News

E-book growth ‘reducing value’

The overall value of consumer book purchases has dropped 9% since 2008, according to the annual Books & Consumers survey conducted by Bowker Market Research UK.
Meanwhile, the growth in e-book sales put internet-only retailers ahead on the number of book purchases over the chains and independents last year, Bowker research director Steve Bohme told delegates at the Books & Consumers conference held in London today (29th March).

British consumers bought 344 million books in 2011, spending £2.1bn. The volume number represents a slight rise year on year, according to Bowker, with a 3% fall in the sale of physical books more than made up for by e-book purchases. However, despite an increase of nearly £50m in the total spend on e-books, overall value decreased; and combined with decreases in 2010 and 2009, the cash fall in the market since 2008 adds up to 9%.

E-books accounted for 5% of consumer book purchases by volume by the fourth quarter of 2011, putting the UK 12–15 months behind the US in terms of e-book market share. Adult fiction is the most affected segment, with Bowker putting the digital sales volume share in double figures by that fourth quarter. But that 5% market share by volume only adds up to a 3% share by value, with e-books overall costing the consumer a third less on average than physical paperbacks, and half as much as hardbacks.

According to Bowker, that low average e-book price is due not least to purchases from self-publishers and new media companies, which the research company puts at “perhaps a fifth” of total e-book purchases by volume in 2011 although just 4% by value.

The rise of e-books accelerated the shift in book purchases from bricks and mortar stores to internet-only retailers in 2011, Books & Consumers said. While high street bookshops remained slightly ahead of internet retailers in terms of overall market value, the total number of book purchases through internet-only retailers was higher in 2011.

However, the research found there was little indication that e-books had caused a net increase in the number of book buyers in 2011. Books & Consumers was  compiled using data from a nationally representative panel of 15,000 of the UK population aged 13–79 who are surveyed every two weeks on their book and e-book buying habits.
 

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Does this really reduce value? If sales of ebooks more than make up for the fall in print book sales, and if there are more people buying books (or more books being bought) due to the way ereaders encourage the reading habit, I see this as an expansion of our sales. Even if the cash value is lower, the costs are also lower for publishers. I'm not sure if that has been taken into the equation. The suggestion is also that books are being devalued in some way, but it looks to me as if reading is more valued than it has been for years. Although self published authors often charge low prices, we find that, as publishers, we can charge a bit lower than the cost of the print book and buyers are happy with that. Our ebooks seem to sell themselves, while print books take more effort and are more costly to promote in terms of events and other marketing techniques. So there are a lot of savings with ebooks and the overall value is high.

An interesting viewpoint but how does this more optimistic map to the sunny uplands of profitable publishing sit with the arguments behind the PA's campaign for the removal of VAT on ebooks?

There are various reasons why VAT needs to be removed. I didn't say publishing and bookselling weren't tough - they are - and as ebooks are going to help us survive and stay profitable it's important for the Government to help by removing VAT.

The removal of VAT helps achieve the kind of price I mentioned - a price a bit lower than the cost of a print book. When you take into consideration VAT at the current rate, 30% at least to Amazon or other retailers (which rises to 65% for sales to some countries) and a reasonable royalty to the author, you can see that the removal of VAT is needed to permit competitive pricing. Although we sell ebooks at the moment we would sell more if we could shave a bit more off the prices, and publishers do need to sell more.

It's also important to remove VAT to create a level playing field for retailers. At the moment Amazon has the benefit of low VAT but other retailers don't. We want to put our ebooks on Kobo and with the Nook when it's available at Waterstones but there's a problem due to the high VAT on ebooks in the UK.

All of the ebook retailers have a price-matching clause so they can pay us less if we offer the ebooks more cheaply elsewhere - they have to because buyers can so easily check online for the best value. So we have to charge the same amount for all ebooks if we put them on Kobo, Amazon etc. As the VAT is higher for the UK retailers this means we have two options. We can charge a higher price on Amazon for Kindle versions to match the higher price of the ebook on Kobo etc, due to VAT, or we can go exclusively with Amazon. If we raise the price on Amazon we aren't competitive with others who sell exclusively with them.

To have a competitive market and not a monopoly for Amazon it's important to lower or remove VAT on ebooks. Apart from that, it seems right that books should be treated as books and not taxed as 'electronic services'. Libraries have to lend them out for free as they're classed as 'books', whereas libraries can charge for audiobooks, which are 'electronics'. Classing ebooks as electronic services at times, and as books at others, just seems to be a muddle and incorrect.

Does this really reduce value? If sales of ebooks more than make up for the fall in print book sales, and if there are more people buying books (or more books being bought) due to the way ereaders encourage the reading habit, I see this as an expansion of our sales. Even if the cash value is lower, the costs are also lower for publishers. I'm not sure if that has been taken into the equation. The suggestion is also that books are being devalued in some way, but it looks to me as if reading is more valued than it has been for years. Although self published authors often charge low prices, we find that, as publishers, we can charge a bit lower than the cost of the print book and buyers are happy with that. Our ebooks seem to sell themselves, while print books take more effort and are more costly to promote in terms of events and other marketing techniques. So there are a lot of savings with ebooks and the overall value is high.

An interesting viewpoint but how does this more optimistic map to the sunny uplands of profitable publishing sit with the arguments behind the PA's campaign for the removal of VAT on ebooks?

There are various reasons why VAT needs to be removed. I didn't say publishing and bookselling weren't tough - they are - and as ebooks are going to help us survive and stay profitable it's important for the Government to help by removing VAT.

The removal of VAT helps achieve the kind of price I mentioned - a price a bit lower than the cost of a print book. When you take into consideration VAT at the current rate, 30% at least to Amazon or other retailers (which rises to 65% for sales to some countries) and a reasonable royalty to the author, you can see that the removal of VAT is needed to permit competitive pricing. Although we sell ebooks at the moment we would sell more if we could shave a bit more off the prices, and publishers do need to sell more.

It's also important to remove VAT to create a level playing field for retailers. At the moment Amazon has the benefit of low VAT but other retailers don't. We want to put our ebooks on Kobo and with the Nook when it's available at Waterstones but there's a problem due to the high VAT on ebooks in the UK.

All of the ebook retailers have a price-matching clause so they can pay us less if we offer the ebooks more cheaply elsewhere - they have to because buyers can so easily check online for the best value. So we have to charge the same amount for all ebooks if we put them on Kobo, Amazon etc. As the VAT is higher for the UK retailers this means we have two options. We can charge a higher price on Amazon for Kindle versions to match the higher price of the ebook on Kobo etc, due to VAT, or we can go exclusively with Amazon. If we raise the price on Amazon we aren't competitive with others who sell exclusively with them.

To have a competitive market and not a monopoly for Amazon it's important to lower or remove VAT on ebooks. Apart from that, it seems right that books should be treated as books and not taxed as 'electronic services'. Libraries have to lend them out for free as they're classed as 'books', whereas libraries can charge for audiobooks, which are 'electronics'. Classing ebooks as electronic services at times, and as books at others, just seems to be a muddle and incorrect.