Bertelsmann getting out of book retailing

[fjtorres]

WSJ link:

http://online.wsj.com/news/article_e...MDAwMjEwNDIyWj

German media conglomerate Bertelsmann SE announced earlier this month it would close its bookselling business in its German-speaking markets, after years of declining sales.

The company's retail locations as well as the online store, branded under the "Der Club" label, will cease operations in Germany, Austria and Switzerland by the end of 2015, spelling the end to almost all of Bertelsmann's remaining bookselling activities.

The first retail store opened in 1964 and they then expanded across Germany. Meanwhile, the book-club business grew across Europe and North America, offering book subscriptions at a discount by signing readers up for bulk purchases.

By 1992, there were more than 300 stores in Germany alone and more than seven million members enrolled in the Bertelsmann book club. Today, only 52 locations remain and sales have fallen sharply, down to less than €100 million, or roughly $136 million, from a peak of €700 million in the mid-1990s.

With the rise of the Internet, German book-buying habits have sharply changed over the past decade. Last year, some €1.6 billion of books—16.3% of all books sold—were sold via the Internet. About 70% of online and mail-ordered printed and digital books are sold via Amazon.com Inc., according to industry data.

All the german Amazon angst is over eleven percent market share?!!

Since the 1960s, Bertelsmann has diversified into other media channels, buying and then selling stakes in music ventures like Sony Music as well as other joint ventures like an ill-fated deal with AOL Inc. in the 1990s.

The company has also acquired assets such as the German magazine publisher Gruner & Jahr, German television stations under RTL Group, RTL.BT +0.37% and the U.S. book publisher Random House, all areas where the company continues to look for growth.

"Bertelsmann has come a long way from bookselling," said Bettina Deuscher, a media analyst at Landesbank Baden-Wuerttemberg. "The bulk of its revenues today come from TV, publishing and business services.

More at the source...
(Might expire)

[doubleshuffle]

I think you may have mixed up your links...

[fjtorres]

Originally Posted by doubleshuffle

I think you may have mixed up your links...

Yup.
Thanks.
Fixed.
Hope it doesn't expire soon.

[Gudy]

Originally Posted by fjtorres

All the german Amazon angst is over eleven percent market share?!!

Uhm... All that angst, as you so quaintly put it, is probably less about the 11% Amazon market share and more about the 86% drop in Bertelsmann book club sales. Which, from where I sit, makes it look less like angst and more like a sound business decision. But then, what do I know about business?

[doubleshuffle]

I think fjtorres wasn't referring to the Bertelsmann decision in particular here, just to the fact of Amazon's market share being surprisingly low for all the angst.

As far as evil monster corporations go, Amazon will yet have to prove that they can attain the level of Bertelsmann.

[Gudy]

Originally Posted by doubleshuffle

I think fjtorres wasn't referring to the Bertelsmann decision in particular here, just to the fact of Amazon's market share being surprisingly low for all the angst.

Hmm, maybe. But the thing to consider is that Amazon does something new (eBooks), is scarily good at something old (logistics), is growing and expanding its market share and technology base with no ceiling in sight, and on top of all that is successful. To a fundamentally conservative business like book retail, that is a profoundly scary thing.

Originally Posted by doubleshuffle

As far as evil monster corporations go, Amazon will yet have to prove that they can attain the level of Bertelsmann.

That is true. Very, very true.

[fjtorres]

Originally Posted by Gudy

Uhm... All that angst, as you so quaintly put it, is probably less about the 11% Amazon market share and more about the 86% drop in Bertelsmann book club sales. Which, from where I sit, makes it look less like angst and more like a sound business decision. But then, what do I know about business?

I was referring to the continuing german media angst over Amazon retailing practices and "bullying" of publishers. Including recent antitrust charges from said retailers.

At 11%, in a price-fixed market, their market power is actually very limited by any rational economic analysis since they can only account for an equIvalent portion of the publisher's business. Especially in a market with single digit ebook penetration.

