The Shatzkin Files

As Europe’s ebook market develops, US publishers may find some sales growth

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Week before last I was in Frankfurt observing that the rest of the world, including our close cultural neighbors in Europe, was going to start catching up to us in ebook uptake. A companion observation was that many book consumers in Europe are quite comfortable reading English.

It is also true that many US publishers own rights that have been pretty much unexploited outside the United States. Although agents do their best to prevent it, sometimes publishers have enough leverage with the advance they’re paying to control global rights to English and even foreign language rights as well. Since those rights are more easily acquired in situations where the author has less leverage, either because the book’s potential is deemed small or because the author sold — with or without an agent — to a smaller publisher, they are often unexploited. Every publisher (and agent) knows that they fail to sell rights offshore in circumstances where they wanted to, tried to, and failed to.

Export of print books has traditionally been a weakness of US publishers, relative to their counterparts in the UK, particularly. This stands to reason. The biggest export markets for English have been in Europe and the UK has a lot less water separating it from Europe than we do. Servicing European accounts with sales reps and with shipments has long been a core component of British publishing. They are often weaker at exploiting unsold rights in the US, which has provided an important chunk of the customer base for US distributors like Perseus, Ingram Publisher Services, National Book Network, and IPG.

But servicing an export market with print is a lot more difficult and a lot less profitable than providing an export market with ebooks. Eliminating both the costs and risks of inventory has an even greater impact on margins (and/or, potentially, on selling price) than it does in the domestic market. So far, the non-US markets for ebooks have been tiny, less than 10% of the US market on a per-capita or per-print-unit-sold basis. But as that changes, and it will, the cumulative opportunity for US publishers to develop incremental revenues from what have been very quiet parts of their list will surely grow.

What we’re watching for, just as we saw it happen in the US, is the development of a marketing and consumption infrastructure (what has historically been called a “supply chain”.) Amazon demonstrated with the Kindle that a device that works well for reading, a wide title selection, and a sales and download process that is simple can very suddenly ignite the market.

Unlike the US before November 2007 (BK: Before Kindle), the device issue is no issue. There is a plethora of proven devices we didn’t have then: Kindle, iPhone, iPad, Nook, Kobo Reader, Android phones, and many other imitators on the market and to come. The downloading process, directly to many devices through their own store connections (Kindle and Nook and iPad) or through apps, is light years better than what we used for reading on the Palm Pilot, or even on the Sony Reader, in the BK era.

That leaves title selection as the biggest barrier for other countries to imitate the US ebook experience. As we observed in our Frankfurt post and previously when we posted from Brazil in August, the lack of epub files in other-than-English is a real barrier. PDFs, which do exist for all books, are a poor substitute. As a confirmed ebook reader for more than ten years, I can tell you I never would have become one without reflowed content (which worked for me in the Palm proprietary format before Kindle and before epub.)

This provides a large advantage for English. I believe we’re going to see in the months ahead rapidly-developing ebook marketplaces in English in non-English-speaking countries. Because of local variations in pricing and taxation and forces of habit, the markets will develop country by country unless and until some pan-European solution develops, which, because it would have to be English-based, seems unlikely to be a near-term development (although it is bound to happen someday if English-language consumption grows the way we expect.)

Although the big US publishers have been both digitizing and putting rights metadata into their files for some time, there could still be backlist titles for which ebook opportunities could be exploited in Europe (and elsewhere) that haven’t made the “cut” for conversion. There has been no reliable data compiled that I’m aware of as to how much of the backlist in big houses has been digitized, but it isn’t 100% anywhere. The anecdotal evidence about how thoroughly the big publishers have researched and recorded their digital rights is conflicting — many have certainly put resources against the challenge — but there are certainly mid-sized, smaller, and acquired publishers who might now have an additional justification to do the same.

Beyond the big publishers it is probable that the opportunities are proportionately larger. Because smaller publishers acquire more books from authors with less leverage (and often authors without agents) and because they have less developed foreign rights contacts, they are even more likely to control unexploited rights. For smaller publishers, it is possible that figuring out how to let the British, French, Italians, and Germans “discover” and purchase their ebook content will constitute an important opportunity pretty soon.

Admittedly, a lot of this is almost long-tail stuff. But not all of it. We’re entering times when publishers are going to have to scrap for every dollar of revenue, both to replace what they’ll lose as bookstore shelf space declines and what they’ll lose meeting price competition from all the new titles enabled by lower barriers to entry. To capitalize on this opportunity, publishers need to watch the development of offshore ebook markets and review all their old contracts to find the rights they own that there has been little prior motivation to think about.

O’Reilly has repeatedly reported that ebook marketing has opened up sales opportunities for them in places where print books were never practical to sell. Their experience is not a typical one; O’Reilly serves a global niche market that comes directly to them for mission-critical information and is now able to purchase it for immediate delivery as ebooks. But their experience is, in this case, a leading indicator of what all publishers who control offshore rights, in English or in foreign languages, will experience for rights which were previously uneconomic to monetize.

