growth, year on year, than domestic developments. For2012, international media growth dropped sharpely, from23 percent for 2011 to 9 percent in 2012 (against continuousgrowth of 15 percent for domestic media sales—withno further explanation given).The lion’s share of Amazon’s international revenue camefrom only three markets, Germany, Japan, and the UK,adding up to $23 billion of the total $26.3 billion for 2012.All other markets combined accounted for just another$3.3 billion, or less than 13 percent of international. Thisrefers to the total turnover, not just media. For Germany,an independent estimate is available that has Amazon’smedia revenue at $3.5 billion, and its book division isthought to represent some 20 percent of the German bookretail market, most likely making it the number one channel,head on head with Weltbild/DBH (“Amazon kontrolliertrund 20% des Buchmarktes,” buchreport, February2013).However, recent growth beyond those three core markets,hence on the really global end of the scale, was even moreremarkable, with 69 percent year on year for 2011, and 50percent for 2012.Since June 2013, Amazon has started to sell its devices inmainland China, with the Kindle Paperwhite 849 yuan (US$134) and tablet computer Kindle Fire HD with 16-gigabyte memory for 1,499 yuan. (Sina, 8 June 2013)Also in 2013, Amazon has started selling Kindle devices inIndia, after its launch of a Kindle shop in 2012, and it hasenhanced its presence in India by unveiling its AmazonAssociates program. (Shelf Awareness, 14 June 2013 and9 July 2013)In addition, Amazon reportedly has started preparation forentering the Russian market with a dedicated website, afterhiring Arkady Vitruk, formerly the general director ofone of Russia’s leading publishing houses, Azbuka –Atticus.(Russian Book Industry Magazine, 4 July 2013)Amazon’s own publishing arm had started its internationalexpansion already in late 2012 to Germany and Europe.(Amazon-Verlage nehmen Kurs auf Deutschland, buchreportNovember 29, 2012) In France, it launched an imprint,Jet City, specializing in graphic novels. (Livres Hebdo, 10July 2013)Interestingly, all Amazon figures breaking down internationalsales reported by Amazon hint at a significant slowdownin its growth for 2012. Growth in overall internationalmedia sales dropped from 23 percent year on year for 2011to 9 percent in 2012. The by-country rates fell on averageby more than a third, for Germany, Japan, and the UK. Forthe rest of the world, the expansion slowed down from amesmerizing 69 percent in 2011, to a still strong 50 percentin 2012. In the second quarter of 2013 though, internationalsales have grown by just 13% (after beeing up by15.9% in the first quarter of 2013).With no details indicated in the filings of the company, andwith no global economic factors providing a plausible explanationfor the pattern, it must be assumed that competitionis the most reasonable explanation. With moreand more hounds chasing the global leader of the segment,on both local as well as global grounds, with Apple,Google, and Kobo, as well as scores of homegrown competitorsstepping into the arena, Amazon should probablyget ready to meet a bunch of serious challengers in themonths and years ahead.Amazon in the crossfire of international controversieson its tax payingFounded as an online bookseller in 1995 in Seattle, Washington,Amazon.com, Inc. (NASDAQ: AMZN) portrays itselfnot as a specialist in books, but as “Earth’s most customercentriccompany,” catering to “four primary customer sets:consumers, sellers, enterprises, and content creators.”Even in the short version, the company statement hints atthe ambition of Amazon to assume, as a vertically integratedservice provider, a broad number of business roles thattraditionally had been the domain of a wide array of separatebusinesses, notably bookseller/retailer, used bookstore,library, publisher, service provider to authors, as wellas publisher (including print on demand), ecommerceplatform, and marketplace—to name just a few.The integration of many roles under one roof has, on onehand, opened unique ways of expanding Amazon’s businessbut has on the other hand drawn critical reactionsfrom many of the traditional players of the book businessand resulted in recent controversies.In 2012, Amazon found itself center stage in a number ofcontroversial debates, notably in Europe. Portraying itselfas a global, “pan-European” company, the firm was critisizedin Great Briain and subsequently in France for minimizingtheir tax payments in countries of operation. (Forthe global debate, see “Forces Shaping the eBook Markets:Key Drivers and Debates”). Aside from such general critisicmof its business practises, a specific issue with the taxationof ebooks has also provoked controversy across Europe.In the majority of countries of the European Union,82 The Global eBook Report
