Agency Abroad and the Limits of Technology
By Emily Williams, Co-Chair, BISG Rights Subcommittee
Anyone who writes about ebook rights and territorial issues hears sooner or later from the Australians.They are mad, and they want answers.
The ebook, with its digital power to leap oceans in milliseconds, seems perfectly suited to this market, geographically but not culturally isolated from its English-speaking cousins. So, although the Australian market has been the slowest of the major English-language markets to adopt ebooks (there is no local flavor of Amazon; Kobo launched in May and iBooks arrived last month), early adopters down under were quick to explore the advantages of shopping for their reads on the borderless interwebs.
In those heady early days, the selection was nowhere near as good as it is today, but Australian readers could buy just about any ebook they found on offer. Ebooks were a new thing, and sales were still tiny, and publishers didn’t necessarily see that implementing the changes in their systems needed to enforce territorial controls was a financially worthwhile proposition.
Bob LiVolsi, founder of the independent ebookstore BooksOnBoard, remembers: “In response to a proactive inquiry in November 2008, personnel from two publishers (now agency publishers) actually told me NOT to bother when we talked to them about implementing territory controls. But when volume started hitting over the subsequent months, all hell broke loose and there was a rush to implement territory controls.”
This was the first moment of disillusionment for Australian readers. US publishers, spurred by Amazon, were the first to ramp up ebook publishing, but they didn’t always control world English language rights to their books. UK publishers or local Australian publishers, who did control rights for Australia, were working in markets where ebooks were growing much more slowly, and in many cases hadn’t gotten around to publishing ebook versions of the same titles. This led to an exasperating situation where Australian readers could find US ebooks online, but when they went to buy some titles they would be rejected with a cryptic note about territorial controls – essentially, go away, we don’t want your money.
(Okay, in fact the US publisher was not legally allowed to sell the book in Australia, but some highly motivated readers were nonetheless understandably upset.)
Agency Full Stop
Then came agency, and things got worse. (At least for a time.)
I’ve talked with a few people inside big houses, and here’s what I think happened. Not quite a year ago, Apple launched its iPad – a big new product out to dominate its category and, as always in the tech world of lucrative devices, cloaked in secrecy until the last possible moment. I have no idea how far ahead of the launch publishers were talking to Apple, but the agency model that five majors rushed to adopt in order join the iBooks store necessitated a massive change in the way they had always operated and implementation was nowhere near smooth.
Apple offered these five publishers the leverage to get out from under Amazon’s monopoly of the ebook market, but the changes this required had to happen on Apple’s schedule – which is to say, right away. Publishers scrambled to get legal issues worked out, new contracts in place with retailers and distributors, and new systems in place to handle the accounting and data. As the seller of record, publishers now had complete control over pricing, but also had to collect sales tax and take on a different legal role with their supply chain partners and their customers.
Getting agency in place for US readers was messy in a big way (for gory details see our earlier post, Indies to Agency Five: Where’s the Love?). Publishers needed more time to get their footing in international markets and as a result the agency houses temporarily cut off all sales of their ebooks abroad.
Australian readers were already mad, you can imagine how they felt about that.
Indie ebookseller Diesel got so many complaints they wrote an apologetic blog post asking ”What’s Up with Down Under?” Kelley Allen, the store’s director, explains, “Over 40% of our customers are outside of the US. We hear a lot of complaints from some very vocal and annoyed customers from the English-speaking countries such as Canada, UK, Australia and New Zealand.”
Publishers did eventually restore sales to customers abroad, first in Canada, then the UK, and then (or in some cases: soon) in Australia. But all of this behind the scenes scrambling was opaque not only to foreign customers but to the retailers who are supposed to be publishers’ business partners. “Territory changes have been challenging,” says Bob LiVolsi, “in that the publishers seem to have been thinking this through as they implemented at the tactical level, allowing retailers no runway for planning and inadequate data to anticipate the impact on customers.”
Readers Get Mad
With communication lacking, new territorial limitations just showed up in the data that retailers get from publishers, and the booksellers’ systems then implemented the territorial controls without the booksellers themselves having any idea what had happened…until they started hearing from pissed off customers.
“Communication of territory rights are by title and they are in the metadata feeds (the book’s ISBN, pricing, title, author, annotations, territory rights, etc.),” explains LiVolsi. “For example, if we receive 100,000 ebooks in a given day’s metadata feed, which happens often, the only way we can know what territory changes there are would be to go through and build a comparison table title by title, an unwieldy task that would be very costly. So, our systems automatically restrict territories based on the territory assignments by title in the metadata feed. Then, we have a funnel that confirms the customer’s territory of residence that gets two to three country verifications before allowing a checkout.”
The consequences were predictable. “About 55% of our customer base is non-US, representing about 47% of revenue,” says LiVolsi. “Australia and South Africa were probably most affected in the English-speaking world by territory adjustments. That appears to be getting fixed now for Australia. It’s unclear what the course is for South Africa.”
And of course, now the other shoe is dropping, as Apple and Amazon ramp up their ebookstores in the UK, major British publishers are now completing the switch to the agency model. “The UK is now transitioning to agency and our supply from a couple agency publishers there is again getting cut off temporarily as publishers and wholesalers negotiate,” says LiVolsi. “So the impact of that is yet to be assessed. On the other hand, agency publishers aren’t nearly as important to our UK customer base and the impact is likely to be relatively minor.”
The Internet Doesn’t Solve All Problems
To be fair, rolling out a new global sales model is devilishly complicated. The simple transaction – here’s my product, give me your money – that the internet seems to enable is not simple at all when it comes to navigating different commercial, legal, and taxation requirements in multiple countries. For evidence, one bookseller pointed to the U.S.-only launch of the Google ebook platform, noting that not even Google, up to its eyebrows in money and technical know-how, could pull off a launch in more than one country at a time.
In one sense, the problem is simple. Ebooks are in a messy transition period, during which access is not yet universal – all readers in all markets cannot all buy the same books. Readers in smaller markets with fewer local ebooksellers are at a disadvantage until the publishers and retailers get the international e-commerce thing sorted out.
(As for the question of why territorial controls need to exist at all, that’s a bigger conversation. Here’s a start.)
There is one thing the internet enables, however, that would go a long way toward minimizing the backlash from early (and loyal! and engaged!) ebook customers: transparent communication. LiVolsi holds up digital leader Harlequin as an example of how publishers should be working with their readers and retail partners.
“Harlequin’s team gets directly involved with us, sharing between us important information about strategy, customer demographics and trends,” he says. “That then integrates into marketing strategy and the result is superior. Nuance upon nuance over time build big success.”
Emily Williams is co-chair of the BISG Rights Subcommittee and a former literary scout who currently works as an independent publishing consultant.