Editor's Note: As All Brain's Marcello Vena told us shortly before The FutureBook Conference, the German consortium behind the Tolino e-reader has been so successful that it's expanding its footprint in Europe. This week, Munich journalist Matthias Matting, who writes Germany's Self-Publisher Bible, has written up the latest Tolino development: a self-publishing platform. In answer to our question about how digital self-publishing in Germany has moved so quickly, he tells us that even six months ago, "most people involved in the trade wouldn't have believed this would happen" and that Tolino is promising top indie authors access to 1,500 physical bookstores. -- Porter Anderson
In 2011, Germany must have looked like paradise for Amazon.
Neither publishers nor booksellers seemed interested in the new trends emerging from the US. Traditionally, books have a special role in Germany. They are seen as a cultural value, not a simple product, by publishers, authors, readers and even by the state, giving them a reduced VAT rate.
Would buyers turn to an ecommerce giant like Amazon that sees books as a product just like diapers or electronic gadgets? Certainly not, especially since no company can buy market share with lower book prices because of the Preisbindung (fixed book prices).
The reality proved different, and this was not unexpected to someone looking deeper into the structures of the German book trade.
Large bookstore chains like Thalia and Weltbild had driven many smaller local booksellers out of business. Readers were used to buying books in places where they could buy other products too – the large bookstores had started featuring a broad range of non-book products to increase their earnings.
What's more, even with its strong urbanisation, Germany has a strong tradition of home-shopping. The former home-shopping giants like Quelle, Neckermann or Otto are gone or have remodeled their businesses, but Amazon quickly became a favourite destination for online shopping. People bought their books online too, and when Amazon launched the Kindle in Germany in 2011, people adopted ebooks faster than anyone expected.
The Weltbild chain definitely was the first that actively invested in this field, too. They developed a line of super-cheap e-readers that sold reasonably well. Competitor Thalia tried with a more expensive but ill-fated device called "Oyo" that was inferior to the Kindle at that time.
Even though Weltbild was having moderate success, Amazon had a much higher market share and was on its way to dominating the market. Amazon never needed lower book or eBook prices – they had their Kindle Direct Publishing (KDP) service that allowed them to offer books that are not available elsewhere.
- Since 2012, around half of all bestselling eBooks at Amazon.de's store are produced by indie authors.
- At least one third is exclusive to Amazon.
Usually, that would have been the point where Canadian-based Kobo (now part of Japanese giant Rakuten) comes in – as they did in France, the UK, and Spain. Kobo was never able to create the same kind of ties to local booksellers that it has in other territories.
Instead, Thalia, Weltbild, Hugendubel and Deutsche Telekom (plus some others) came together and created the Tolino brand. Their first e-reading devices were not as good as the respective Kindle models. The second version shortened the distance.
From the first version, Tolino always sold their system as "open," compared to the "closed" Amazon system. Indeed, the Tolino e-readers are open in terms of allowing ebooks from different stores on one device. They still use DRM restrictions, and they still have a pre-installed store on each device that users cannot change, but the premise definitely seems to influence buyers -- especially since Amazon has been criticised in German media for alleged work conditions and their tactics in the Hachette-Bonnier negotiations.
It seems that Tolino's strategy is now leading to success. They started to expand to Belgium and Italy a few months ago. Their biggest success, though, was integrating wholesaler Libri into their ranks. The number of local bookstores that sell Tolino devices has increased dramatically because of that. GfK is even reporting that Tolino has a market share slightly above Amazon's. (This is based on input gathered from a standing consumer panel of 25,000.)
Until now, there was only one piece missing: There was no self-publishing system integrated into Tolino.
Asked half a year ago, most people involved in the trade wouldn't have believed this would happen: It must be tremendously difficult to get the managers of so many ebook stores to agree about a self-publishing system. That's because you cannot have a successful self-pub operation if you don't give indie authors visibility – a place in the virtual bookshelves that was reserved for more expensive (and more lucrative) traditionally published titles before.
If all goes well with the new self-publishing arm managed by Tolino Media (formerly called Pubbles), revenue in the stores will decrease. Let's hope that store managers are prepared to see this as a good sign (it will be easier because the sales numbers will increase at the same time).
German indie authors, at least, seem to be very happy about this step.
Now, they have direct access to nearly 95 percent of the market. It is not necessary anymore to pay an aggregator a percentage. With a 70-percent net royalty rate (guaranteed only until January 2016), Tolino is paying them even more than it pays some traditional publishers. The playing field is further leveled by the new VAT regulations that are in effect since this year: Amazon isn't getting a VAT advantage anymore.
And there is one Tolino proposition that could seriously rival Amazon's KDP Select program: Tolino hasn't given any details yet, but they promise their bestselling authors access to 1,500 local bookstores with paperbacks.
Even if you take into account that Amazon has some 40-percent of the online printed book sales in Germany, there is a large buyer potential here for authors, previously been untapped. The ebook had a revenue share of 5.7 percent of the German book market in 2014 – that leaves more than 90 percent to be conquered by successful indie authors that will never be accessible with a book printed by Amazon's CreateSpace division.
Matthias Matting writes Selfpublisherbibel.de, among Germany's leading resources on all things self-publishing. As a successful indie author himself with more than 50 titles, he's the president of an alliance of German indie's, the Selfpublisher-Verband.de. In addition, Matting works part-time for a Munich based publisher (www.m-vg.de) and freelances as a journalist, expert and speaker.
Main image: Tolino models (left to right) Shine, Vision 2, and Tab 8, as pictured at Tolino.de