The State of Play in the UK: An Update – and Merry Christmas!
Okay, so I’ve been forced out of the cave by events. Which is ironic given it’s been other events that have kept me in seclusion. Namely local conditions here in sunny West Africa, which have conspired against my best laid plans.
But not for long. If all goes to plan I will be solar powered by the end of the month.!
Meanwhile, life has been chugging along between power-cuts. Next month sees MWiDP launch a new How To guide for writers. One with a difference, of course, as the title might suggest.
Co-written by award-winning blogging guru Anne R. Allen and NYT best-selling author Catherine Ryan Hyde, this is a How To with a difference, and will be updated every six months to ensure it’s always up to date. More details on this in coming weeks. Here just to say that every six months might not be enough.
For instance, take this line from the Introduction to the new book, written by our very own Saffi:
The only certainty is that there is no certainty. The publishing world is changing daily. What was established fact yesterday can be questionable today and history tomorrow.
This past month has proven that to be very timely.
A short while ago I wrote a post on The State of Play in the UK – an overview of the British ebook market and what the near-future holds for those writers targeting the home of the English language. Given recent totally unpredictable developments in the UK I’ve been inundated with emails asking how I see the Brit’ ebook scene now.
At the time I was optimistic (aren’t I always?) that while the future of ebook Britain was bright, Amazon was facing the prospect of being eclipsed by the burgeoning Kobo which had teamed up with UK retailer W.H. Smith, and there was the much rumored partnership between Barnes & Noble and Waterstone’s, which would have brought the nook to Britain.
A formal announcement was expected at the London Book Fair in April, but the Book Fair came and went with no news.
In fact, unbeknownst to all but the privileged few, Barnes & Noble was simultaneously in negotiations with Microsoft, and shortly after the LBF an official partnership was announced between Barnes & Noble and Microsoft.
A deal that left Waterstone’s out in the cold, the nook plans for international expansion on hold, and my predictions for the UK ebook market seriously holed.
Suddenly it seemed like Kobo had an open goal for the British ebook market.
W.H. Smith is the second-largest bookseller in the UK, with stores in pretty much every major town, and countless stores in the big cities. A chain that, because it also sells stationary, DVDs, music, games and newspapers, gets far more footfall than Waterstone’s.
And Kobo was busy installing wi-fi kiosks and staff to promote the Kobo e-readers and tablet, while selling ebooks through the W.H. Smith ebook store it operates. With Kobo’s black and white e-readers significantly cheaper than the Kindles, and with Kobo’s tablet (which is actually cheaper than Amazon’s best b&w device) facing no competition from the KindleFire, which remains unavailable outside the USA, it looked like Kobo was a sure-fire winner in the race for ebook supremacy.
Then came another bolt from the blue, just weeks after the B&N-Microsoft deal, as Amazon and Waterstone’s announced a partnership, in a move that left observers stunned. Me included.
On the list of the top one million least likely things ever to happen this was number one million and one. I honestly checked the date of the report when I first read this, thinking it must have been an April 1st post turned up late.
Waterstone’s boss James Daunt had previously been widely reported as comparing Amazon to Satan, and while that was probably wildly exaggerated by the media there’s no question Amazon and Waterstone’s were business rivals, not allies. Observers compared the move to letting the fox into the hen-house. Of mortgaging Waterstone’s future for short-term gain. Some suggested it was the beginning of the end for Waterstone’s.
Amazon and Waterstone’s in partnership? You couldn’t make it up.
Not here to analyze the numerous unverified guesses as to what’s in it for Waterstone’s. The simple fact is we don’t know (and may never know) the detail of the deal. But what is clear is that Waterstone’s will now be selling the Kindle in its 300 stores across the UK.
True, the Kindle is already available in supermarkets and electronic goods stores in the UK, but there it’s just another gadget. One among many, easily passed by.
But for the Kindle to be sold in Britain’s leading bookstore gives Amazon unprecedented access to its prime target audience – book buyers. Would the nook ever have taken off were it not for the Barnes & Noble bricks and mortar stores?
Waterstone’s chief James Daunt is neither stupid nor suicidal (I’ve been following his moves closely since he took over running the company last year and have been impressed with his objectives, if not yet his achievements), and we have to assume there are major benefits to be accrued by Waterstone’s from selling the Kindle and directing customers to the Kindle UK ebook store.
Obviously Waterstone’s will make money on the sale of the device. But how will Waterstone’s make money once the customer leaves the store and buys ebooks from their own home? Possibly the Kindles sold will be linked to Waterstone’s in some way (perhaps getting the buyer to sign up a Kindle account whilst in store) and the company will receive a commission on future sales through that account.
