best efforts of some local players. But not everyone is trying to slow growth, and some publishers and retailers are open to new ideas.

At least one company at the Frankfurt Book Fair will be offering e-books as gift cards (an idea, you may remember, that was being promoted by Dean Wesley Smith). The British book chain Waterstone’s are developing their own e-reader, and a German chain has just launched a device, retailing for around $80 (thanks again, Stefan).

On top of that some publishers are experimenting with bundling content. Bantam are offering the first four e-books of George RR Martin’s fantasy epic A Song of Ice and Fire for the collective price of around $22 in the French Kindle Store.

The fifth book is around the same price, and the publisher is obviously hoping the reader will be hooked at that point. And the strategy appears to be working, with both offerings currently in the Top 50.

It seems that French readers are no different to anyone else, and they will respond to perceived value. Opportunities for entrepreneurial self-publishers await.

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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55 Responses to The European Market: What’s Slowing Growth & What’s Driving It?

  1. Great blog post! The world is the future for e-books. I’m sure more Amazon stores are going to open and this will only help indie authors.

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  2. Pat Mullan says:

    David,

    Thank you for the very thorough look at the European e-book market.

    Best, Pat.

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  3. David H. Burton says:

    Where’s Kobo at in the European market?

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    • Getting reliable figures for the European market is even more difficult than it is in the US. I don’t know if anyone has an accurate breakdown of market share – none that is verifiable anyway. Can I get away with “small but growing”?

      They certainly stole a march on Amazon by launching local language stores (or at least announcing them in certain cases) in markets Amazon hasn’t gone into yet such as Italy, Spain, and the Netherlands (and outside Europe, Australia and Hong Kong), and where they have launched in the same markets (such as Germany) they did so with a local language reader (which Amazon didn’t have until last month) and far more local language books (I think Kobo launched with 60k German books and Amazon with 25k, although there is a possibility that Kobo are counting free books and Amazon are not).

      Their international expansion plan is certainly more aggressive (or at least as publicly announced). But one of the main issues they have faced is partnering with retailers to get their devices in bricks-and-mortar stores. I believe they have yet to strike a deal in the UK, despite looking for a partner for some time, and I think they have had issues in all markets. Waterstone’s looked a likely partner, but have since decided to develop their own reader, and I would imagine that other bookselling players in Europe are thinking the same way. After all, why invite the fox into the henhouse?

      You may have noticed a lot of qualifiers above. I couldn’t even take a stab at their slice of the market. It’s hard to measure anyway with so many Euro sales being routed through Amazon US (and Smashwords etc.), and because the retailers don’t share information. In the information vacuum that is Amazon, competitors tend to puff up their own figures, knowing that they can only be caught out if Amazon went public with numbers, which they won’t – something B&N have been accused of in the US.

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      • Cora says:

        I checked out the German Kobo store a while ago and it was awful. They did offer German language e-books and their reader supposedly has a German menu option, but their entire page interface was still in English. Only the book blurbs were in German.

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  4. Stefan says:

    As much as I’d like to see some competition for Amazon on the international market, Kobo – for the time being – doesn’t seem to be the one.

    Kobo seems to have seriously underestimated the problems of expanding to Europe: They don’t have a German website yet that could be reached from out of Germany. From inside, last time I could try was in August and even then I was re-directed to their mother site with some pages offering their texts in German (but the number of pages was seriously restricted – it didn’t feel like experiencing a German homepage at all). As far as their e-reader is concerned: After the early summer announcement that it should be available in Germany in August (in some kind of bricks&mortar stores, too…) nothing happened. Late September VP Michael Tamblyn claimed that the reader would be available in Germany and Austria from October on (but he mentioned nothing about store co-operations etc.).

    Dave – actually, I can’t remember if Amazon promoted the same money-back-guarantee when introducing the Kindle in Germany (maybe someone else can).
    At the moment, the cheapest Kindle would come up to a total of around $ 130,- for me (to Hungary, ordered from US: 109 + 21 for delivery, no customs charges). Actually, although the surcharge is applied to many books for me, I think free books are almost always exempted (can’t remember ever to have come across $2.40).
    Germany has a law for fixed book prices, too. For some time, there was a debate about whether it should be applied to e-books (different VAT) as well, but at the moment the understanding seems to be that it has to.
    Finally, the new cheap German device you mentioned doesn’t have an e-ink screen, what people who are used to one will consider as quite a drawback (and no mention of WiFi either… but maybe they just forgot to).

