Ebook taxes called unfair by publishers

[SteveEisenberg]

Originally Posted by fjtorres

Betting the farm on the old ways often leads to losing the farm.

What business plan would have worked?

In the encyclopedia wars, even Microsoft, with or without Funk & Wagnalls, failed. Moving to digital earlier or later made little difference.

[meeera]

Originally Posted by HarryT

Can't be done. The copyright holder has the absolute right to grant the right to copy to whomsoever, and with whatever restrictions, they wish. If they decide to grant me the right to only sell their book to people called "Smith", then that is absolutely their right. It's completely irrelevant whether or not you, me, or anyone else agrees with their decision or thinks that they're completely nuts.

Not the best example of account of people named "Smith" are more likely to be of Anglo descent than the average, but sure.

However the legacy publishers and agents and authors will gradually realise, I hope, that people are increasingly buying from whatever "country" they choose, in practice, and that the old borders don't make any sense in a global economy. And that trying to tell people to go away when they're saying "Shut up and take my money!" is not a particularly sound business model when the book is likely globally available on a pirate site two or three clicks away.

Governments are very slowly waking up to how this affects their citizens, too, with the Australian government getting intermittently quite cranky about the Australia Tax on digital goods.

[pwalker8]

Originally Posted by HarryT

Can't be done. The copyright holder has the absolute right to grant the right to copy to whomsoever, and with whatever restrictions, they wish. If they decide to grant me the right to only sell their book to people called "Smith", then that is absolutely their right. It's completely irrelevant whether or not you, me, or anyone else agrees with their decision or thinks that they're completely nuts.

Just because something is now, doesn't mean that is the way it will be for all eternity. In the US especially, copyright is a deal between the copyright holder and the government granting the copyright holder exclusive rights to copying a work for a limited time for the purpose of encouraging the arts and sciences. Copyright holders are dependent on the government for the enforcement of those rights. Copyright holders who abuse those rights, such as only selling to people named "Smith", will find over time that the rights may be revoked. It's not an inalienable right, nor is it property. The pendulum has swung far to the side of copyright holders. It really won't take much for the pendulum to start to swing back.

People don't understand the archaic business models that led to geographical restrictions. That business model makes less and less sense given the easy that one can buy things world wide today. Just last weekend, I bought several high quality recordings from a vendor in Sweden even though I live in the US, something that would have been very unlikely even 20 years ago. Given how easy it is to buy pass such restrictions for those who want to, I don't see those restrictions lasting a whole lot longer. We are already seeing the cracks.

[pwalker8]

Originally Posted by SteveEisenberg

What business plan would have worked?

In the encyclopedia wars, even Microsoft, with or without Funk & Wagnalls, failed. Moving to digital earlier or later made little difference.

That's of course the point that is ignored. Encarta really didn't last very long as a viable product. It wasn't so much that Microsoft made such a wonderful marketing move that those hide bound encyclopedia makers ignored, it was that the paper version encyclopedia business was going the way of the buggy whip makers. Encyclopedias and dictionaries now exist as websites, rather than as the must have volumes sitting on the book self for any parent with school age kids. While you can still buy 20 volumes of the Oxford English Dictionary, most get an online subscription.

[HarryT]

Originally Posted by pwalker8

People don't understand the archaic business models that led to geographical restrictions. That business model makes less and less sense given the easy that one can buy things world wide today.

That's because you're looking at it from the POV of the customer, not the author. It makes a great deal of sense from the author's perspective. The majority of books don't pay more than their initial up-front royalty payment. By selling country-specific or regional rights to multiple publishers, the author receives multiple royalty payments, and hence makes more money. The business model is designed (absolutely rightly) to give the maximum benefit to the author, not to you, the customer.

[GERGE]

If we are talking about copyright, I recommend this to everyone: http://digitalcommons.law.umaryland..../vol59/iss2/7/

It is quite helpful to understand how deeply rooted copyright is in our civilization.

[fjtorres]

Originally Posted by HarryT

The majority of books don't pay more than their initial up-front royalty payment.

The *vast* majority of traditionally-published books don't pay more than the upfront "advance". Viable alternatives now exist that bring meaningful income for far longer.

Originally Posted by HarryT

By selling country-specific or regional rights to multiple publishers, the author receives multiple royalty payments, and hence makes more money.

A better justification is that it brings in a local partner with better access to local retailers and marketing which should theoretically result in higher sales and thus more income.

[GERGE]

I also feel that I should add this to the main topic; there is a proper reason why ebooks are taxed more in some countries, article in The NY Times isn't really does a good job of explaining.

I will try to explain by taking UK as an example (I could use my own country but I am sure more poeple speak English than Turkish here and therefore could go to the sources =) ).

Now, for UK, the standard VAT rate is %20. Article says that UK has %0 VAT for printed books, %20 for e-books. That %20 is the standard VAT. And this is a classification problem.

What you need to know here is that tax laws are very detailed and precise. This is by necessity but I am not going to go into details here. It includes books as zero VAT rate but the books are classified under printed products. And e-books are not printed. This is the problem. It should be the same everywhere on that list.