Here:
http://the-digital-reader.com/2014/0...laint-germany/

http://publishingperspectives.com/20...rseas-as-well/

Plenty more all over.

[Gudy]

Originally Posted by fjtorres

I was referring to the continuing german media angst over Amazon retailing practices and "bullying" of publishers. Including recent antitrust charges from said retailers.

At 11%, in a price-fixed market, their market power is actually very limited by any rational economic analysis since they can only account for an equIvalent portion of the publisher's business. Especially in a market with single digit ebook penetration.

Well, if Amazon's behaviour was as described, i.e. they lowered their stock, removed preorder buttons and caused longer delivery times for the books from that one publisher, their behaviour was quite possibly anticompetitive, and the antitrust charges may be quite justified under German law.

As for their market share - 11% doesn't sound like a lot, but that may very well still make Amazon the largest book retailer in Germany by a good, solid margin. Also, that's 11% of the total book market. They are apparently pressuring for higher rebates for e-books, though, where they have a 70% market share. And at that point we are well into the range where the German cartel office tends to take a dim view of shady business practices. Especially since Amazon is BOTH a publisher AND a retailer in the e-book market, so the way they treat other publishers becomes doubly interesting: The lower publisher share, and hence lower royalties, might pressure authors to abandon their publishers and publish via Amazon, where the royalty rates are higher.

The German book market may be price-fixed, but just what exactly that means for e-books isn't clear. In the same way that a paperback edition of a book can have a different price from a hardcover edition of the same book, an e-book edition of the same book can have a different price still. Now, is an ePub edition of a book sufficiently different from a Kindle edition of a book that it can have a different price, or are they considered the same edition in the eyes of the German book pricing laws? I don't think anyone has ever decisively answered that question.

And lastly, what Amazon is doing right now doesn't seem to benefit anyone but Amazon's bottom line. It probably wouldn't lead to lower e-book prices, which would benefit consumers. It certainly would lead to less money per book for authors, who aren't really known for getting rich (with a few notable exceptions). So I have a hard time cheering for them on that basis alone.

[fjtorres]

Originally Posted by Gudy

As for their market share - 11% doesn't sound like a lot, but that may very well still make Amazon the largest book retailer in Germany by a good, solid margin.
.
.
.
Also, that's 11% of the total book market. They are apparently pressuring for higher rebates for e-books, though, where they have a 70% market share.
.
.
.
The German book market may be price-fixed, but just what exactly that means for e-books isn't clear.

If Amazon were indeed the market leader at 11% then that would be a stfong health market with no need for government meddling. Antitrust isn't about who is top dog but about the ability to control the market and actually *abusing* that power. It would a historical first if a company with such a small market share could, by itself, control a market where it can't even set its own prices.

German ebook penetration has been growing...to maybe 7% of the total market so that, oh, scary!!, 70% number is meaningless in an antitrust context. 70% of a trivial segment is still trivial. IBM once had 100% of the PC market simply because nobody else was making PCs; whoop-dee-doo! First movers and pioneers in immature markets acquire big share numbers that evaporate like morning mist once the market matures. Still no reason to go whining to government.

As for the impact to consumer prices, german readers here can speak to that better, but what I hear is they face unacceptably high ebook prices anyway. One reason why ebooks amount to so little there. Where Amaxoncan bring change there is towards lower prices if they foster a healthy indie ebook marketplace as in the US/UK.

All I see in that environment is a bunch of deeply entrenched players looking to screw consumers and retailers as long as possible and amazed that anybody would dare talk back to them. And scared that Amazon might foster an indie ebook revolt like they have in the US/UK.

Not impressed.

[Phogg]

Originally Posted by Gudy

Well, if Amazon's behaviour was as described, i.e. they lowered their stock, removed preorder buttons and caused longer delivery times for the books from that one publisher, their behaviour was quite possibly anticompetitive, and the antitrust charges may be quite justified under German law.