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    • Hi Stefan,

      Thanks for that additional information. It sounds like Kobo are struggling to find appropriate partners. But at least their threatened presence in the market, and Apple’s roll-out of 26 Europoean iBookstores (as well as some moves from local players like Waterstone’s and Telefonica) will keep the pressure on Amazon to continue their international roll-out at a decent pace.

      Does Germany have a trade agreement amongst booksellers as well? Maybe I’m imagining it.

      Re: the price of the Kindle. I ordered one for my mother last week. Basic model. The reader was $109, plus $21 for delivery plus import duties. The import duties only appeared on the bill at the very final step after you enter delivery details etc. Total cost was roughly $170. (The import fees were 27 Euro. I just tried to purchase another and its still quoting those import fees).

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      • Stefan says:

        Price of Kindle: I played it through recently until the very last moment before I buy, and it had $129.88. But as Christmas is coming up, I will try to make someone happy, too, and then I will be able to tell you exactly. Did you order as a resident of Sweden or of Ireland? (The EU membership might make a difference.)

        German book prices: I don’t know about any official trade agreement amongst booksellers, but everybody has to keep to the price fixed by publishers (publishers have to set a price). And the German Booktrade Association is keeping a watchful eye on everything. At first, they were unsure about e-books, but sensing the danger, since 2008/09 they enforce it for e-books as well. The basis is that the law itself has the provision that it is also applicable to products that reproduce or substitute books. To quote from an interview with an Association rep from Sept 08: “[German] publishers are increasingly worried that they will lose control over pricing and that non-price-fixed e-books will endanger their core business with hardcover and paperback books.” (http://www.boersenblatt.net/260493/).
        I like the part about the “core business”…

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      • Re: kindle prices.

        The import charges only appeared at the last possible moment, just before you confirm the order (after you enter credit card details and delivery address). I ordered one to be shipped to Ireland, that was approximately $170 (including power adapter $15), and I checked out the price to send one to Sweden, and the only difference was delivery was $2 more. Both countries are in the EU (although Sweden is not in the Euro).

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  5. Stefan says:

    So, this is the last one for today, then I’ll keep my mouth shut.
    I just saw that tomorrow a new study, “The Global e-book market: current conditions & future projections”, will be presented at the Book Fair. You can download it here (in English!):
    http://www.livreshebdo.fr/cache/upload/pdf/eBook_Report_2011_web1004c_1.pdf

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    • Hey, thanks for that link. I read the first half of the report – I’ll read the rest later.

      The report is interesting, but I wouldn’t rely on it fully. The statistics are a curious mix of the right up to date, the very much out of date (UK market share is far above 6%), and the plain wrong (e.g. according to them, Amazon, B&N and Apple have 103% of the market between them). They get some basic facts wrong too (e.g. Amazon Encore is NOT a self-publishing program it’s a publishing imprint of Amazon). They also compare apples and oranges to curious effect (including iPhones when discussing what percentage of the market e-readers have).

      The basic analysis is reasonably accurate though.

      One big thing that they are wrong about is that there is no longer any prohibition against re-categorizing e-book VAT at the lower rate. That was lifted in 2009. Since then, France has passed a law which will take effect next year which will reduce the VAT on e-books to the print book rate, and Spain is working on similar legislation.

      Some stuff is interesting. They claim 450,000 e-readers had been sold in Germany BEFORE the introduction of the Kindle. If true, that’s very promising, but it’s hard to know how solid that information is given the errors in the UK and US sections.

      If the statistics about French downloading from libraries are correct, that would seem to indicate that there is a much larger demand for e-books than is currently being satisfied by the retailers, and that Amazon could do quite well there. I noted that one respected French publisher proposed that online selling of ALL books be made illegal in France. Not the most progressive attitude, and particularly dismissive of what readers might actually want.

