Amazon made the first move in its latest wave of international expansion by finally throwing open the doors of its long-mooted Spanish site Amazon.es.
Amazon’s eighth store outside the US (following Canada, Britain, France, Germany, Italy, Japan, and China), will stock the usual assortment of books, games, DVDs, appliances, and electronics, but neither the Kindle nor e-books, for which Spanish customers will continue to be re-directed to Amazon.com.
Respected Spanish daily El Pais has a source which claims that an official Kindle Store – selling both the device and e-books (including local-language books) – will be open before the year is out (link in Spanish).
Physical books are on-sale already, available in Castilian (Spanish), Galician, Catalan, and Euskara (Basque), as well as English and other languages. There are over 2.5 million books available for purchase, and Amazon is believed to have been stockpiling them for the past year.
A cursory glance through that book selection reveals some of the challenges facing Amazon in Spain, and perhaps some opportunities for self-publishers.
English hardbacks are offered at Amazon’s usual competitive discounts; for example, George RR Martin’s A Dance With Dragons is offered at 58% off. However, local language books reveal something very different.
Under Spanish law, Amazon can only discount books from Spanish publishers up to a maximum of 5%. This ban on deeper discounting holds for the first two years after publication. A quick glance through the local language book listings will confirm that this is the exact discount that has been applied to newer books.
Amazon was able to achieve dominance in the US through selection and price. One of the major weapons in their arsenal has essentially been disabled, for newer releases at least.
However, they will still be able to remain competitive through offering cheap or free delivery, and perhaps by being creative in bundling books with other items. Textbooks are exempt though, and we could see some aggressive Amazon pricing here.
With regard to e-books, an agreement is believed to be in place with the major Spanish publishers to price the Kindle editions at 30% below the print editions.
This rigid price structure presents a number of opportunities for both self-publishers and smaller publishers who fall outside the ambit of any price agreements (such as the Agency Agreement) and outside the remit of Spanish law.
CreateSpace books seem to be slowly filtering through. I found a print edition of Nathan Lowell’s Quarter Share, but none of his other books. But it won’t be until the Kindle Store opens later this year that real opportunities to undercut the bigger publishers will present themselves.
The biggest prizes of all may go to writers like Bob Mayer and Scott Nicholson, who are already working on Spanish language editions of their books.
It is not yet clear whether the hundreds of millions of Spanish speaking customers in Latin America will be able to purchase Kindle books from Amazon.es, but this would seem to be a logical move, especially given that the entire Spanish language area is usually carved out as one for territorial rights.
As for Amazon, I’m sure they would love more freedom to discount (and indeed they are up against similar, but not as restrictive, legislation in France and Germany). Help may be on the way from the European Union.
Earlier this year, the EU raided the offices of several French publishers who were suspected of colluding to fix prices. The investigation has since been expanded to several European countries.
The strange thing about this is that price fixing for print books has long been enshrined in law in several European countries, including France. What seemed to trigger the move was an alleged attempt by publishers to fix the prices of e-books.
Print books have often been treated differently under the law as they are considered cultural artefacts. Curiously, e-books, as they are delivered over the internet, are classified as a service, and often fall under the ambit of different legislation.
As EU law supersedes national law in both these areas, these discounting laws may have to be abolished, and, indeed, publishers could potentially face fines.
On a similar note, the Office of Fair Trading (a UK government body) is investigating the legality of the Agency Agreement and is expected to rule shortly. And, of course, in a highly publicized move last month, several class action suits were launched in the US alleging price-fixing in relation to the same agreement.
If any of these agreements are struck down, it will be a huge blow to the larger publishers who are attempting to both artificially inflate the prices of print books and e-books by limiting the ability of retailers (such as Amazon) to discount.
While some self-publishers may reflexively cheer any black eye given to Big Publishing, they should be careful what they wish for here. With no restrictions on discounting, Amazon (and other retailers) will be free to sell any book (both print and digital), at any price they like, removing one of the big competitive advantages that self-publishers have.
For now though, Amazon are stuck with the current restrictions, and self-publishers retain their pricing advantage in all markets.