It goes without saying that the greatest change in our industry over the last decade has been in the area of selling digital content: not mainly because of dramatic technical innovation, but because of the modes and extent of digital content use. This is not to say that such trends have always been in the direction of increase: as noted elsewhere, through most of the second decade of the C21st there has been a correction, in the UK and the US in particular, to the earlier rising curves showing eBooks as a proportion of total trade publishing sales. Nevertheless, those sales have stabilised as a crucial component of the overall mix.
But in both school and college education, and in tertiary libraries especially, digital materials are playing a steadily more prominent part. It is now de rigeur that courses in core school subjects must contain a digital element to complement traditional materials; in undergraduate textbooks an increasing proportion of sales is migrating to digital formats; and publishers of reference and research materials are focusing more and more on assembling digital bundles of materials either on subscription or sold for ‘perpetual access’, the latter being the favoured model in the US even if it is one in which the implicit guarantee seems likely to present technical challenges.
Reference and Journals publishing was swift to respond to the opportunities presented by digital formats; and people involved in those sectors may be forgiven a raising of the eyebrows when the eBook revolution took place in trade publishing and was albeit rightly hailed as ground-breaking. Digital formats were already dominant for multi-volume reference works, given the ease and swiftness of access, cross-referencing and updating, and the sales model was subscription. A significant proportion of such works have now abandoned print format altogether. At that time journals too were shifting firmly away from print, a trend which continued so consistently that in 2020 79% of sales income was from digital, 17% from hybrid print/digital, and only 4% from print.
Digital, then, is dominant in these sectors, and its share is increasing in other academic areas: in 2020 total sales of UK-published academic and professional books were split 50/50 between print and digital formats (this includes the online reference discussed above, but not journals).
Sales of digital product in the academic and professional sphere are made either directly from publishers’ bespoke platforms, where titles grouped thematically (or sometimes more widely) are made available according to a subscription or sales model; or through distributors/vendors with whom contractual arrangements have been established. As well as the commercial terms, the details of these arrangements need to include territory (an element that must also be defined both within the publisher’s metadata for the title on their supply system and in the data-feeds presented to the various metadata agencies), and whether or not the agreement is exclusive or non-exclusive for the territory: that is to say, whether the vendor/distributor is appointed as the publisher’s sole partner in that territory, or whether others will also act for the publisher in the same territory. Once metadata is correctly set up on the vendor’s system and the publisher’s, observance of the territorial agreements should follow.
These same principles apply to the selling of educational product, with schools taking the part played by libraries in the academic sphere: the provision of online course materials requires a publisher’s platform to which teachers and pupils have defined and protected access. Supplementary materials, particularly in the fields of teacher guides to the use of materials, professional development for teachers, and literacy/numeracy, may be provided through the same platforms, but also as separate digital volumes for sale through eBook vendors.
Publisher platforms of this kind do not play a part in the sales of consumer publishing eBooks, and thus the choice of routes to market becomes more complex. The remainder of this section will focus on adult and consumer eBooks and audiobooks, but where academic and educational publishers are selling eBooks through the channels set out, much of what follows will be of close relevance.
A particular feature of this sector is the sense of excitement felt by publishers who see their global reach extending into corners of the world never previously accessed because of limitations on physical distribution and supply-chain into more remote territories. By the second decade of the C21st the major UK consumer groups were reporting eBook sales into around 190 countries against a UN membership of 193. A book may have only a small, niche audience, but the eBook reach enables access to a higher proportion than ever before of the members of that audience.
There are three key factors publishers must consider as they embark on their digital sales journey:
- Sales Channels, Territories, Vendor Partners
- Pricing and Metadata
- Cultural Factors to Take into Consideration
Sales Channels, Territories, Vendor Partners
eBooks
It is well-known to consumers and not only suppliers that amazon is by far the dominant world player, taking a very substantial market share in the UK, the US, and most of the markets publishers in this sector would regard as in their premier league. The exception to this in terms of a local operation is Australia, where Apple, Kobo and the local Perth-based player ebooks.com established an earlier presence and while amazon is important, somewhat different market dynamics were established.
It is relatively easy as a SME publisher to get set up on amazon for the sales of eBooks, and many in this category will already be set up in the UK: extending this to take advantage of amazon’s global reach is quite straightforward as long as territorial rights and pricing are specified, a subject to be covered below.
A particular feature to look out for relates to overseas sales taxes: increasingly in recent years overseas governments have imposed local sales taxes on eBooks sold by amazon, which has resulted in amazon withholding a commensurate amount from their payments to publishers. To overcome this a publisher needs to show, by providing the relevant paperwork to amazon, that the publisher has a ‘tax nexus’ in a country that has a double taxation treaty with the country where the book is being sold. This sounds daunting, but the process starts with awareness of the requirement, and is in fact not difficult to achieve. The danger to avoid is the need to correct this retrospectively, with all that would imply for depleted revenues and complications over royalty payments. Financial advice will set a publisher on the right course here.