      Finally, it seems that across Europe we are seeing the same trends as America: fiction readers leading the charge.

      I will read the rest later, thanks for that.

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  6. David,

    You’ve got some data here, but you’re mainly talking about Amazon. The bulk of the ebook market in Europe gets bought and viewed on iPads and iPhones. That’s not anecdotal, it’s what’s really happening. Whether or not Apple is a better deal for authors, the company “gets” international, and has for more than a few decades. With content, they’ve already built a strong system for distribution in Europe. I’m not sure that Amazon has some magical formula for selling in Europe.

    Apple also recognizes something else quite well–the differences between the US and European culture around books. Though it may change, it’s clear that there’s a difference. That would be a good article topic for you…

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    • I’m talking mainly about Amazon because they completely distort a market when they enter it (which they are starting to do in Europe), and who was leading market share before that doesn’t matter hugely. Apple are selling very few books anywhere, and some analysts peg their US market share (of e-books sold) as declining.

      I’ve no doubt Apple have sold and will sell a lot of tablets in Europe. I’m just skeptical how many books they’ll sell. It doesn’t really matter if you have 60% e-book market share if the market is at less than 1% of all books sold. It’s not going to take too much for Amazon to overhaul that kind of lead.

      I believe Amazon will have the same formula as they have in Europe: the largest selection, the lowest prices, and the best customer experience (as well as the most popular e-reader which effectively chains customers to the store). Apple may be able to match them in some aspects of that, but not all, not until they get serious about selling books. And when they do (if they do) they have a lot of ground to make up.

      I don’t doubt that cultural differences exist between the US and Europe regarding books; I just think they are overstated. Trade magazines are fond of quoting numbers in surveys that show the overwhelming majority of German readers will not even consider reading e-books, but they fail to report that numbers were equally high in the UK and the UK, and that those very same numbers in Germany are falling dramatically year-on-year.

      Apple have some advantages in Europe. Brand. Store network. A huge head-start in tablets and smartphones. But I think that heavy fiction readers in Europe will prefer e-readers over tablets, just like they do in the US, and that those that do read on tablets, will prefer the Kindle app over the iBookstore. That is, unless Apple radically revamp it. But in that sense, they are well behind with no signs of turning it around.

      Having said all of that, there are a lot of variables, and anything could happen in a year. Also, if enhanced e-books really take off, that will play into Apple’s hands (and the larger publishers). I’m skeptical though.

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      • I’d have to wonder how many of those German iPad owners downloaded Kindle apps–the big trick is not necessarily the device, but the market. iPad, despite the noise, has ever been an ereader. (Anyone have that handy slide where Steve Jobs claimed more than 30 percent of the ebook market?) Ironically, with Jobs’ death, the next Apple leader may actually take an interest in the ebook market–it’s there and it’s relatively low-overhead.

        I just don’t see sales of enhanced ebooks ever taking off because of the dramatically higher prices–I didn’t here much buzz after the Ken Follett experiment, but let’s see what Pottermore delivers.

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  7. Excellent analysis, as always, David. Timely too. Cheers

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  8. Very good analysis, David. I do expect the low-cost Kindle Basic to make fast inroads in the European market.

    It will be fascinating to see how it all plays out.

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  9. David, would you care to include this etailer of indie books from Europe in your next analysis?
    http://www.xinxii.com
    I like them cause they will pay me in NZ into my paypal account on request. However I have no idea how much VAT or other taxes they levy upon ebook sales or where they are based for tax purposes. Authors can list their books in many different formats, so we can supply ebooks for readers without an ebook reader.

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    • Hey,

      I wrote about Xinxii way back in April: https://davidgaughran.wordpress.com/2011/04/25/making-money-from-writing-part-3-sales-channels/

      They seem like a smart bunch, and very clued in on social media. However, they don’t seem to get enough eyeballs on their book listings to make sales in any numbers. I’ve had all my titles listed there in multiple formats and I haven’t made a single sale (in fact, I stopped checking over a month ago). In that same time, I’ve sold over 1,000 e-books on the other channels, so I don’t think it’s me, necessarily. I’ve also struggled to find anyone who has sold more than a handful there – total – and all of those sales seemed to come from specifically directing readers to go there (as opposed to, say, Smashwords).