What will happen to Waterstone’s own ebook store is equally unclear. At the moment Waterstone’s ebook store is a not insignificant player in the UK market (it still brings the Saffina Desforges brand significant revenue each quarter, although very few indies are there) and presumably will continue to operate. No doubt the Waterstone’s store will be able to pick up trade from customers who prefer not to use Amazon, and those who have a device other than the Kindle.
Perhaps, just perhaps, Amazon will take over running the Waterstone’s store in the same way as Kobo now run the W.H. Smith ebook store. That would be an impressive move by Daunt. But that’s pure speculation.
Reports suggest Waterstone’s will be investing serious money (“tens of millions”) into upgrading all the UK stores with wi-fi kiosks and trained staff. Rather like rival Kobo is doing with W.H. Smith, in fact, and as Barnes & Noble has been doing very successfully with the nook. I suspect this will be financed by Amazon. The Russian billionaire Alexander Mamut, who owns Waterstone’s, may well have that kind of money to splash around, but impossible to see how it could be recouped, unless there is a commission on future ebook sales as per the possible scenario above.
But whoever is footing the bill, it looks like full steam ahead to upgrade the Waterstone’s bricks and mortar stores this autumn / fall and be in a position to market the Kindle in-store before Christmas.
For Waterstone’s, I suspect this deal was its last hope of competing in the digital future. An offer it couldn’t afford to refuse. Waterstone’s was way behind with its digital strategy, despite running the second largest ebook store in the country. To understand just how far behind, consider this:
Last year, as the UK’s biggest-selling indie author and at number two in the Kindle store and just launching on Waterstone’s ebooks, we approached Saffi’s local Waterstone’s branch to do some promo.
The manager looked blank. “We have an ebook store?”
By late summer we were riding high in the Waterstone’s ebook charts, with two books simultaneously in the top ten, and kept off the number one spot only by the Steve Jobs biography soaring when Jobs died. We were the top most searched-for name in Waterstone’s ebooks. We approached a bigger Waterstone’s store in the hope of getting some media interest.
“We have an ebook store?”
By spring 2012 we were officially the biggest-selling indie author of the previous year, and Sugar & Spice was officially the eleventh biggest-selling ebook in the country for 2011.
Ever the optimist we approached a major Waterstone’s city bookshop.
“We have an ebooks store?”
Yet James Daunt clearly sees and understands that digital is the future. It’s just that, for whatever reason, he’s been slow to get the company’s ethos changed.
Yes, it would be very easy for Amazon to use its presence in the heart of its biggest print-books rival to undermine Waterstone’s. Yes, it could easily take Waterstone’s down the Borders route, and then buy up the stores and all that prime real estate for a pittance, from its petty cash.
But as things stand Amazon has the perfect deal. It will have bricks and mortar ebook presence across the UK in the best possible way – in the country’s leading book-store. It will be able to go head to head with Kobo, its only serious rival on the international scene.
And while buyers will have to pay full VAT at UK rates on the Kindle devices sold through Waterstone’s, Amazon will continue to supply ebooks via Luxembourg at a fraction of that rate (just 3%), giving it a continuing price advantage over Kobo and all other rival sellers. If Amazon were indeed to run the Waterstone’s store that would give Waterstone’s a huge advantage over Kobo-W.H. Smith.
Whatever the detail, Amazon gets the best of both worlds, just as it always has. Bricks and mortar presence and off-shore tax advantages. But at a price – the survival of Waterstone’s as an independent nationwide book-store chain. If Waterstone’s fails Amazon would lose its bricks and mortar presence or have to take over the stores and lose the tax advantage. A symbiotic relationship unprecedented in publishing history.
What does this mean for the future of publishing in Britain?
Long term, that’s anyone’s guess. I just hope I’m right and Waterstone’s will survive.
Short term it means that the Christmas/New Year season 2012/13 is going to be UK publishing’s answer to the Rumble in the Jungle. The biggest booksellers and ebook players in the country will be going head to head this winter for the hearts and minds of the British book-lover, both intent on converting the UK to e-reading.
It’s going to be an ebook bonanza for those of us lucky enough to have our ebooks in the right place at the right time. The clock is ticking. Select fans may want to reconsider their options.
Who will win? .
At the moment my money is on Kobo. Kobo is already way ahead with its plans for in-store facilities, potentially reaches a much wider audience (i.e. not just book-store shoppers), and has cheaper e-readers than Amazon. Most importantly it has a cheap tablet available. And it’s being sold in the store that sells magazines. Wonderful to read on a tablet. A total disaster on the Kindle.
If Amazon can get its act together and launch the KindleFire in the UK (promised since January but still no sign) then Amazon’s market supremacy will probably continue. Without a tablet to compete then Amazon faces losing its dominant position in the UK despite the Waterstone’s deal, just as it has now taken second place to Kobo in Canada.
Whoever the winner is in the retail stakes, it’s a win-win for us all as writers and self-publishers, with huge new market-share being opened up.
Make the most of it. It’s going to be a great Christmas.