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Sainsbury’s has backed Anobii chief executive Matteo Berlucchi’s call for publishers to remove Digital Rights Management from e-books after gaining a majority share of the business after HMV sold its interest.
Sainsbury’s bought HMV’s 45% stake in the social reading site for £1 but, along with the three publishers Penguin, Random House and HarperCollins, has also refinanced it. The end result is that Sainsbury’s will own 64% of Anobii with the publishers each taking a reduced holding of 12%.
Anobii approached Sainsbury’s, as Berlucchi said the company needed to “partner with a player with a route to market in the UK, which had a lot of customers and customers who already bought a lot of books". Anobii was some way from making a return for its investors, he added. “As a company, we are currently not making a profit. It will take some time before it’s capable of sustaining itself and we will require investment to reach the point where we are going to be profitable.”
Sainsbury’s declined to say how much additional money it had put into the operation. Its head of digital entertainment Mark Bennett told The Bookseller: “We have invested additional equity in the business to develop it to the next stage and the publishers retain equal shareholding in Anobii.”
Berlucchi said that a new investor was needed after HMV decided to dispose of its stake. HMV bought a 45% share in the operation in 2010 along with minority investors Penguin, Random House and HarperCollins, with a view to creating a rival to Amazon in the e-book market. However, since then HMV has sold Waterstones, and has been forced to restructure its debts. Figures are not available, but HMV has said that it spent £2.1m acquiring and investing in Anobii in its last fiscal year (to the end of April 2011) and lost nearly £1m.
Bennett said sharing ownership of Anobii with three major publishers was a positive attribute for the business. “We really wanted to go into partnership with them—we can benefit from their experience and expertise,” he said. “We have looked at how the entertainment market has been changing and investing in digital. E-books are the fastest growing markets and more of our customers have already been investing in the e-book world. Obtaining this stake is a great opportunity for us, and Anobii is coming at this from a different angle because it has a strong social element.” Berlucchi has argued that removing DRM on e-books would enable any retailer to sell e-books to Kindle customers.
He was backed by Bennett, who told The Bookseller that e-books as a whole risked falling into the same trap as the music industry if the issue was not tackled. Bennett said: “DRM was an issue in the music industry and now e-books. We would like to be working with publishers to explore removing it, it is something we want to look at, but it has got to be done in the right way.”
Sainsbury’s public backing could help push publishers to experiment without DRM, following the likes of Macmillan imprint Tor and Osprey. But they will also be looking to see how much investment is being committed to grow Anobii. Sainsbury’s branding will appear on Anobii’s UK website and users who want to buy a physical book will be directed to Sainsbury’s website. The synergies will take place “as soon as possible” and in time for Christmas, Bennett said.