Of course, there are global ebook providers that US publishers already do lots of business with: Amazon and Kobo both have global reach and Google and Copia promise to. But it is not yet clear how powerful these channels will be in the emerging ebook markets relative to local entrants which will develop.

We’re trying to provide information that will be useful in this regard at Digital Book World. The opportunity to sell print abroad will increasingly oblige US publishers to know about Book Depository, an online book retailer that is a David challenging the Amazon Goliath globally. Our conference in January will introduce them personally to the US publishing community. That’s print and that’s right now.

On the ebook side, we’re delivering a country-by-country marketplace assessment for Europe from Cristina Mussinelli, the voice of European publishing on the Board of the IDPF (International Digital Publishing Forum.) Both of these should represent new sales opportunities for US publishers, many from nooks and crannies of their backlist. We will also have a panel on ebook distribution for small and medium-sized publishers that will provide further insight on how hard, or easy, it might be to act on this opportunity.

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  • Which is pretty funny, as recently they have gone out of their way to cut off sales to non-US customers for lots of books for which there is only a US edition, and no other…. 🙂

    • Could you briefly elaborate on that?


      • Sure. Let's take the DAW monthly SF/fantasy anthology series, for one. Books that don't sell a lot, that have zero chance of a publisher from another country wanting to sell them in English. Now can only be bought in the USA.

        Or for example older books, like the Supermen anthology by Gardner Dozois. e.g.

        Obviously stuff that won't sell a lot – but a year and a half ago, on sale to everybody. Now, – poof – all those sales for books like that over this period with no other editions are gone forever.

        Steven Brust has been at it for decades, no other editions :-

        So in the past, this opportunity was being exploited, then they deliberately stopped.

      • Thanks very much for the specifics. Just confirming that what you're saying

        is that the publishers have pulled the ebooks from the Australian market

        even though there's no local publisher in Australia? Is that the point? I

        want to try to check this out from the New York end but I need to understand

        what I'm checking.


      • Yes that is exactly correct. No publisher in UK, Australia, NZ or wherever.

        And ebooks pulled from people in Sweden, or Swaziland or Vietnam etc. Basically the whole world – with occasionally some of them available in Canada. Those are just the examples I thought of thought of in a few seconds.

      • Thanks very much for the information. This makes no rational sense. I'll try

        to learn more.


      • Also, I mentioned the DAW anthology series – but didn't give you an example, here's the latest one that I was interested in fyi :-

      • The first possible hunch is that this is somehow a victim of Agency pricing

        policies. I'm not sure what the issues are there: legal or otherwise. But

        I'm going to ask some questions. Thanks for calling the specific examples to

        my attention. If there's a pattern, it will likely be by publisher.

        Agency resulted in books being withheld from big chunks of the US market for

        a while until some contracts could be negotiated. There are transitional

        issues to publisher-set pricing (although I'd think that it would be

        possible to have Agency pricing in one market and wholesale in others.)

        Complicated stuff. If Agency is to blame, the problem could well be



      • Happened much earlier than that though. Was earlier, when they started crying in the UK. April last year and onwards.

        I don't think any reasonable person would call closing on 2 years temporary though. 🙂

        'Yes, sir, we have that in stock, but we can't send it to you for 23 months.'

      • OK, that helps. Can you tell me if what you're talking about are all

        Macmillan books in the States? Or are there others? And are you saying this

        problem stems from April 2009? Agency began at the beginning of April 2010.


      • They aren't all MacMillan books, no. I'll see if I can find you some more examples of US-edition only ebooks that are cut off.

        April 2009 was when it first happened to me, so that is the time it started give or take a month or so I think from memory. With a Sean Williams book – now in his case might have been going to be an Australian edition perhaps. An author whose house I could walk to if I felt like it, as well. 🙂

      • Rodyounger

        Related to your discussion – did you see article in Bookseller: Amazon Kindle's territorial controls 'easily cracked'?

        I have had a similar “experience” with Amazon in USA and UK with regard to my “Kindle” account. In the first instance I don’t own a Kindle and have never registered for a Kindle account BUT unilaterally created a Kindle account for me but associated my residency status to my default one click address (in Spain but I have several delivery addresses registered with them, including in USA and UK) NOT the credit card billing address (UK).

        Amazon uk also have “opened” a Kindle account for me but referred me to my account with despite the fact is my main Amazon account. Anyway, I changed my default address on to a UK address and now my “unwanted” Kindle account is with Amazon UK.

        So far so good but, as I pointed out to Amazon, surely the best address to confirm the geographic location of the buyer is the billing address of the credit card (and ask user to confirm which one is default billing address if there is more than one) not the “delivery” address for a physical product which may be a gift to someone else.

