Kobo Partners With Major European Booksellers As Global English E-book Sales Surge

On Monday, we took a look at the European e-book market, on foot of the opening of Amazon Spain in September, last week’s new French Kindle Store, and widespread rumors that dedicated Kindle Stores will open in Spain and Italy shortly.

One of the commenters to that piece asked about Kobo, given that I had flagged their European expansion as one to watch during the summer. I responded that Kobo had struggled to find appropriate partners in key markets. Well, that has now changed.

Yesterday also saw the beginning of the Frankfurt Book Fair which is at least partly responsible for the European focus of much of the news, as well as the flurry of announcements this week, including a big one from Amazon which we’ll get to at the end.

Global English E-book Sales Skyrocket

There were two warm-up events for the Frankfurt Book Fair this week. TOC’s event was called Let’s Get Digital (which gave me a chuckle), but the more interesting tidbits (for me) came out of the Publisher’s Launch mini-conference on Monday called eBooks Around The World.

This might come as a surprise to self-publishers seeing meager sales (if any) on Amazon Germany, but English e-book sales are booming in non-English speaking countries. According to a Kobo VP, sales of English language e-books, outside of USA, Canada, UK, and Australia, are up over 300% in 2011.

South Africa is leading this charge, up 432%, and Sweden is next at 359%. Before anyone gets too excited, in both cases the markets are starting from an extremely small base, and there are reasons why Kobo sales may be disproportionate in both markets.

Both countries are in Amazon’s Surcharge Zone, meaning they pay $2 more (plus sales tax) on every e-book purchased. And, in the case of Sweden at least, iPads are extremely popular, dedicated e-readers are virtually non-existent, and given how poorly the iBookstore is rated by readers, it’s not to much of a stretch to imagine that iPad owners who like to read e-books could lean towards the Kobo app (where there is no surcharge).

Whether they can hold on to that market share when Amazon enter the market and if/when Apple get serious about selling books is an open question, especially as I haven’t seen any Kobo readers on sale in Sweden yet, and partnering with local retailers (for them at least) is key.

Kobo Agrees Partnership With Major UK & French Retailers

Kobo has moved into France in a big way by partnering with major French retailer FNAC. It sounds like the deal will be similar to their ill-fated partnership with Borders in that FNAC will provide the storefront, and customers will be passed to Kobo to process the transaction.

FNAC will stock Kobo readers across their 81 stores where they will have staff on hand to demo the devices. As part of the deal, FNAC’s catalogue of 80,000 French language titles will be added to Kobo’s existing 2 million or so e-books, giving them a far greater selection of local-language content than Amazon’s Kindle Store, at least for now.

FNAC are a major player in France – the largest retailer of its kind in the country, selling more books than anyone else – but have underwhelmed with their own e-bookstore, and were said to have lost money on their own e-reader. This deal looks like a win for both companies.

It should also be noted that FNAC have significant international interests: 20 stores in Spain, 17 in Portugal, 4 in Switzerland, and 10 in Brazil. Whether this deal gives Kobo an opportunity to expand into those markets remains to be seen.

One market they are strengthening in is the UK. Kobo had been searching for a key retail partner for some time. Waterstone’s seemed the obvious choice, but that deal fell by the wayside when they decided to develop their own e-reader, slated for next year. Instead, Kobo have agreed a deal with WH Smith.

It’s hard to explain what a WH Smith is like to someone who hasn’t been to the UK, but imagine a 7-Eleven with a post office, that also sells toys, games, movies, and a selection of books in a string of key shopping locations across the country including malls, motorway service stations, airports, train stations, and hospitals, as well as in the prime retail areas of urban centers.

This deal will give Kobo huge visibility in the UK, and it’s similar to the FNAC deal in that WH Smith will maintain the e-storefront and then pass customers to Kobo to complete the transaction, and will also stock their e-readers across its extensive store network.

Some analysts may recall Amazon kindly taking care of that pesky internet business for Borders and will wonder if FNAC and WH Smith have let a fox into the hen-house here. That would be a valid concern for both companies, although it’s hard to see how they could capture a share of the digital book market otherwise.

