Actors in the book chain in the digital age: in order to identify ways of developing digital books in France while preserving the book value chain and the editorial diversity of French publishing, the Centre d'analyse stratégique, in partnership with the Centre national du livre, has produced a series of 3 analysis notes accompanied by proposals, each focusing on one of the actors in the book chain: authors and publishers (I), bookshops (II), public libraries (III). The contents are as follows.
I - Authors and publishers - How best to develop the digital book market?
The growth of the French market seems to depend on three main factors: readers offering interoperability and good value for money, a wide and enriched digital offer, and book prices that are sufficiently attractive for readers and remunerative for the players in the book chain.
Ensure interoperability of reading media
For a long time, the high price and poor quality of reading lights and digital tablets effectively limited the market's growth. However, the supply of electronic reading media has grown over the last three years, resulting in record sales in the last half of 2011.
The various digital book models have developed by integrating file formats that are not available on all online sales platforms. Thus, it is not possible for an owner to Kindle to buy titles in ePub format. An owner of Kobo will also not be able to acquire titles through Amazon's online bookstore. Only royalty-free books, i.e. published at least 70 years after the author's death, can be downloaded from any platform to all models of readers and tablets.
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This obligation to remain dependent on a specific platform seems clearly contrary to the exercise of free competition. Moreover, without free transfer from one tablet to another, it is impossible to give or lend one of its works in digital format. These practices are nevertheless common and very much appreciated by readers who cultivate by this means a real sociability around books.
Interoperability between the different digital book formats is one of the main demands of the Federation of European Publishers, which brings together the National Publishers' Union and all its European counterparts.
Proposal 1 : Bringing together publishers and distributors of digital books to create a real interoperability of files between the different models of tablets and readers.
Setting a fair discount for digital books: price is obviously a key criterion to encourage readers to buy digital books. The rise of the American market is largely based on the attractiveness of Amazon's offer, with files selling for $9.90 for works that cost $20 or $25 in print. As things stand at present, such an aggressive commercial policy has no equivalent in France: the law of 26 May 2011 on the single price of digital books requires the publisher, as for paper books, to set a public sale price for each book, which all resellers must respect, without the possibility of offering a discount which, if adopted by certain web players, could be considered a dumping practice. Readers nevertheless expect a real discount for the digital version of a book compared to its paper version. Several opinion studies reveal that the expected price for the digital version of a book is 40 % cheaper, which is confirmed by a recent report submitted to the Ministry of Culture.
However, most of the digital books available on the French market have a selling price that is "only" 20 % to 35 % lower than their paper equivalent. In order to encourage publishers to charge more attractive prices, while preventing the launch of an unlimited downward spiral, it may be envisaged, as suggested by the President and CEO of FlammarionTeresa Cremisi, to limit the decline of the digital book. The floor price would not only make it possible to curb the risks of devaluation in the publishing sector but also to preserve the paperback market, which plays an essential role in the book economy. While, in theory, the production of a digital book represents a saving compared with a traditional book (printing, paper, storage and shipping costs are eliminated, representing a saving of about 30 % in costs), the cost of developing a digital book cannot be neglected.
Even in the case of a homothetic declination of the paper version, the editor must at least perform several operations: convert the text file to the various existing formats, structure the data (setting links for tables of contents, calls for notes, etc.), reread, correct and check to ensure that the output file conforms to the original text. The files are also equipped with digital security (DRM) in order to limit their duplication.
While these operations have a fairly limited cost for novels, they entail much more expensive development costs in the case of illustrated works (practical guides, art books, tourist guides) or requiring numerous hypertext links. In the case of "enriched" books, the development costs are of a completely different magnitude: from 10,000 euros for a children's book in the form of a fairly simple application to over 100,000 euros for the most ambitious projects, such as The Fairy Herbarium.
Publishers are reluctant to lower prices further than the current discount of 20 % to 35 %. Beyond the "hidden costs" mentioned above, there is a risk that a downward spiral could emerge in the book market, creating habits among readers to consume low-priced books that would have formidable effects on the profitability of the sector. It is therefore a question of achieving a price that is sufficiently attractive for the readership, without devaluing the work of the actors in the book chain.
Proposal 2 : Launch a consultation with publishers to set a limit on the discount rate on the digital edition of a book compared to its paper edition.
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Diversifying, facilitating access and securing the digital offer: Despite fears about the prospect of dematerialization of books, publishers are now aware of the need to develop their digital offer.