      Now, I wouldn’t count them out just yet. They are trying all sorts of things to promote the site, and seem quite keen to promote indie writers (unlike, say, Kobo or Apple). However, I think it’s fair to say that they face an uphill struggle against the bigger pan-European players, and local players in each market.

      My take on the site – viewing as a reader – is that books are kind of tucked away. The site seems more focused on selling documents, PDFs, slide shows, notes etc. rather than books. Perhaps they are trying to corner some kind of corporate/educational market. But I can’t see that strategy winning over readers.

      Dave

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      • Cora says:

        Regarding XinXii, I am one of the few indie authors who have made some sales there, albeit only a handful. And even my meagre sales got me onto their top 50 bestseller list, which should tell you something.

        XinXii is very easy to deal with. However, they seem to be focused mainly on advice books, contract templates and educational materials like lecture notes. Their all-time bestseller is a template for a non-disclosure agreement (selling for a hefty price, too) and stuff like someone’s university term papers, a teacher’s materials on Fahrenheit 451, etc… seems to sell well there. Their customer base is not very fiction focused at the moment.

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  10. Pingback: Germany discovers Indie Publishing | Pegasus Pulp

  11. Cora says:

    There must be something in the air, because I also blogged about the European, more specifically the German, e-book market and reactions in the German media to the indie publishing phenomenon today. I just added a link to this post BTW.

    According to the latest available figures from last year, e-books were 0.5 percent of the total book market in Germany. It’s almost certainly higher than that now – I hope they’ll release new figures during the Frankfurt Book Fair which starts tomorrow. In the Netherlands, e-books are 1.7 percent of the total book market, which is a high percentage for continental Europe.

    Amazon’s entry into the German and French markets will almost certainly increase the e-book market share, but I don’t think they will be as dominant as in the US. Apple has a fairly big share and the German bookstore chains Thalia and Weltbild/Hugendubel (of the 60 Euro colour e-reader) have been offering their own e-readers for several years now. I see very little interest in the Thalia Oyo e-reader when I’m in one of their stores and most Weltbild stores don’t display their reader in store anyway. I also hardly ever see e-readers of any kind in the wild either in Germany or the rest of Europe. I have seen maybe three dedicated e-readers in the wild and two of those belonged to ex-pats in airport lounges or planes, the third was a student on the tram. A bibliophile teenager in my neighbourhood is also experimenting with e-reading on his smartphone. I haven’t been in the UK for a year now, but I’ll be visiting in late October. It will be interesting to see how many e-readers I can spot there.

    What is more, a lot of Germans have never heard of e-books. When I’m talking about my indie publishing venture, I regularly have to explain to people what e-books are. Even the parents of Apple’s iTunes marketing guy for Germany didn’t know what e-books were. And most of the people who know about e-books range from “I don’t need this” to downright hostility.

    Of course, e-reader adoption will eventually grow in Germany and continental Europe. Though I still believe that it will progress much slower than in the US. And the fixed book price agreement in Germany (which also applies to German indie publishers BTW) is only one aspect. There are also cultural aspects which increase the resistance to e-books or at least don’t make people overly eager to switch. But that’s a blogpost in itself.

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    • Hi Cora,

      I read your blog post – very interesting. For anyone that wants (a lot) more detail on the German market, check it out: http://pegasus-pulp.com/2011/10/11/germany-discovers-indie-publishing/

      I would be very, very surprised if e-books had captured a bigger share of the market in the Netherlands than in Germany. This should mean that the market is currently higher than 1.7% there which would peg Germany at almost US 2009 levels. There are no guarantees, of course, that the German market will grow as quickly as the US. It may not, in fact, for all sorts of reasons – not least the currently limited selection of German e-books – which is a huge factor.

      A lot of people mention cultural differences in Germany and France that will slow the growth of e-books. Maybe they are right. I seem to be in the minority suggesting that these differences are overstated and that there was similar resistance in the US and the UK and even the most optimistic e-book evangelists were surprised by the dramatic growth of e-book sales (as a percentage of the overall book market).