        Moving on to the territorial restrictions they apply to e-books, my novel Deadly Secrets is available via New Generation, as a Kindle version on and and as an ePub version via WH Smith (amongst others). It has NO geographical restrictions listed with Nielsens yet and WH Smith will only sell it to a UK resident. Why? In fact, in September 2010 WH Smith announced that it would only sell e-books to UK residents for “legal” reasons”. This is rubbish as there are many e-books which do not have such a tight territorial restriction. I have received no explanation from as to why they have placed a UK only restriction on the book but it certainly hasn’t come from New Generation or me. Territorial rights are easily available via Nielsens (although to be fair data integrity for some e-book titles is poor) and/or major distributors so there is no excuse for not being able to distinguish which countries/regions an e-book can be sold in.

        While granting of exclusive territorial rights to publishers in a region or country to enable the publisher to leverage its knowledge of, and position in, that particular market has served authors and publishers well for physical books, the advent of e-books is, as it did for the music industry, making the concept of a global marketplace a reality. Most leading publishers argue that marketing and distribution strategies for e-books are no different than for physical books and hence territorial restrictions should still apply but unfortunately it is not that simple.

        While e-books do cannibalise sales of physical books they also expand the market bringing in new types of readers who are generally Internet savvy and who can easily compare prices around the world. As e-book penetration rises so will their readers’ demand easy access to them at a reasonable price from wherever they are in the world.

      • DAW is Penguin, of course, and so is this Ilona Andrews book from Ace :-

        I think it is far more likely to happen with MacMillan or Penguin, certainly.

        I know of one of Murdoch's clan books – Year's Best SF 15 by Hartwell/Cramer which became restricted and now is available again. At dumb pricing still, think they are charging $10+ when it is an $8 paperback. Which is a drop from the $15 they wanted people to pay originally. You could ask them why they do this, too. 🙂 e.g.

        Then you get really dumb things like this. This Bran Mak Morn Robert E. Howard book I bought for around $10 cover price when it came out.

        Note that it says on this page :- GEOGRAPHIC RESTRICTIONS: Available to customers in: US, PR, VI, UM

        Also note that the price has gone up to $17, which is a pretty massive increase. That is the paperback price (and this is only a paperback). So puts to the lie the less than paperback price they were talking about when they went Agency. Which hardly anyone believed anyway, so no shock there. That is another issue though of course. It is 11.99 at Amazon because of the 2.00 tax we pay for being lucky enough not to be in the USA.

        However, Amazon will sell me the exact same book, currently.

        I have not done any of the fake address/account junk to get around anything, it is there for Australian customers.

        It is 'Exorcist' type headspinning for publishers to complain about Amazon's dominance – but only sell books via Amazon. (Which happens lots with MacMillan, so bordering on hilarious).
        Dead pool Barnes and Noble and Sony are of zero interest to anyone not in the US (or Canada I suppose) as they only sell to Americans. Apple might get around to it eventually, maybe, but given other media history it will take years.

        You can also ask, hey, this Agency pricing supposed to be the same everywhere. Appears you can't manage that, so why? 🙂

  • Recently I've been running a series of workshops for Polish publishers on how to enter e-book business and the biggest problem they have is negotiating digital rights with agents representing foreign authors.
    That means foreign literature translated to Polish will be “leaking” to an e-book market tremendously slowly.
    There are 5-6k e-books available in Polish. Most of them are written by Polish authors. With this little supply of books in electronic form, readers who decided to go “e”, have to pick up English editions anyway.
    I think this is a typical situation in an emerging non-English e-book market – readers buy books both in their language and in English.
    In Poland there are roughly 15k Kindles and 15k iPads. Their owners just don't have access to Polish e-bookstores which follow the Amazon exclusive content+device business model. Hopefully it'll change, but still the availability of Polish titles is the bottleneck.

  • Rodyounger

    Mike great article which picks up on many issues I am looking at as i seek to develop a niche online retailer of english language ebooks – with emphasis on long tail/out of print/non-digitised books. However, I am looking at it both ways: US authors/books to Europe and European authors/books to USA (and other english speaking territories). Clearly ebook distribution is also key and this is still underdeveloped/fragmented in Europe despite Ingrams and Overdrive having a presence. Also, adoption of agency model in UK by Hachette looks as if it will be followed by others while countries such as France and Spain already have some form of pricing “protection” – at least for physical books and are seeking same for ebooks. On this point where can I access the country-by-country marketplace assesment for Europe you mention at the end of your post?

    • Rod, the assessment for Digital Book World doesn't exist yet, except

      possibly in Cristina Musinelli's head. She will present it at out conference

      in January. I don't know yet whether there will be any slides or other

      takeaways. If there are, they would probably be available at Digital Book

      World's web site.


      • Rodyounger

        Thanks Mike – I assume conference will be held in US. I am based in Spain so unlikely to be able to attend but hopefully you might make some material available and even do the conference online? Have signed up to your newsletters and will also keep an eye on the website. KR Rod

      • The conference is owned and run by the people at Digital Book World. Indeed,

        they will post some material from the conference (but it certainly won't be

        all of it). Keep your eye on their web site.