The other option, of course, would be to develop their own devices (which FNAC tried) and chain customers to their own e-bookstores. But, as Waterstone’s are likely to find out next year, it’s probably too late for that. Speaking of which…

Indie Booksellers Ponder Their Own E-readers

Oren Teicher, the CEO of the American Booksellers Association (ABA), has said they are exploring the possibility of developing their own e-reader. It’s an audacious move, for sure, but I can’t help feeling it’s a little too late.

Any entity seeking to get into this race now is it a severe disadvantage, especially in the US. Amazon and Apple are relatively entrenched in the dedicated e-reader and tablet market respectively. Barnes & Noble have carved out their own piece on the back of a highly visible nationwide chain.

Major device manufacturers, with very deep pockets, such as Sony, Samsung, and RIM are struggling to hold on to any of the market.

Indie booksellers may have Google on their side (to an extent), who provided them with an e-commerce platform to sell their books, which essentially acts as a customizable portal to the Google e-bookstore and its millions of titles.

However, Google don’t sell many books and it’s not hard to see why. The customer side is a mess. Reports from self-publishers who do list there (I don’t) indicate that the other side is just as bad. In fact, most don’t bother listing because of Google’s policy of arbitrarily discounting books, causing Amazon to price match, which in turn leads to self-publishers losing the all-important 70% royalty rate.

From Teicher’s comments, it now appears there are issues with the e-commerce platform too, with new releases being slow to appear  – which is not good, to say the least.

There is no doubt that Google have the resources (both financial and technical) to make a play for a significant slice of the digital book market. However, it doesn’t appear to be a big priority for them right now, and I imagine their offering will continue to underwhelm until that changes.

But rather than fixing their own store, they are pressing ahead with international expansion. The UK store opened last month, and Canadian and Australian stores are expected before the end of the year, with Europe on the road-map for 2012.

As for the ABA, I would respectfully suggest that they focus their efforts on curating that e-bookstore catalogue, rather than wasting resources on developing an e-reader.

Their natural demographic are the minority of readers who want a limited, hand-picked selection of books, rather than the majority who prefer the near-infinite selection of Amazon. If they try and play Amazon at their own game, they will fail.

On this note, Bloomsbury executive director Richard Charkin is urging retailers to develop their own devices to compete with Amazon. Aside from the fact that taking advice on how to compete with Amazon from a large publisher is the last thing anyone should be doing, I’m sure the irony of this won’t be lost on most, given that publishers have singularly failed to develop their own retail side to check Amazon’s growth, let alone done anything as radical as even considering developing their own device.

A quick look at Bloomsbury’s tepid, clunky online bookstore will show print books at ridiculously high prices – often twice that of Amazon UK – and e-books nowhere to be seen. They do have listings for some backlist e-books, but they don’t sell them in their own store. Instead, they link to – you guessed it – Amazon.

That’s how you compete!

Amazon Launches New Science Fiction, Fantasy & Horror Imprint: 47North

While their competitors are flailing around, Amazon are busy vertically integrating in a very methodical way. Their publishing strategy in 2011 has been very simple: follow the readers.

They launched their thriller and mystery imprint, Thomas & Mercer, with the marquee signings of JA Konrath, Barry Eisler, and the deceased Ed McBain’s backlist, then quickly scooped up a host of successful indie writers, beefing up their roster considerably.

Aside from that genre and romance (which has its own dedicated imprint, Montlake), the next wave of readers to make the switch to digital were science fiction, fantasy, and horror fans. And now they have their own imprint: 47 North.

Again, they have amassed an impressive collection of writers to kick things off including Neal Stephenson and Greg Bear, Chris Roberson, and BV Larson (the full, extensive list is on Amazon’s press release).

Some self-publishers have noted that this group of writers is markedly different from the Thomas & Mercer list (most come from trade publishing), that there are notable indie absentees who have been dominating the genre bestseller lists for some time, and indeed that certain popular sub-genres like high or epic fantasy aren’t represented at all.

However, in response to a thread on Kindle Boards on that topic, one of the 47North authors BV Larson (who originally self-published) commented that nothing should be read into this initial line-up, and that he fully expects to see more indies signed up in due course, and for the various sub-genres to be fully represented.