      But we are all guessing. Time will prove us all right/wrong (delete as appropriate).

      Thanks for the extra info.

      Dave

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      • Cultural differences don’t stop technology, as well as the birth and aging of a new generation.

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      • Cora says:

        I ran across the Dutch numbers when researching Dutch e-book vendors as a possible additional sales outlet, since there is no Amazon NL and plenty of Dutch people speak English and/or German. I was a bit surprised that the percentage was so high as well.

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      • Cora says:

        Replying to Scott (since I can’t seem to do so directly), I’m a teacher and even the most voracious readers among my students, the kids who drag a different book around school every week, not only don’t own e-readers, they have never heard of e-readers and e-books at all. They did think the idea was rather cool, though, when I explained. And when I gently suggested to an aspiring writer among my students that maybe he should upload his magnum opus about dinosaurs to a blog or turn it into an e-book to give away to friends, he was very adamant that he wanted a “real book”. So if 12 to 15-year-olds view e-books that way, it may take a while yet for them to reach critical mass in Germany.

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  12. Charlotte says:

    Having recently moved from the UK to the Netherlands, I was shocked at the huge price increases once I got re-routed to the Amazon US Kindle store. Interestingly though (and to my relief) I can still download free books (though it’s impossible to tell whether I’m seeing all the free books that are available to US customers).

    Digital reading over here hasn’t even started, as far as I can tell. It’s difficult and expensive to get even the Sony reader, and there’s nowhere to buy books from anyway (Amazon US is not an option with those prices). Most people haven’t even heard of digital reading or digital publishing. I’m waiting with some impatience for somebody to get e-reading started over here, but if Kobo doesn’t follow through on their plan to open up shop in the Netherlands, then it could be some time coming.

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    • TheSFReader says:

      Charlotte, I think you can “change” your settings to tell you’re still in the UK. It should enable you to access to the UK prices … (at least it works for the US store).

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      • I have heard from other readers that this works, but only for a while, and Amazon will eventually realize that you’re not on “holidays” from the UK, and are actually living somewhere else, and will automatically reset your location. By all means try it, but maybe you should stock up on books for the few weeks that it works, before you get pinged with the surcharge again.

        I’ve been thinking about a possible workaround for the surcharge. I’m living in Sweden (a surcharge country) but I set up my account when I was living in Ireland (a non-surcharge country). I don’t get hit with the surcharge. It must be either (a) that I still have an Irish delivery address attached to my account or (b) that I have an Irish credit card still attached to my account, or (c) both.

        I suspect it’s (a) because I know someone else in a similar situation who started getting pinged with the surcharge when they deleted an old German delivery address. So, maybe you could try entering a UK delivery address in your account (or an Irish one). It might require a book order to validate the address. I know when some US indies wanted tagging privileges in the UK, they were required to make a purchase. They bought a book and had it sent to a charity shop like Oxfam. A few days later, they had tagging privileges in the UK. A similar approach could work to give you access to the UK store. But I think it would be easier to do it with an Irish address, then gain access to the US store without surcharge prices (as the UK has its own Kindle Store and the “tagging” trick doesn’t give you access to it).

        Does that make sense? My brain is kind of soupy today…

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    • Cora says:

      You could try a Dutch e-book vendor. There are several and most of them sell English language e-books. The prices seem very high, though, probably even higher than Amazon with surcharge

      Still, here are a few:

      http://www.selexyz.nl/
      http://www.bruna.nl/
      http://www.ebook.nl/

      They also sell e-readers.

      Like

  13. TheSFReader says:

    Just to speak about France, and what I see/don’t see : While a lot of friends own iPads/iPhones, they DON’T read on it. Not that I’m inclined to meet reading people in my job, but from my own (limited) POV, Apple has no market share in e-reading.
    Also note that in addition to all the “big” players, we have a small “local one” with Bookeen and their Cybook ereaders (Opus, Orizon, and next to come Odissey).

