Tolino success points to potential of territorial pricing for ebooks

The only ebook retailer that has managed to take on the might of Amazon with a realistic challenge is now available to self-published authors around the world as distributor Draft2digital has added Tolino to its range of channels.

Tolino is a partnership of four German publishing companies, including Bertelsmann, and Deutschen Telekom. The operation, which was set up only a couple of years ago, sells ebooks and a range of half a dozen ereaders, including the Shine, the Vision and a tablet.

Although Tolino is a relatively recent entrant, it is reckoned to have managed to pick up a share of around 40% of the German ebook market, which is the second-biggest in Europe, although still some way behind the UK.

Amazon’s Kindle is also considered to have a 40% ebook share in Germany. Amazon has been in the German market for over a decade but has never been overwhelmingly popular in mainland Europe by comparison with its massively dominant positions in the US and the UK.

Germany is a big English-language market, esimated to be the third-largest in the world, so don’t worry if your books aren’t translated. The German ebook market is on a rising trend and is popular with traditional publishers in particular as the country still has a fixed book price agreement which means ebook prices are generally considerably higher there than in the US and UK.

For example, Ken Follett’s recent best seller, Edge of Eternity (retitled Kinder der Freiheit for Germany), costs an eye-watering €20.99 ($23.90 at current exchange rates or £15.72) on price-controlled German ebook sites, including Amazon.de, while it’s half that price in the US on Amazon.com at $10.99 (€9.65 or £7.23) and just £6.65 ($10.11 or €8.88) in discount-crazy Britain at Amazon.co.uk. You can click on the pictures in the gallery above to view the details.

The higher prices mean traditional publishers, which agree individual deals with Amazon, will be netting considerably more for German business on a per-sale basis than they do in the US and UK, although at much lower volume.

The situation is not quite so bright for self-published authors as Amazon sets minimum and maximum list prices of €2.99 and €9.99 for sales to be eligible for 70% royalties through Kindle Direct Publishing throughout the eurozone. A €20.99 price for a KDP author would be eligible only for 35% royalties, netting just €7.34, only marginally above the €6.99 70% payment on a €9.99 ebook.

However, it does show there are possibilities for self-publishers to raise their prices in the German market as buyers are much more used to higher prices.

Most KDP authors don’t set their international prices individually, but instead leave it to Amazon to set the price automatically based on the US price. It could pay to experiment with setting European prices individually.

For example, a $3.99 ebook would be priced automatically at around €3.51 on Amazon.de, whereas a price of €7.00 might be more appropriate for the market.

Bear in mind also that since January 1, VAT is levied throughout the European Union at the country rate where the buyer is located. This means a German ebook will have an extra 19% slapped on the price, so take this into account when you price an ebook.

Amazon now considers prices set by KDP authors to be inclusive of VAT, so, for example, if you price an ebook at €10, Amazon will take out €1.90 for the VAT before calculating the royalty, which will be based on €8.10.

The situation is worse in the UK, where the VAT rate is 20% and ebook prices are heavily discounted.

Obviously, you can’t use Tolino if you’re signed up to be exclusive to KDP Select, but if you aren’t, then it makes sense to use a channel that’s level pegging with Amazon in a growing market that has massive potential.

D2D’s other channels include iBooks, Barnes & Noble’s Nook, Kobo, Page Foundry, ebook subscription service Scribd and Amazon’s self-published print book arm CreateSpace.

The firm is also negotiating deals with library distributor Overdrive, India’s ecommerce giant eFlipkart, Ingram and Google Play.

Tolino has recently set up partnerships in Belgium, Italy and Holland and now covers a wide area of  central Europe.

Draft2digital will provide self-published authors with monthly sales reports from Tolino and says it pays the same royalties on Tolino as on its other channels, which, after D2D’s 10% commission, should be around 60% of list price. The firm recently added international pricing, so authors can now set separate prices for the US, UK and the eurozone.


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