The next question is: if Amazon is taking a very high market share in most countries, who makes up the remainder?
- Apple Book Store sells into a noticeably smaller range of countries, a listing to be found here.
- Google also has its own bookstore which makes its catalogue widely available internationally.
What these two members of the ‘GAFA’ (a common abbreviation in Europe for Big Tech: Google, Amazon, Facebook, Apple) have in common for our purposes is that books are a peripheral activity to hardware development and sales for Apple, and to advertising for Google.
Kobo (headquartered in Canada) is considered by those most closely engaged in this area of sales to be the most interesting player after amazon: its parent company Rakuten, the Japanese industrial group, is itself a true corporate giant, and is exploiting its internal synergies to the benefit of its various divisions; Kobo has positioned itself as the ‘active challenger brand’ to amazon, and that is part of their shared mission; and in particular Kobo has approached established bookshop chains (and some online vendors) in a variety of markets, and become the eBook partner for those companies, with mutual benefit: the chain creates an eBook offering, and Kobo has a physical presence in-store. These international partners include prominent international retailers at the top of a longer list:
- Fnac, France
- Livraria Cultura, Brazil
- Angus & Robertson Bookworld, Australia
- Booktopia, Australia
- Indigo, Canada
- Feltrinelli, Italy
- Mondadori, Italy
- bol,com, Netherlands
- Crossword, India
- Eason’s, Republic of Ireland
See this link for a fuller list.
ebooks.com, headquartered in Perth, Australia, deserves mention here as a significant player just outside the top division: an entrepreneurial start-up in the year 2000 by the booksellers Stephen and Trudy Cole, it has sales portals in the US, UK, Canada, and Europe as well as Australia, and is especially strong in South East Asia.
The strategic question is whether to attempt to set up direct relationships with each platform, which is challenging, and discouraged by Apple in particular who in line with their policy on music through iTunes do not wish to have multiple supplier relationships (and SMEs should also bear in mind the implications for their own resource); or to sign up with an ‘aggregator’ who will offer a single agreement, the aggregator’s master terms and conditions, and support with metadata etc.
This aggregation option can be the best for a smaller publisher, taking away the complexity and demand on resource of dealing with thirty or forty different retailers around the world.
Examples of aggregators are:
The Ingram Company CoreSource Plus, probably the largest in the sector.
Smash Words, operating out of California.
Access to public libraries around the world deserves mention here. It is a significant market sector, but one which draws opposition as well as support from members of the publishing community, because of fears that e-lending will encroach to a damaging extent on sales, as has been shown to be the case in recent German experience. Policy and practice are therefore widely variable, with some major consumer groups embracing the library sector (particularly in the USA) and others excluding it from their sales channels altogether (particularly in the UK and the UK’s export markets). E-lending continues to be an area of great variation round the world, and one that is subject to much change. Our purpose here is to alert readers to the issue so that the current position can be researched, and a decision reached with which a publisher is comfortable for their particular list and stage. This principle also applies to textbook publishers and e-lending by academic libraries.
Should the decision be to access the public library sector, certain major aggregators play a key role in the supply chain:
Overdrive is perhaps the largest such platform worldwide.
The major US wholesaler and provider of publisher services Baker & Taylor offers libraries extensive access to digital as well as physical content.
Gardners in the UK also offers a library service in addition to its wholesaling services to booksellers.
Audiobooks
The dynamics of this market, which has migrated heavily towards streaming, are similar to those of the eBook sector, and here too amazon dominates through its subsidiary audible. For years audible had little or no competition, and even provided apple’s itunes audiobook service for a considerable period on a white-label basis. As in the eBook zone they are easy to deal with but on their own terms: a contract is available on their website and help with audiobook production is available to publishers who lack that facility, under their audiobook creative exchange (acx) programme, a marketplace which connects producers and live-readers with publishers and authors and takes advantage of economies of scale.
Kobo, Google and Apple all entered the market, but did so relatively late.
A different challenge to amazon’s market position has been posed by enterprises developing subscription models, notably Storytel in Sweden.
As with e-lending by libraries, the major publishers have adopted diametrically differing positions in relation to subscription models, and even publicly disagreed. The reservations of those declining to sell to such customers have again related to damage to sales; with the question of author remuneration also presenting a challenge. Smaller publishers may in fact have tended to be readier to explore the model. Publishers need to consider their lists’ suitability for this channel, and whether the reduced revenue per book will be more than compensated for by the incremental audience. Some anecdotal evidence suggests that this mode of delivery will attract customers who might otherwise not read such content, and who thereby become part of a wider regular readership.
The subscription companies have mostly appeared in northern Europe, where Bookmate, Bookbeat, developed in-house by publisher Bonnier, and Nextory offer similar all-you-can-eat subscription services.
As in the case of eBooks, it is relatively easy to make an arrangement with audible, but beyond that the benefits of an aggregator apply. Prominent amongst these are: Findaway Voices, Zebralution, Bookwire.