    One of the “Kindle Store” best feature (for me) is the openness to self-publisher, which features prices that will appeal to enough readers taht it becomes a selling point : if Publishers don’t price ebooks low, someone else will, and show that an ebook’s price doesn’t need to take into account the whole old paper production/distribution line.

    I take the Kindle France as the tipping point which will really finally start the e-reading “habit” here, and it prompted me to open a forum (modeled after mobileread and kindleboards) for the starting community (http://lire-numerique.com/forum ).

    Like

    • All of the iPad/tablet owners I know here in Sweden are gadget freaks, but not heavy readers (or read at all really).

      I think the forum is a great idea – best of luck with it. I might even drop in and see if I can dust off my French (it’s only about 8 years since I attempted a sentence).

      Like

    • My anecdotal experience with France and iPads is that iPad owners there are voracious readers. But there’s an elephant in the room here, which is most blog visitors (and Dave) are focusing on fiction. Non fiction (especially technical and informational) does well on the iPad in Europe. Sweden and the rest of Scandanavia also have one of the highest rates of tech book purchases from the iBookstore already (though most often English versions).

      I think fiction is a different animal, and might be slower than other forms to take off in non-US markets on mobile devices.

      Like

  14. TheSFReader says:

    A bug maybe (hopefully), but it seems, regardless of the publisher’s intentions, DRM are applied automatically to books on the French Kindle Store😦 as seen from a French account.

    Like

  15. Thanks David, as always, for the great information. One critical point for indie writers is the VAT tax added to your price is also used for Amazon’s price-matching purposes. So if your $2.99 book at Smashwords is also $2.99 at Amazon, the VAT will actually push you up to about $3.44 or so–and under Amazon’s terms and conditions, you need to have the price the same everywhere. Amazon.de unpublished my book twice because of price-matching problems (this only happened with my German-language book, oddly enough–but I wonder if they will spread that to all titles.).

    I’m simply jacking up my foreign-language prices in the other markets, or avoiding them entirely, because compared to Amazon, they aren’t even markets, just a place to list your book.

    Like

    • Scott,

      That’s a very important point, thanks for bringing it up. There will be price matching issues, for sure. For example, the minimum price you can set to attract the 70% royalty rate in Germany is EUR 2.60, (EUR 2.99 with VAT). This is the price I have set “Let’s Get Digital” at. It’s $2.99 in the US. As such, via Smashwords, it’s now in the German apple store for EUR2.50 including VAT. If Amazon price match, I lose the 70% royalty rate. If they unpublish, it’s even worse.

      I don’t sell much on Apple (or B&N for that matter), so I really should raise the price straightaway to prevent these issues. By my calculations, I need to raise my $2.99 price on Smashwords to $3.60, but I think I might need to raise it to $3.99 to be safe. One thing, however, is giving me pause. I make a decent amount of sales on Smashwords. In fact, I direct customers there to avoid the $2 surcharge, and they are very grateful for that. They would be forced to pay the higher price too, unless I gave them a coupon – which I suppose I could leave printed on my site permanently to let them buy for $2.99. Not an ideal solution though – the ability to set separate prices for foreign markets or various partners on Smashwords would be better, but that could be a long time coming. I might email Mark Coker to see if there is a better way.

      Dave

      Like

  16. Thanks for the great post, David. I’ve only had passing familiarity with how the various markets work, and this demystified a few things for me.

    Like

  17. Anyone have that handy slide where Steve Jobs claimed more than 30 percent of the ebook market?)

    Anybody have that slide showing Amazon’s documented e-book and Kindle sales?

    Cultural differences don’t stop technology, as well as the birth and aging of a new generation.
    Grammatic confusion aside, culture stops, alters, averts technologies all the time, throughout history. Culture also *creates* technology. Culture is code for values, and values are perhaps the prime shaper of human history. I’m not sure what you mean–that Amazon’s Kindle is “unstoppable”?

    Like

  18. Lassal says:

    Hi David,

    I will be buying a Kindle in the next couple of days to check on my formatting. So I will be able to give you the accurate numbers for Germany soon. Just saw that the basic Kindle reader is listed for 99EUR incl. VAT.

