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