This is why e-books have more tax. In Turkey, finance ministry decided to classify e-books as books in 2013 with a new code, therefore we pay the same %8 VAT for both. Google Play Books, for example, takes %8 VAT from everybook they sell to me.

Some of the problem arises from the nature of tax regulations. Tax can usually be only decided by law, not by statutes or bylaws or anything lower like that. Law, like criminal code, civil code... They are hard to made, they are slow.

What is needed is to classify e-books as books by law, not by common sense. Common sense don't really have a place in tax law and that is actually usually good for the public benefit. But those are unnecessary discussions here, never discuss public benefit with a lawyer anyway =)

PS. Geographic restrictions on books actually don't have any basis on any law I know of. They are mostly contract based restrictions created by taxation problems.

[thewitt]

The EU had an opportunity to fix this tax inequity, but they chose not to do so. Reclassifying eBooks would be very simple and would not require any laws be changed. Tax classifications are reviewed all the time and revised without the law changing.

There are politics in play, plain and simple. Follow the money and I suspect you will find the real reason for oppressive ebook taxation.

[HarryT]

Originally Posted by thewitt

The EU had an opportunity to fix this tax inequity, but they chose not to do so.

I believe I'm right in saying that EU countries will be allowed to charge a reduced rate of VAT for ebooks, as for printed books. A resolution to that effect was passed in the last few months.

[GERGE]

Tax, as a general rule, should be specified by law in the continental Europe.

Moreover, EU can't fix this in anyway. The European Commission's tax policy is to leave the member states basically alone while making recommendations. But the member states are free to disregard the recommendations.

EU's tax policy should be written somewhere on the Commission's website.

[fjtorres]

Encarta provided MS will a billion-dollars a year of business for a decade. Then it provided traffic to MSN for another 5 years. That is 15 years longer than most of the other encyclopedia vendors.
If nothing else, it would have allowed them the time and money to pivot to a different business model.

The tech world is a red queen's race of constant reinvention.
Looking for a magical business model that will survive unto eternity is, well, magical thinking.

Look to Microsoft and all the times they have reinvented themselves in the past four decades:
- they started as a vendor of programming languages for multiple operating systems for hobbyist computers
- they added a business-focused OS and apps and an entire pbook publishing house
- they long sold one of the most popular and profitable games ever
- then they added content publishing in the CD-ROM era, online access and online-exclusive content production during the internet bubble
- along the way they became the largest corporate server management tools vendor
- more recently they stepped into console gaming and developed a multibillion-dollar a year business in XBOX along with video and music streaming business
- and right now they are in a dogfight with Amazon (another eternally-morphing company) for the top spot in the cloud services business where both are far outpacing all other contenders and preparing for the possible end-of-life-ing of their Windows cash cow.

Look to other tech business and you'll see similar stories; Sony was transistor radios, then it was TVs, now it is console gaming and Spider-man movies. Maybe Ghostbusters.

IBM used to be about tabulator punch cards, then typewriters, then mainframes, then PCs, now it is about corporate consulting and computing services.

Apple used to be about hobbyist computers, then business and educational computers, then about content creation computers, then about digital music, and now they are all about luxury phones and jewelry.

Tech businesses know product lines don't last forever and expecting them to do so lands you on the side of the road as leftover roadkill of the more agile companies. Which is one of the primary reasons why technology disrupts long-established businesses it encroaches on: once a tech-savvy player enters the business they keep looking for new ways to play the same game. And invariably they do.

ebooks are real.
And ebooks aren't just print books minus dead tree pulp; ebooks are a whole new way to package, distribute, and monetize stories. Note I said "monetize"; selling stories isn't the only way to make money in ebooks. Just as selling encyclopedias door-to-door wasn't the only way to make money off reference materials.

Times change and the technology world changes annually, not every five decades.
The biggest publishers are pretty much guaranteed some form of survival into the next century thanks to life+70 copyrights but smaller publishers don't have that luxury; they need to find ways to play the red queen's race of ebooks before they become roadkill like the encyclopedia publishers.

And anything that hampers that is going to have to be fought tooth and nail.

[fjtorres]

Originally Posted by HarryT

I believe I'm right in saying that EU countries will be allowed to charge a reduced rate of VAT for ebooks, as for printed books. A resolution to that effect was passed in the last few months.

Almost a certainty.
But the publishers involved in the NYT report aren't just European publishers nor are they just concerned with European sales.

The disruptions from ebooks impact all publishers and all markets.
They already are.
In fact, the biggest disruptions coming from ebooks will not be European or NorthAmerican.

[theducks]

Originally Posted by HarryT

I believe I'm right in saying that EU countries will be allowed to charge a reduced rate of VAT for ebooks, as for printed books. A resolution to that effect was passed in the last few months.

The keyword above is allowed

Since when, does any taxing authority want to give up a source of revenue

[HarryT]

Pretty often, actually. The British government has always strongly supported the idea that books should be zero-rated for VAT.