The Global eBook Report: Current Conditions & Future Projections. Update October 2013

publishing and book retail. In the meantime, global platforms such as Amazon or Apple’s iBookstore affect markets such as China and Brazil, invigorating the dynamics of globalization, but they also challenge traditional local players in publishing and in retail, while Kobo , as the newcomer, proposes its approach and partnership models with local players, from France (with Fnac ) to Brazil (with Livraria Cultura ), as an alternative to the predominance of just a few superpowers of the Internet. In the small and highly fragmented markets of Central Europe, and not just there, the unleashing of such new forces is met with serious concern, as it challenges the local book and reading cultures in a time of economic upheaval.
    This report will therefore explore the manifold dimensions that the digital transformation is inducing.

A global book business versus national cultures, fairness and pride
    Ebooks are only one part of this new ecosystem of writing, publishing, and reading, as are publishers and retailers, and in many continental European markets, they represent just a few percentage of the revenue of their national book industry. The digital distribution of books finds itself in the middle of a complex economic, political, and cultural battlefield where national governments, the European Commission , and the leading global digital actors such as Amazon , Apple , and Google fight over power and control in the digital economy of the next decade.
    Globalization, therefore, inevitably spawns a second movement: regulation. In the US, the Department of Justice (DoJ) has stepped in, disagreeing with five major publishers and Apple (a distributor of ebooks) over who should control the pricing of digital books, bluntly calling the publishers’ agreement with Apple a “conspiracy”. The ultimate result of this lawsuit, say the critics — and not all of them are publishers — will be a “government-assisted monopoly” (Jenn Webb in a TOC blog post ), as it would help Amazon to single-handedly dominate an industry, allowing it ultimately to define retail prices of ebooks instead of publishers and thus further expand its massive market share. The European Commission has a similar investigation underway.
    The complex legal argument, though, is not the most relevant aspect for our perspective here. It is the political dimension instead, and the fact that Amazon — and a few other companies, mostly from the US, that are rolling out their ebook services on a truly global scale — are of an entirely different scale and scope from what used to reign over publishing in the old days.
    Pearson , the leader in global book publishing, had annual revenues of $9.2 billion in 2012. NewsCorp , one of the leading global media companies and the parent of HarperCollins , recorded a turnover of $34 billion in 2012. This has NewsCorp playing in the same ballpark as Amazon (with $61 billion in 2012). By comparison, Apple has recorded revenues of $156 billion (Sept. 2012) and an operating income of over $55 billion. Google had revenues of $50 billion and an operating profit of over $13 billion.
    The discrepancies in size fueled the biggest merger in the history of book publishing, when Random House and Penguin (a division of Pearson) decided to combine their activities in a new company, Penguin Random House , which became effective July 1, 2013. Together, they will generate revenues of ca. $3.9 billion from an output of ca. 15,000 new titles annually (see The Bookseller , 1 July 2013). However, even the now largest trade publisher is clearly centered on books.
    In the current battle over emerging ebook and digital publishing markets, we must understand a variety of dynamics between players of not entirely different scales but also contrasting agendas. For Penguin Random House and for Hachette Livres (with revenues from publishing at $2.8 billion), turning front- and backlist titles into ebooks and expanding their access to international markets on a global scale is an imminent priority.
    For companies such as Apple or Google, the digital transition and global outlook in book publishing will be only part of a much broader picture, as they distribute all kinds of digital media content, not just books.
    Even though revenue from books is a central element at Amazon, retailing books is one among several of a broadening set of services, and this is similarly true for scores of domestic ventures in emerging markets where those global players are