It also should be noted that he said that Amazon “appear to move about double the pace of any publisher I’ve run into”, that they gave him a “better, faster contract” than he would have gotten from the competition, and that they “might be around longer”. Indeed.

Finally, I should point out that Lee Goldberg’s and William Rabkin’s Dead Man series will come under the ambit of this imprint, and not Thomas & Mercer as I suggested last week.

The first books published by 47North will be the re-release (in advance of Halloween) of the first five books in this series, all of which were originally self-published. The series will then progress with a new book from a new author each month, commencing in November, continuing, according to Lee Goldberg, “into infinity!”

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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27 Responses to Kobo Partners With Major European Booksellers As Global English E-book Sales Surge

  1. Impressive post. Lots going on in the ebook world.

  2. James says:

    English e-book sales are booming in non-English speaking countries….and Sweden is next at 359%
    Yep, that’s exactly what I comented on your previous post. Especially non-fiction.

    While their competitors are flailing around, Amazon are busy vertically integrating in a very methodical way.
    Except that that “boom” you mentioned has little to do with Amazon so far, and doesn’t look much like “flailing” to me.

    Any entity seeking to get into this race now is it a severe disadvantage, especially in the US.
    Cheap, no-name e-readers are estimated to sell in the millions in SE Asia. You can get them on the street.

    Their natural demographic are the minority of readers who want a limited, hand-picked selection of books, rather than the majority who prefer the near-infinite selection of Amazon. If they try and play Amazon at their own game, they will fail.
    David, come on. How do you arrive at this conclusion? Based on what, exactly? I know Amazon’s popular, but this sounds awfully hyperbolic to me, especially the last bit about trying to compete with Amazon.

    Major device manufacturers, with very deep pockets, such as Sony, Samsung, and RIM are struggling to hold on to any of the market.
    Sony’s e-reader business is growing, actually. Samsung doesn’t have a clear strategy yet (and may never have one). RIM isn’t much interested in the e-book/e-reader niche–yet.

    • Hi James,

      1. It has quite a bit to do with Amazon. In the article I linked to, you will see their sales growth of English language books in non-English speaking markets is booming too. I’m of the opinion that the surcharge has a dampening effect on these numbers and that they would be even greater without it.

      2. See above. Also, I was specifically referencing publishing companies there – sorry if that wasn’t clear. I don’t know if Kobo could be described as a fully fledged competitor yet, but they are showing promise, especially internationally. This two deals announced today are a big step forward for them.

      3. Do you really think the ABA can develop an e-reader which will capture a significant portion of the device market, chain customers to indie bookstore’s e-offerings, and thus give indies a significant share of the e-book market? I mean, it’s possible, but I really really really doubt it.

      4. Sony is a funny one. They had the market cornered and let it slip away. Their e-bookstore is still awful, despite being one of the first around. And in certain markets in Europe (Ireland for example) owners of their readers are extremely loyal (more so than to other e-readers) and yet they don’t seem to be able to capitalize on it. The last (reliable) figures I saw had Sony pegged at a single digit e-book market share in the US. It has been that way for a while.

  3. As an indie author my problem with Kobo is that they discount.. Being from the UK the easiest way to spread the distribution load is to go with Smashwords. Smashwords signed Kobo up to a no-discount agreement, but only for the other side of the Pond, therefore when Kobo discounts in the UK arena Amazon price matches. I pulled the plug on Kobo distribution via Smashwords as with them I was selling in a poor ratio to Amazon. Will I change my mind? I’ll see how sales to Kobo go worldwide.

    The other thing I have a wary eye on is Kobo’s use of hidden sales stores. The great thing about Amazon is I can see the page, and the price, on Amazon.de/.fr/.com for my books. I can’t see what’s going on Kobos non-UK stores, and that makes me twitchy. Or paranoid, depending how one looks at one’s business.

    • I knew there were problems with Kobo in the past, and that Smashwords had resolved them. However, I didn’t realize the no-discount agreement only applied to the US. Thank you for letting me know.

      On the positive side, Smashwords are working on a regional price tool which will allow you to fix prices of your choice in each market. That would be excellent and would prevent any future price-matching nonsense (the difficulties with that would multiply with each international store otherwise).