As for their market share - 11% doesn't sound like a lot, but that may very well still make Amazon the largest book retailer in Germany by a good, solid margin. Also, that's 11% of the total book market. They are apparently pressuring for higher rebates for e-books, though, where they have a 70% market share. And at that point we are well into the range where the German cartel office tends to take a dim view of shady business practices. Especially since Amazon is BOTH a publisher AND a retailer in the e-book market, so the way they treat other publishers becomes doubly interesting: The lower publisher share, and hence lower royalties, might pressure authors to abandon their publishers and publish via Amazon, where the royalty rates are higher.

The German book market may be price-fixed, but just what exactly that means for e-books isn't clear. In the same way that a paperback edition of a book can have a different price from a hardcover edition of the same book, an e-book edition of the same book can have a different price still. Now, is an ePub edition of a book sufficiently different from a Kindle edition of a book that it can have a different price, or are they considered the same edition in the eyes of the German book pricing laws? I don't think anyone has ever decisively answered that question.

And lastly, what Amazon is doing right now doesn't seem to benefit anyone but Amazon's bottom line. It probably wouldn't lead to lower e-book prices, which would benefit consumers. It certainly would lead to less money per book for authors, who aren't really known for getting rich (with a few notable exceptions). So I have a hard time cheering for them on that basis alone.

Amazon is not a publisher.
Amazon is a distributor for self publishers who retain the rights to their works.

Huge difference.

[rcentros]

Originally Posted by Gudy

And lastly, what Amazon is doing right now doesn't seem to benefit anyone but Amazon's bottom line. It probably wouldn't lead to lower e-book prices, which would benefit consumers. It certainly would lead to less money per book for authors, who aren't really known for getting rich (with a few notable exceptions). So I have a hard time cheering for them on that basis alone.

Actually Amazon's "bottom line" is surprisingly small. It appears that they plow almost all of their money back into Amazon. (How odd and how unlike the fruity device maker.)

http://www.ibtimes.com/amazon-nearly...m-care-1513368

As for authors getting rich -- they never have, except for the notable exceptions that have become household names. When I used to read SF (lots of it), long before eBooks, I was surprised to discover that several of my favorite authors (who seemed extremely successful) were still working day jobs.

That said ... some of the "self-published" books Amazon is "featuring" (selling cheaply) wouldn't have made it in the real world. The last couple I've read, which had promising premises and slick covers, have turned out to be pure drek. So those authors are lucky to be making anything at all.

[Gudy]

Originally Posted by Phogg

Amazon is not a publisher.

Amazon begs to differ.

[speakingtohe]

Originally Posted by fjtorres

As for the impact to consumer prices, german readers here can speak to that better, but what I hear is they face unacceptably high ebook prices anyway. One reason why ebooks amount to so little there. Where Amaxoncan bring change there is towards lower prices if they foster a healthy indie ebook marketplace as in the US/UK.

All I see in that environment is a bunch of deeply entrenched players looking to screw consumers and retailers as long as possible and amazed that anybody would dare talk back to them. And scared that Amazon might foster an indie ebook revolt like they have in the US/UK.

Not impressed.

Having lived in the Canadian North, I have seen more screwing of consumers by the entrenched businesses who prior to 2005 and later, (in some small communities even to this day) I think I understand what you are saying. 2003 prices for a quart of milk, $9 and a package of photocopy paper $11.98. I was once asked by an Inuvialuit woman how you tell if a pear is good. She had paid $5 for one and it was hard like a rock she said.

The incumbent retailer is not always the good guy.

Helen

[HarryT]

Originally Posted by rcentros

As for authors getting rich -- they never have, except for the notable exceptions that have become household names. When I used to read SF (lots of it), long before eBooks, I was surprised to discover that several of my favorite authors (who seemed extremely successful) were still working day jobs.

Yep. The British SF author Bob Shaw (alas now dead these many years) used to be a good friend of mine, and although he was a popular "mid-list" SF author, he was very far from being a wealthy man. He made a living from his writing, but I, as a not-spectacularly-well-paid computer programmer, earned more than he did. Of course he probably enjoyed his job more than I did .