Amazon’s performance in 20122012 2011 2010Absolute($bn)Growthyr-on-yrMedia($bn)GrowthMediaAbsolute($bn)Growthyr-on-yrMedia($bn)GrowthMediaAbsolute($bn)Growthyr-on-yrNorth America $34.8 30% $9.2 15% $26.7 43% $8 16% $18.7 46% $6.9 15%International $26.3 23% $10.7 9% $21.4 38% $9.8 23% $15.5 33% $8 18%Consolidated $61.1 27% $19.9 12% $48.1 41% $17.8 19% $34.2 40% $14.9 17%DE $8.7 21% $3.4* $7.2 36% $5.3JP $7.8 18% $6.6 32% $5UK $6.5 20% $5.4 38% $3.9DE+JP+UK $23 20% $19.2 35% $14.2Rest Int $3.3 50% $2.2 69% $1.3Source: SEC filings. *€2.6 billion. Estimate buchreport.Media($bn)GrowthMediaprinted books benefit from a reduced VAT, while ebookstend to be subject to the full tax (which makes a differencebetween zero for print, and 20 percent in the UK, for instance,or 7 percent versus 19 percent in Germany). In fact,Amazon charges its British customers a VAT of the full 20percent. Yet by having set up European headquarters inLuxembourg, which collects a VAT of only 3 percent for anebook, Amazon can up its margin by the difference, as itforwards only those 3 percent to tax authorities in Luxembourg.Competitors obviously consider this as a huge challenge,given Amazon’s dominance on ebooks. (Amazonmakes UK publishers pay 20 percent VAT on ebook sales,The Guardian, October 21, 2012).In Germany, the debate on tax has echoed at first lessstrongly than its expansion in both market share and scopeof services. But the perspectives have largely changed inthe first half of 2013, in the light of successful “Buy local”marketing campaigns launched by independent localbooksellers, a rising critical debate in the media on Amazon’svery modest tax paying (German overall turnover of$8.7 billion contrasted with a mere 118 million of profitsfor all its European holding in Luxembourg), together witha stand off with unions, and several strikes at its Germanwarehouses. (Frankfurter Allgemeine Zeitung, 12 July2013)Earlier developments: 2012 and beforeToday’s ebook environment can reasonably be describedas having been triggered, directly or indirectly, by thelaunch of Amazon’s Kindle reading device in 2007. The devicewas the part visible to consumers, in a much morecomplex and proprietary, highly integrated system thatconsisted of Amazon’s leading online platform for selling(printed) books in the US and most major European markets,plus China; a phone hookup allowed the direct orderingand downloading of digital books, and the agreementwith publishers—at first the Big Six in the US—tomake available a wide catalog of attractive titles under thissystem.By mid 2012, the Kindle and its successor devices, notablythe color Kindle Fire, were seen as the most popular readingplatforms for ebooks internationally, and Amazon setup localized Kindle shops via its website for not just the USbut also the UK, France, Germany, Italy, and Spain.In Japan, Amazon entered into an agreement with 40 publishers,including Gakken and Kadokawa, on the distributionof their ebooks for the Kindle in Japanese (Asahi Shinbun,May 7, 2012).In August 2012, the Kindle was also launched in India witha catalog of over 1 million titles priced in rupees, makingit the biggest ebookstore on the subcontinent.Amazon, the Kindle, and the related offers—from authorservices to lending books as a prime customer (availableso far only in the US)—form an increasingly integratedsphere, of which significant parts are not available via otherplatforms. This connection is demonstrated by Amazon’sclaim that 180,000 Kindle-exclusive titles are nowavailable on that lending library, and altogether Kindleexclusivetitles have seen over 100 million downloads bylate August 2012 (press release, August 28, 2012).The Global eBook Report 83
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ContentsAbout the Global eBook Repo
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Receptiveness for foreign (English)
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Produced in Atlas by O’Reilly Med
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Mapping and Understandingthe Emergi
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publishers’ agreement with Apple
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January 18, 2013; “Un rapport env
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1980s, global cities in the 1990s,
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The ambitions, and thelimitations o
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Metadata is the key to online sales
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English Language eBookMarketsThe fo
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Overall, the spectacular growth in
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hit (source: various reports summar
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Debates Shaping the Book Industry i
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Contributed article BookwireAvailab
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GermanyKey Indicators Values Source
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than 10% of all online sales by the
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