      Kobo ghettoize indie books. As do Sony. Barnes & Noble kinda do, and certainly cook the bestseller list to keep us out (and reduce our visibility in other ways). Apple are building storefronts for the Big 6, so discoverability will be a major issue for indies there.

      Amazon give us an even playing field. But we also need some competition for Amazon too, so they continue playing nice. Barnes & Noble seem to be afraid of all things international, and neither Apple nor Google have prioritized the book business, so we need someone.

      • Neil says:

        Kobo ghettoize indie books. As do Sony. Barnes & Noble kinda do, and certainly cook the bestseller list to keep us out (and reduce our visibility in other ways). Apple are building storefronts for the Big 6,

        You’ve made the analogy of Google vs. Yahoo (search). If everyone else ‘gehttoizes’ indie authors, than readers who enjoy will gravitate towards the Kindle/cloud reader/Kindle app. I suspect at $79 per K4 (w/ads), many cloud reader/Kindle app readers will transfer.

        I would like to see more competition myself. But that won’t happen as long as everyone else is fighting over the big6 customers leaving indie authors to Amazon. I often do not leave the Amazon recommendations; they’ve identified my preferences that well.

        The only serious contender could be Google. Everyone else is fighting over a shrinking slice of the pie.

        Neil

    • From my perspective Kobo is the best choice. They don’t restrict distribution (like iBookstore does) and they don’t charge international fees (like Amazon does). When I publish a book via Smashwords, I’m sure it will land at Kobo.
      Generally, out of the three, I think Kobo is best suited for international expansion (approach+format+DRM).

  4. And reading that grammar & punctuation, I may never sell another book again!

  5. Lassal says:

    Hi all …
    just back from the book fair and tired as hell. So please do not mind me copy-pasting part of what I have just posted at Dean Wesley Smith’s blog, which is still awaiting moderation.

    “One thing I missed this time due to work but will certainly not miss next year, is the conference “SPARK”. Two days basically talking about the future of storytelling in all it’s glory. Title “How will stories be told in the Future?”. (More info in English here: http://www.frankfurtsparks.com)

    I was talking to one of the organizers, and he was telling me that they expect publishers to rent less and less space on the book fair in the future because of the development towards eBooks. So the book fair is actively trying to plan ahead for whatever a future book fair might look like – thus the conferences. Rather fascinating, in my oppinion. Because walking along the long ailes of the fair (I managed to see about 1/3 of the whole animal in one day), you sure saw the one and other iPad screwed to the wall, so people could try out one publisher’s new application, but basically you saw the new media only where services (print, ebook cards, … ) were being offered. Not amongst publishers. That looked pretty much the same as always. In fact, I heard a laudatio for some major German book award, where they were specifically (or better, very unspecifically, generalizing. books=good content, and new media= bad content … Which is just … silly! But, what did he get?! Applause. Sad.)
    But then again, as I said, I have but seen a third of it.”

    You can have a look at the programm of Sparks – The Digital Initiative of Frankfurt Book Fair – if you follow the link. It is obvioulsy about the whole digital development, of which the ebooks we know today are but a part of.
    A friend of mine went to the conference and I will pester her on the weekend.

    But now I will have a long hot bath and some nice dinner. There are many more book aisles to walk past … tomorrow.

  6. Stefan says:

    Considering the bad impression I had of Kobo, those two partnerships seem to be really smart moves.
    They also have a cooperation with German online electronics retailer redcoon.de, where you can order the Kobo Touch for € 149,- (but it is still on pre-order and no date given). As Media-Saturn-Holding owns shares in redcoon, I wouldn’t be surprised if we’ll hear about another cooperation with one of the holdings two chain stores (Media Markt or Saturn) in the near future.

    • Stefan – I think another German reader was saying the same thing the other day – the Kobo store was poor. Maybe linking up with local retailers can help them on the customer side. A Media Markt partnership would be a big deal for whoever strikes one – they are all over Europe, Russia, Turkey, China too I think. They must be one of the biggest chains in Europe.

