A Look at Global Expansion for e-Books

Andrew Weinstein

Published online: 3 February 2010

� The Author(s) 2010

Abstract Forecasts indicate a growing demand for digital content around the

world. Converting to digital content can open up countless new revenue possibili-

ties. Adding alternate channels may be worth consideration, but what are the options

and what does it take to utilize them effectively? This article explores the oppor-

tunities that potentially exist for publishers with content that may be digitized and

distributed to global markets. A brief review of the current marketplace is also

incorporated, including current players and trends. Finally, an analysis of some of

the potential issues, challenges and pitfalls is presented in context of delving into a

new international digital content distribution strategy.

Keywords e-Books � Digital � Publishing � Retail � Channels � Globalization �Digitize � Supply chain � Best practices � ISBN � Pricing � International �e-Readers � Territorial rights � Currency � Conversion

Global e-Book Opportunities

The US e-book market has seen massive growth over the past 18-months to the

point that not only is the growth rate impressive, but so are the absolute numbers.

Total industry revenue from digital-book downloads rose 150% in 2009, according

to the Association of American Publishers, while e-reader sales were expected to

reach 3 million by Dec. 31, according to Forrester Research.

Now that the revenues are becoming meaningful, many stakeholders, formerly on

the e-book sidelines, are starting to enter the fray. Even outsiders have taken notice

and a whole new investment cycle has been in effect for some time now.

A. Weinstein (&)

IngramDigital Retail Solutions, 14 Ingram Boulevard, La Vergne, TN 37086, USA

e-mail: andrew.weinstein@ingramdigital.com

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DOI 10.1007/s12109-010-9148-5

There is a new sense of urgency among publishers, retailers, and wholesalers to

do ‘‘something’’, especially if they have done nothing to date.

Particularly, publishers, retailers, wholesalers, and publishing services providers

outside the US are looking to jump in. Also, libraries outside the US have been very

active in securing rights to English language e-books to make available to their

respective patron/student populations. Due to the amount of content these libraries

are seeking, the dollar amounts can reach into the millions.

In addition to the traditional publishing stakeholders, there is a new crop of

hardware manufacturers jockeying for market share with the objective of launching

their devices outside the US before Amazon’s Kindle can become dominant in

international markets. While others scramble, however, Amazon continues to push.

They’ve already announced a next-generation Kindle which will allow users to

wirelessly download e-books from Amazon in more than 100 countries.

The success of the Kindle, along with other high-profile products such as Barnes &

Noble’s Nook, and Sony’s Digital Reader, at first seemed to have established the

format for this particular space—namely, a single-screen device upon which

consumers download books and magazines and newspapers from a single content

provider—very similar to the Apple-iTunes model. The concept is clearly a viable one,

evidenced by Apple’s unveiling of their new iPad device and the iBooks application,

which effectively turns the iPad into the highest-profile e-reader on the market.

Rotman Epps, of Forrester Research, however, views today’s e-readers as ‘‘transitional

technology’’. Currently, more people read e-books on their smart phones than they do

on dedicated devices. In other words, the market can still be described as wide open.

All of this activity has made e-books a hot topic in the trade and mainstream

press, and very visible to the average book buyer. Most importantly, this high

visibility is anticipated to increase the population of people who will try e-books. As

such, new entrants are popping up every day. Around the world at least 17 e-readers

are in development or are already on the market. Asustek (Taiwan), Samsung and

LG (South Korea), Fujitsu (Japan), Plastic Logic and Interead (UK) all have unique

products in the pipeline. Sony is also rolling out a new family of e-readers, including

a pocket-size version and one with a large screen that’s geared toward magazines

and newspapers. All told, retailers, dedicated devices, and multi-function devices

are creating a very robust platform onto which e-books can be sold to consumers.

Recent initiatives to jump start the local e-book market have been launched,

announced, or actively researched in close to a dozen countries, including Finland,

Germany, Italy, the Netherlands, and Spain. All involve creating more local market

content.

