December 2, 2011
Stunning numbers reflect European disinterest in ebooks and buying books online
by Dennis Johnson
A New York Times report yesterday by Kevin J. O’Brien makes the startling observation that 98% of all European book sales are of print books. Of course, the report goes on to observe that those sales are “stagnating,” because they are down 2 percent over 2007 levels. Why 2007? Who knows? But others would observe that a mere 2 percent fluctuation over a five year period, the latter half of which saw a historic economic downturn, bespeaks a surprisingly steady business.
In any event, the report suggests that what might be behind the fact that only 2 percent of book sales are of ebooks is the “value added tax” (VAT) applied by EU countries on ebooks — usually far greater than that applied to print books.
In Germany, consumers pay 19 percent in VAT for e-book downloads and 7 percent on printed books. In France, the difference is 19.6 percent and 5.5 percent. Printed book taxes are 4 percent in Italy and Spain instead of 20 percent and 18 percent for e-books. In Britain and Ireland, the gap is widest: 20 percent on e-books, but no tax at all on printed books.
However a Wall Street Journal report by Alen Mattich notes that European publishers are charging 20 – 30 percent less for ebooks than print books, which means, while not as insanely discounted as at Amazon US, ebooks in the EU are still less expensive than print books.
Instead, the WSJ suggests the disinterest in ebooks has more to do with “rules against book discounting” — the net pricing laws we’ve written about many times before at MobyLives (see here and here, for example). Such laws mean all retailers have to sell books at the same price, and as a result, it has led to — as Mattich puts it — a “relative lack of interest in online buying in Europe” because “there’s simply no advantage to buying from a website as opposed to from a bookstore.” (Mattich also notes that this means, specifically, that Amazon does not dominate book culture in Europe as in the U.S. — although that may not last, because “Amazon has started selling Kindles more aggressively in Europe.”)
Anyway, while noting that all this has created a “negative feedback loop,” whereby “Low demand for e-books results in fewer e-books released, which further holds back demand,” the Journal report notes — o, so briefly! — that there may be one other thing going on: “Part of the reason e-books have failed to take off is no doubt down to reader preference.” It makes no further analysis of the meaning of its own observation that when prices are the same online as in brick-and-mortar stores, people choose not to shop online, even though it is obviously easier. (However the article does quote consultant Mike Shatzkin saying this choice is “not cultural but rather price-driven,” when of course it seems exactly the opposite — there is, after all, no price differential, so the choice has nothing to do with price. And of course the first question this prompts only furthers the idea that it’s cultural: In the same situation, would Americans make the same choice?)
And as you might expect, the article goes nowhere near analyzing the more specific observation that, in Europe, where ebooks are still less expensive that print books, people choose print, 98-2.
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.