- A still insufficient supply: The digital offer only accounts for about one fifth of new releases and about one third of bestsellers. Although the Editis Group has chosen to publish all its new releases simultaneously in print and digital versions, this is not the strategy chosen by all other publishers. Also, the 50,000 references available on Fnac.com are still a long way from the one million shares that the US has at its disposal Amazon. The commercial offer of digital titles will be extended thanks to the law of 1 March 2012, which will allow the marketing of digital versions of out-of-print 20th century works that are no longer sold in print and have not yet fallen into the public domain. Approximately 500,000 titles are concerned: published before 2000, they are now impossible to find in bookshops and are no longer reprinted by their publisher. Under this law, the "unavailable" titles may be digitized and marketed; the corresponding copyrights will be subject to collective management with royalties being shared equally between authors and publishers. The National Library of FranceFrance, because of its digitization policy, will obviously be the key player in this innovative measure around the world, enabling it to control its editorial heritage, to breathe new life into it and to benefit from it itself.
Nevertheless, such a market, while abundant in volume, does not offer considerable commercial prospects: few readers are in favour of out-of-print books. The prospect of new competition comes from the players in online distribution. Amazon, already a leader in the distribution of digital books via its Kindle reader, became a publisher of general literature, thrillers and science fiction in autumn 2011. Simultaneously a distributor, publisher and owner of a technological solution that very largely dominates the reader market, Amazon benefits from a formidable commercial strike force, thanks to which its publishing branch could well offer authors much more attractive remuneration conditions than traditional publishers. While defending itself from any plans to develop publishing activities in the digital book market, Facebook, for its part, bought in August 2011 Push Pop Pressa company specializing in interactive books for iPod touch, iPad and iPhone.
This digital offer is now very widely present in the case of works that are subject to frequent updates. Technical, scientific, medical and legal editions began their migration to digital at the beginning of the 2000s. Today, paper production has become marginal; 90 % of the turnover of these publishing sectors comes from the sale of dematerialized content. The case of Reed Elsevier may herald similar developments in other scientific or legal publishers. For this publishing heavyweight (the second largest European group), it is no longer a question of selling books, even if they are in digital format, with a linear structure, but of offering genuine tailor-made content from the mass of digitised and precisely indexed works. The researcher no longer buys books that he will consult here, but personalized studies, carried out thanks to powerful software.
The rise of shelves and reading lights is obviously changing the game. Publishers are now aware that the mass arrival of these devices in the home will soon transform reading habits. They must therefore now take their place in this market.
- The risk of piracy: If demand were to grow faster than supply, it is obvious that piracy would be indirectly favoured, as has been the case with the online music supply. When the reader cannot legally find the work of his or her choice in a digital version, he or she may be tempted to download it illegally. The most emblematic example of illegal downloading, beyond the control of the publisher and the author, was La Carte et le territoire de Michel Houellebecq, prix Goncourt 2010, because the book was not available in a digital version when it was released. Today, comic books are the favourite target of pirates. According to a study published by the MOTif, about 40,000 titles are now pirated with 8,000 to 10,000 titles available for illegal downloading. Out of a panel made up of 50 of the best-selling comic strip titles in 2011, it turns out that 58 % of them are not available as legal digital offerings on one of the three main distribution platforms.
- Fragmentation of distribution: Another element detrimental to the growth of digital books in France is fragmented distribution. While the United States benefits from a single distribution platform for digital books, France has no less than three major platforms: Numilog (Hatchet), Eden (La Martinière-Le Seuil, Flammarion, Gallimard) and E-Platform (Interforum Éditis), to which smaller players have been added: Immaterial, i-Kiosk... However, in order to integrate the catalogue of each platform, digital book resellers have to pay a high subscription fee; the temptation is therefore to turn to a single major player, even if it means depriving themselves of an exhaustive offer.
In addition to these platforms, some publishers have chosen to sell their books directly on their site in digital format alongside paper books. This is the case for éditions Eyrolles, from The Harmattan or from Harlequinthe specialist in romance novels. The online bookseller's initiative Decitre could change that. Scheduled for launch on April 4, 2012, The Ebook Alternative (TEA) will be an open source book distribution platform, i.e. one that does not support any proprietary format. TEA has already signed an agreement with several publishers including Gallimard, La Martinière and the group Éditis. This new platform could be able to centralize all or part of the distribution of digital books, if it is sufficiently attractive to all publishers.
The solution to the fragmentation of the supply of digital books will in any case be to eventually set up a single distribution platform.
Proposal 3 Bringing together the players in book publishing and distribution to achieve a grouping of French digital book distribution around a single platform.
Proposal 4 Training a group of expert teachers and National Education inspectors on digital textbooks to guide publishers towards the most promising devices in terms of learning.
Proposal 5 Provide for an appendix in the publishing contract clearly detailing all provisions relating to the digital exploitation of the transferred work. In the case of the enriched book, provide for a separate contract.
(Sources: Thomas Loncle, lawyer at the Paris Bar; Sarah Sauneron, Social Issues Department; Françoise Vielliard, Sustainable Development Department and Julien Winock, Watch and Foresight Department)