      • Stefan says:

        Yes, the site was poor – and still is. Although you don’t get re-directed any more, kobobooks.de still has a lot of things in English. It’s getting better, but it’s still a far cry from being catered for an average German user who just discovered e-books (have a look for yourselves). Example: Who needs the NYT list there?
        One of the troubles with Kobo seems to be that they are always quite optimistic in their press releases as far as deadlines are concerned. The one from Sept 1 stated that their e-readers will be available in Germany from Oct 1 – that didn’t happen as far as I know (see above: still on pre-order). As they gave Oct 17 as shop date for 750 branches of British WH Smith, it will be interesting to see what happens next Monday.

  7. Thanks, David. Great info here

  8. A quick thought on the Britain / WH Smiths angle.

    For those not in the know the British book store world is, effectively, Waterstone’s and WH Smiths. There are no other significant players nationally, though some major cities have impressive indie stores. For now…

    Waterstone’s is a sinking ship. Bought out by a Russian venture-capital firm with an eye on prime property and absolutely no interest in books. Imagine Barnes & Noble on a much smaller scale, without the Nook, but still handing over shelf-space to coffee stores, novelties and anything except books… Borders, anyone?

    The new man at the top in-store, Daunt, is enthusiastic and ambitious, but it’s not clear just how much his vision coincides with the vision of Mamut, who holds the purse strings. Waterstone’s has been in steady decline for several years. Their e-book store is tiny, unappealing and restricted to UK sales, and they do not let indies list direct. It has sold Sony and iRiver ereaders for a good year or so now yet the staff are grossly ill-informed about the ereaders, and there is no in-store access or promotion of the Waterstone’s e-charts. The idea of a dedicated ereader so late in the game is ludicrous and just ain’t gonna happen.

    WH Smiths is not a book shop in any meaningful sense of the word. It sells books in the same way supermarkets sell books. Big names, celeb trash and glossy covers – anything the Big Six will pay them to promote – with staff that neither know nor care about literature.

    Like any forward-thinking business they understand the future is digital and if they can free up more shelf-space in-store for other rubbish they will. The chances of WH Smiths letting indies in is negligible. Their e-sales will be a platform for the same mundane rubbish as before – celeb trash, big names and whatever the Big Six pay them to promote.

    The other potentially sgnificant UK ebook player is Tesco, the biggest retail chain by far in the UK. So far their ebook store has been a sideline, but they have the money and muscle to make that work, should they ever get their act together. No sign of that yet, however.

    For the UK, Amazon’s Kindle store remains the only bright hope at this time.

    As for reaching the rest of the English-speaking world… Smashwords continue to be the only realistic entry point for self-publishers, and it remains to be seen how effective that will be. If other stores treat Smashwords uploads the way B&N do, using them as padding to make their lists look impressive, but giving them no further support, then breaking the international market will not be easy for indies.

  9. Bv Larson says:

    David,
    Excellent, insightful article. You should be writing for Publisher’s Weekly! Some of the follow up posts have really helped me grasp the UK book situation as well. Thanks everyone,
    -B. V. Larson

  10. Cora says:

    A little addition about FNAC, they’re also very active in Belgium and have been for more than twenty years at least. I used to buy comics there as a teenager. FNAC sell a lot of music and DVDs in addition to books, but their book selection was always good as well. They already had US-style superstores, when such stores were still extremely rare in Europe. Nice selection of foreign language books, too (good for me, since I can’t handle more than a comic in French).

    The last time I was inside a FNAC store was last year and they were still nice and blessedly free of non-book crap. However, since much of their product lines (books, films, musics) is rapidly going digital, it makes sense for them to expand their online presence. Not sure if Kobo is the right partner, though.

  11. Tony Slater says:

    Great stuff again Mr. Gaughran – daily I gasp at the revelations on this blog, and then am forced to read them out to the rest of my family who won’t believe that information capable of causing such a gasp is beyond their grasp…
    Just wanted you to know, I’m still here, keenly following – just don’t want to bog down your comments section with my musings!
    Tony

  12. Red Tash says:

    Truly fascinating developments! Thanks for posting, David.

    I’ll be in touch soon.

  13. Pingback: Amazon Faces Serious International Competition, From Japan | David Gaughran

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

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