Pricing and Metadata
Audiobooks pricing
Pricing is relatively straightforward in this zone: set a list price in sterling, and the aggregator you have chosen to work with will assist with working out the receipts to be expected. In the subscription model, receipts will be based on consumption and not on the price set by the publisher. Apple and Google will set a list price on the basis of which publisher receipts are calculated. audible take a set amount from the consumer and remit a share of that to the publisher.
Ebooks pricing
Here the pricing decisions are more complex. A decade ago a situation existed wherein two sales models existed side-by-side: first, ’agency’ where the publisher was effectively the retailer and set the price, and the vendor such as amazon acted as an intermediary ‘agent’, deducting a percentage fee from payment to the publisher; and secondly, ‘reseller’, whereas with print books the retailer/vendor purchased the eBook from the publisher at a discount off the publisher’s list price, and then sold it on at a price they themselves set.
The reseller model has now become dominant (Australia is an exception), and in this context publishers need to set prices separately for the various major markets: UK, USA, Canada, Australia/New Zealand, South Africa, Europe, India. A short project studying the eBook sellers in these major markets will reveal the market prices set by the industry, which will offer a useful guideline, as well as an indication of the relative prices of print and eBook formats in each market. amazon offers two options: either to set a global list price which they then translate into the relevant currencies at prevailing rates of exchange; or to price by market. For a publisher with pressure on resource, a hybrid approach is advised: price individually for the key markets listed immediately above and allow the default to the global price elsewhere. It will be necessary to review the individual market prices with a certain frequency in order that they remain current.
Metadata
A key observation should be made at once under this heading: that despite the importance of metadata to sales success in all formats, the standard of metadata offered by publishers remains very variable. British publishers have generally been more conscientious than others in this area, against a long background of engaging with international markets: the particular area of importance within metadata here is the accurate setting-up of territorial rights. There is potential for under-exploiting precious copyrights if not all the territories a publisher has licensed are set up as available to that edition, and sales lost for that reason are always invisible: no-one will report them back to the publisher.
Against that background, the publisher who puts themselves in the premier league when it comes to metadata will reap rewards and be easier to deal with. The choice of bibliographic/metadata company is so important that though it is not the custom of this guide to recommend particular partners, and this comes with the appropriate disclaimer, companies such as Consonance have a proven track record.
Accuracy in this sphere is of particular importance when English-language rights are split and some territories are licensed to another publisher: both parties need to have this division of rights accurately reflected in their metadata, so that the territorial aspect of their agreements is respected. These territorial definitions have existed for some time in other areas of the creative industries, where some companies enforce them even within their own organisations in order to support and assess their regional divisions. As has been said elsewhere, territorial rights are quite easily implemented in the digital arena provided the will to do so exists.
Cultural factors
A key part of publishing export comes into play with the need to develop an international outlook where the assessment of a list’s (or a book’s) export potential is concerned. One element of this is the possibility that certain content will transgress local regulations. While self-censorship has become a controversial subject, particularly in the fields of journals and research publishing, and that is not what is being urged here; nevertheless, it is wise to be sensitive to local customs, laws, and politics, especially in the areas of morality, decency, and international dispute. The Trial of Lady Chatterley in 1960, when Penguin Books was found not guilty of an offence under the Obscene Publications Act in publishing D H Lawrence’s novel, changed the UK literary landscape fundamentally. But many countries round the world retain laws at least as restrictive in this area as that Obscene Publications Act, and books can be banned and an order made to withdraw all copies from sale. Equally a robustly drawn international border on a map of the Middle East or South Asia can bring instant punitive intervention, as can criticism of a regime.
A key point here is that local vendors may face serious personal consequences, and publishers’ agreements with eBook aggregators and retailers may indemnify those partners against the consequences of offending content, with unforeseen consequences. Some regimes use text-and-data-mining software on bibliographic metadata to identify offending titles and intercept their circulation.
It is of course impossible to second-guess what may contravene the regulations and customs of every country. But developing a suitable habit of mind will go a considerable distance, and to that end, connecting with members of the industry round the world in an environment such as the Frankfurt Book Fair creates a network from which advice may be sought. A SME publisher is also likely to have a clearer idea of their list’s content than a large group with a deep backlist.
Conclusion
The purpose of this chapter has been to demystify what can be a daunting area for publishers. It is one which offers great opportunity and is now a core part of almost all publishers’ activity.
The eBook field benefits from a common file format in epub, so that a publisher equipped with that file and accurate metadata is ready to go, though it should be said that illustrated material presents a stiffer challenge. The audiobooks formats are somewhat more complex, but the help of a chosen aggregator will smooth the path.
In the context of the profound disruption to the transport sector caused by the pandemic of 2020-2021, digital formats have offered a crucial alternative to those who have found difficulty accessing the content they need. The crystal ball is opaque when it comes to predicting where these shifts will settle. What is not in doubt is that publishers will need to take close account of the role played by digital formats within their portfolio.
