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The Global eBook Report – Fall 2013

2 October 2013

From Global eBook – a report on market trends and developments:

Ebooks are only one part of this new ecosystem of writing, publishing, and reading, as are publishers and retailers, and in many continental European markets, they represent just a few percentage of the revenue of their national book industry. The digital distribution of books finds itself in the middle of a complex economic, political, and cultural battlefield where national governments, the European Commission, and the leading global digital actors such as Amazon, Apple, and Google fight over power and control in the digital economy of the next decade.

Globalization, therefore, inevitably spawns a second movement: regulation. In the US, the Department of Justice (DoJ) has stepped in, disagreeing with five major publishers and Apple (a distributor of ebooks) over who should control the pricing of digital books, bluntly calling the publishers’ agreement with Apple a “conspiracy”. The ultimate result of this lawsuit, say the critics —and not all of them are publishers— will be a “government-assisted monopoly” . . .  as it would help Amazon to single-handedly dominate an industry, allowing it ultimately to define retail prices of ebooks instead of publishers and thus further expand its massive market share. The European Commission has a similar investigation underway.

The complex legal argument, though, is not the most relevant aspect for our perspective here. It is the political dimension instead, and the fact that Amazon —and a few other companies, mostly from the US, that are rolling out their ebook services on a truly global scale— are of an entirely different scale and scope from what used to reign over publishing in the old days.

Pearson, the leader in global book publishing, had annual revenues of $9.2 billion in 2012. NewsCorp, one of the leading global media companies and the parent of HarperCollins, recorded a turnover of $34 billion in 2012. This has NewsCorp playing in the same ballpark as Amazon (with $61 billion in 2012). By comparison, Apple has recorded revenues of $156 billion (Sept. 2012) and an operating income of over $55 billion. Google had revenues of $50 billion and an operating profit of over $13 billion.

The discrepancies in size fueled the biggest merger in the history of book publishing, when Random House and Penguin (a division of Pearson) decided to combine their activities in a new company, Penguin Random House, which became effective July 1, 2013. Together, they will generate revenues of ca. $3.9 billion from an output of ca. 15,000 new titles annually (see The Bookseller, 1 July 2013). However, even the now largest trade publisher is clearly centered on books.

In the current battle over emerging ebook and digital publishing markets, we must understand a variety of dynamics between players of not entirely different scales but also contrasting agendas. For Penguin Random House and for Hachette Livres(with revenues from publishing at $2.8 billion), turning front- and backlist titles into ebooks and expanding their access to international markets on a global scale is an imminent priority.

For companies such as Apple or Google, the digital transition and global outlook in book publishing will be only part of a much broader picture, as they distribute all kinds of digital media content, not just books.

Even though revenue from books is a central element at Amazon, retailing books is one among several of a broadening set of services, and this is similarly true for scores of domestic ventures in emerging markets where those global players are currently expanding with their book and publishing related offers. Obviously, this opens much room for friction and competition.

The entire report (110 pages in PDF) is available for download at no charge at Global eBook

Amazon, Apple, Big Publishing, Books in General

7 Comments to “The Global eBook Report – Fall 2013”

  1. I’m not about to read a 110 page report, but its nice of them to offer it free for this month. However, if the snippet PG quoted is any indication, they can’t seem to grasp the difference between wholesalers (BigPub), distributors, and retailers (Amazon, Apple). Who do you think should determine the prices at a retail store if not the retailer itself? Books and e-books are not Special Flowers.
    The whole “government-assisted monopoly” rant was a nice bit of comedy. Is this really a report or a novella?

  2. It is available at no charge for one month.

    “For a promotional period of one month, the report can be downloaded free of charge. From November 1st, 2013, purchases will cost €29.95.”

  3. “…will be a “government-assisted monopoly” . . . as it would help Amazon to single-handedly dominate an industry, allowing it ultimately to define retail prices of ebooks instead of publishers and thus further expand its massive market share.”

    What?

    Dan

  4. Unfortunately, the Kindle version is only available on Amazon’s German website. When will Jeff Bezos realize that there’s a huge American market for ebooks, too?

  5. Therefore the points are?
    The old cartel that set the book prices and regulated the number of published writers was good, the new merit-monopoly is bad, because it will set the prices.
    Divided, local publishing and distribution was good, the new global distribution is bad.
    No competition for the established book publisher is good, competition created by the most efficient retailer is bad.
    For right now, whatever is bad for the established industry is good for me as an Indie Publisher.

  6. I only read the Germany portions of the report, but already spotted a couple of errors. And the author actually seems to be German.

    As for the “government assisted monopoly”, the report is written from a European POV, where fixed book price agreements are standard in most countries and largely uncontroversial. From that POV, the whole Department of Justice uproar about price-fixing looks weird.

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