    Another thing: you were talking about different VAT for books and e-books. In Germany the VAT is: 7% for books and 19% for ebooks.

    Also I will be checking out that company with the e-book gift cards on the Frankfurt Bookfair. I did read Dean’s post, too, and all the comments and thoughts about it. So I am curious about the product EPIDU is offering. EPIDU appears to be a publishing company – but I have not looked closely yet.
    http://www.epidu.de/

    I was also talking to a very good friend (!) of mine, who manages a bookstore in Frankfurt, about the potential of the idea of gift cards for e-books … But the emotional barrier was too high to overcome with logical arguments. That was interesting. And a bit frustrating. My gess is that you will be able to buy gift-cards soon – maybe anywhere BUT in small bookstores.

    Best,
    Lassal

    Like

  19. Looks like Amazon is getting a leg up on international sales. These dedicated stores will be great for Kindle, I never released how fast the fees add up without a regional site.

    What are some of the other ebook distributors doing internationally? I remember hearing something about Kobo a while back, but what about BN?

    Like

    • Cora says:

      Barnes & Noble doesn’t even recognize that people outside the US exist. Non-Americans can’t buy from them nor can they use the Pubit platform.

      I think it’s an exceptionally stupid business policy, but that’s just me.

      Like

    • I wrote about Kobo today. Barnes & Noble seem to have no interest in the international arena. They also don’t allow international readers to purchase their e-books, nor do they allow international self-publishers to list their books there.

      If you can figure out the logic in that strategy, I’m all ears.

      The only smart thing they have done (in international terms) is they have been very aggressive in sourcing Spanish-language content for their site, striking all sorts of deals with Spanish publishers (whose market extends across Latin America). Given the Hispanic population in the US, there is significant money to be made in Spanish language sales. Indeed, I read something recently where a Spanish publisher was saying that, for their frontlist at least, they were selling 2 Spanish language e-books in the US for every one in Spain.

      Like

  20. Pingback: on publishing « creative barbwire (or the many lives of a creator)

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  22. Ray Sullivan says:

    Great posting David, it filled in a lot of gaps in my knowledge, especially the outrageous $2 surcharge – let’s start a campaign! Reference setting your Apple prices to avoid price matching – it could get more difficult as Apple price in $0.99 increments outside Europe and in 0.49, 0.99, 1.49, 1.99, etc in Euros and GBP based on the US price,which is why my $0.99 (plus tax) cost £0.86 on amazon UK but £0.49 on Apple

    Like

    • Hi Ray – I just rescued your comment from my nasty spam filter – not sure why it ended up there, sorry!

      With Amazon at least, you can set the price at (almost) anything you like. It looks like Smashwords are developing a new tool to allow its authors to have more granular control over prices on individual channels (and in different territories), which is great.

      Like

  23. Lassal says:

    Hi,
    as promised above, I just ordered the basic Kindle via amazon.de and it is 99EUR inkl. VAT (19%)
    No extra costs. Not even delivery.
    I did add a cable for 9,99 and a protective hull for 29,99 (yes, an extravaganza – but I know the chaos in my handbags). So it was 138,98 EUR all together = 116,79 + 22,19 VAT

    Like

  24. Maciek says:

    quote:
    What this means, in effect, is that if your book is retailing for $2.99, a customer in, for example, Sweden, will see a price of $5.74. Of that retail price, you receive $1.05, VAT is responsible for $0.74, and Amazon pocket a whopping $3.95.
    end of quote

    Yes, but what will happen for the author in Sweden if the same book is purchased from the customer located in US? (Not Sweden)?

    Like

  25. Maciek says:

    Thanks. After some hard searching I was also able finally to find info on Amazon endless FAQ pages. Thanks for the confirmation too which is extremly important part of the whole picture.

    Like

  26. Pingback: 2011: The Self-Publishing Year In Review | David Gaughran

  27. Pingback: 2011: The Self-Publishing Year In Review « Guyanese Online

  28. Pingback: The European Market: What's Slowing Ebook Growth and What's Driving It | The Passive Voice

  29. I’ll check into that now. Sorry about that!

    Like

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