Today, due to the lack of local market product availability, US published e-books

are almost a requirement in any international e-book offering, just to create a

compelling selection of titles from which users may choose.

e-Book Challenges Due to Globalization

Because most, if not all of the e-book markets outside the US have lagged behind,

there are not enough local language titles available in e-book format to support a

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reasonable selection for consumers today. One could point to a number of familiar

reasons for the lack of supply of local language e-books:

1. Unknown e-book rights status

2. Lack of funds to convert print book or print optimized digital files to e-books

3. Lack of local market retailers to sell e-books

4. Lack of local market service providers to manage technical infrastructure

Local rights issues, let alone international rights issues, could be the subject of

their own journal article(s). However, classifying the different types of rights issues

are worth mentioning:

1. Who owns the rights to publish the e-book version if silent in original book

contract?

a. Publisher versus literary agent/author

2. Who owns the e-book rights in any specific territory?

a. Intra-publisher (regional offices of global publisher)

b. Publisher versus publisher (3rd parties)

c. Exclusive or non-exclusive Open Market rights ownership

When rights by territory are owned by different publishers (item 2b), the answers

can be more clear. When rights by territory may be owned by local publishing

offices of the same global publisher (item 2a), things can get quite interesting

depending on how sales and expenses are accounted for.

To date, most e-books sold to users outside the US happened when a user outside

the US purchased an e-book from a US-based retailer. While not ideal, the sales

volumes were relatively insignificant. With more and more retailers launching

outside the US selling english language e-books, the potential for more significant

sales of English language e-books outside the US became much more real and has

sparked a renewed effort to deal with territorial rights issues.

Best Practices Still to be Developed

Even with sales of US e-books in the US happening for over a decade, best practices

to govern how the digital supply chain should work and setting expectations with

consumers as to how, when and where they can purchase e-books are still evolving.

Layering in the complexities of expanding the e-book business globally, as quickly

as the industry is growing, will force some issues and hopefully create the sorely

needed best practices. Once standards are agreed upon, the digital supply chain can

adapt, provide a reliable set of services, and the industry can communicate to the

end consumer, allowing the consumer to make purchasing decisions with confidence

and properly set expectations.

Below are three specific areas and decision points that need better defined best

practices as well as some of the options that have been put forth to date as best

practices:

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Determining the Territory of the Sale

1. Retailer incorporation

2. Retailer URL

3. IP address of user

4. Billing address of the user

5. Physical location of a library

6. IP address of a library patron

On Sale Date

1. Not enforceable—e-book is available for download as soon as it is delivered to

the supply chain

2. Global—e-book is available for download at 12:01 am in a time zone selected

by the publisher

3. By Geography/time zone

a. e-book is available for download at 12:01 am in each respective time zone

of the retailer on the on-sale date.

b. e-book is available for download at 12:01 am in each respective time zone

of the consumer on the on-sale date.

4. Pre-sales—e-book can be advertised (metadata) and sold, prior to the on-sale

date, but no downloads occur until the on-sale date.

Publisher Suggested List Prices for e-Books

1. Local currency pricing (a list price in every currency in the world)

2. Pricing in ‘‘major’’ currencies (a list price in a subset of more common

currencies)

3. Global pricing (one list in one currency for all markets)

4. Developing nation pricing (lower list prices, restricted to specific developing

markets)

ISBN Policy

ISBN policy and decisions on best practice issues above are linked. Whether or not

ISBNs are the right mechanism to differentiate pricing, on-sale dates, and territorial

rights is a topic that deserves its own discussion. But today, it is the only industry

mechanism that exists. However, what is possible to differentiate with an ISBN and

the ISBN policies that already exist within publishers are often in conflict. For

example, a publisher who owns worldwide rights to a title but wishes to restrict the

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price or have a different on-sale date for an e-book title in each territory will have

difficulty with this process using a single ISBN. With this sort of issue in mind, you

can see how setting up a global supply chain thus becomes a major challenge.

International Supply Chain Development

It is not in anyone’s interests, especially publishers, to deliver an unencrypted digital

file to every company that wants to try and sell e-books, domestically or

internationally. Similarly, many companies that want to sell e-books do not have the

resources or desire to contract with publishers, build out DRM and digital

fulfillment infrastructure and create payment relationships with hundreds or

thousands of publishers. Hence, the growth in the business of digital wholesalers/

aggregators like Ingram/Lightning Source and Overdrive. Depending on how the

best practices take shape, they may help determine if global aggregators, local/

regional aggregators, or both proliferate as more international publishers and sales

channels enter the market.

Conclusion

While the globalization of e-books is a huge positive with major revenue potential

for all publishing stakeholders, creating best practices in the key areas that impact

publisher and retailer profitability through to consumer experience will be a key

focus for all stakeholders around the world in 2010. Creating a critical mass of

desirable e-books demanded in global markets, compensating all stakeholders,

while delivering exceptional value to the consumer should be the key focus for the

future.

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