Amazon’s Australian Kindle store: an unhappy ending for the book industry?

Amazon has been prising open the wallets of Australian consumers for years – but what will its local push on Kindle mean for readers, writers and publishers?

When Amazon opened its Australian Kindle store last month, it was to feisty reaction from independent bookshops. Charismatic Sydney bookseller Jon Page of Pages & Pages Booksellers even relaunched his “Kindle amnesty” – a scheme that allows conscientious local readers to swap their Kindle for the Australian book sector’s preferred e-reader, the Kobo, and receive a $50 book voucher for their trouble.

“We’re calling it Kindle Amnesty 2.0,” jokes Page, who is spruiking for the Kobo Aura HD, which he argues is “equal to or better than the Kindle Paperwhite”. Those who read via tablets such as the iPad or Galaxy have access to Kobo reader apps. “We want to take the fight to Amazon because they are so dominant in this market, particularly with the Kindle device,” argues Page. Pointing to the Commonwealth’s 2011 Book Industry Strategy Group report, he claims that Kindle represents about 70% of dedicated e-reading devices. (This figure does not include tablets, phones or laptops). “That’s a problem, because the Kindle locks competition out and locks customers in.”

Industry sentiment is divided over the impact of the entry of the tech giant into Australian online retailing. Some have been forecasting impending doom. Others are merely apprehensive about Jeff Bezos’ juggernaut. Amazon’s thin margins terrify competitors. Despite vast revenues, the parent company makes no profit. Amazon raked in US$17bn in net sales last quarter, for an operating loss of US$25m. Analysts and brokers are starting to wonder whether, eventually, Amazon’s gravity-defying stock price will tumble to earth.

But other industry observers have argued that an Australian Amazon presence will be good for consumers and readers. As Kobo’s Malcolm Neil told Melbourne’s Independent Publishing Conference recently: “Amazon is good because the customer likes them ... We’re not going to win the argument by telling people they’re wrong.”

Martin Shaw, books division manager at independent retailer Readings, argues that Amazon’s Australia venture may not be such big a deal. “It is only ebooks,” he says. “That market has got so many players in it now, who knows what sort of impact it will have? We will just have to see how the dust settles.” Shaw foresees a coming war of devices in which competitors try to lock customers into competing ecosystems. “I think there will be a lot of devices flooding the market trying to get people to enter the walled garden,” he says. “That will force other e-tailers like Kobo to become more aggressive.”

Of course the irony is that, in our globalised world, Amazon is not really “starting up” in Australia at all. The retail behemoth has long been prising open the wallets of Australian consumers, who have been buying books and all manner of other things from Amazon in the US for years – estimates of how much that market is worth vary enormously. The move by Amazon to begin an “.au” store that trades in Australian dollars and sells Australian ebooks through Kindle merely makes that custom one step easier. “All that’s changed now is that it’s an Australian-facing site,” Page argues.

There are upsides for consumers. The Gordian knot of digital copyrights, based around various national boundaries, has meant that some US and Australian titles were not available as ebooks in Australia. The new Amazon.com.au store can now stock a much wider range of titles that have Australian-only digital licences.

And prices will be forced lower. Shaw says that we may see “a race to the bottom”. Amazon’s deep pockets, he says, means “they can go there [to low prices] and stay there for as long as they want”. Australian book prices are still much higher than comparable titles internationally. In Amazon’s view, that margin can be returned to consumers in the form of lower prices.

A quick look around the various sites for Australian ebooks revealed some savings. An ebook of Ross Garnaut’s Dog Days worth $9.99 on Kobo, was $9.49 on Amazon. Eleanor Catton’s Booker-winner The Luminaries was $10.68 on Kobo; on Amazon it was $9.35. (As a comparison, a paperback of Dog Days costs $15.29 from Bookworld, while The Luminaries costs $22.49). For other titles, owing to so-called “agency pricing”, Kobo and Amazon’s prices have converged: Christos Tsiolkas’ Barracuda was the same price on both.

The other potential winners of Amazon’s entry are successful authors and self-publishers. Amazon’s benefits to authors are controversial, but for the top tier they are real. The Australian publishing industry has been rather wary of embracing the digital world and while it's hard to pinpoint precise figures, there's a perception that many local authors have lagged well behind their US counterparts in ebook market penetration. Australian self-publishers will now get a 70% royalty for books sold to Amazon.com.au accounts. International experience has shown that a lucky few will reach big new audiences with bestselling self-published titles. Although on the other hand, mid-rank and lower authors may find themselves little better off.

Meanwhile, agents, publishers and booksellers still face real challenges from digital, Amazon or not. Digital is reshaping the industry and still threatens to cut middlemen out of the chain. Online-only retailers like Bookworld may be the most vulnerable, lacking the size and scale to adequately compete. When Amazon bought Book Depository, the UK retailer popular with Australian consumers, there was consternation in the book industry, despite the Australian Competition and Consumer Commission deciding not to oppose the move.

As books blogger Patrick O’Duffy wrote recently in a long analysis of Amazon’s entry into the Australian market: “By starting this process of moving into Australia, Amazon is going to permanently affect the local writing, reading, publishing and bookselling world.” That much at least seems certain.

Contributor

Ben Eltham

The GuardianTramp

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