Plan B for Schedule A: Just How Big is the EU English-Language Market?

In the wake of the now infamous BEA US/UK Turf Wars panel, a flurry of debate about control of English-language rights in the European Union has risen on both sides of the Atlantic: British publishing is crumbling and must be defended. The Brits are inciting a land grab. US editions are free-riding off of UK publicity. Europe is one market and can only be protected by being exclusive. A move toward exclusivity is atavistic and an attack on cultural diversity. Resist this Protectionism! Stop American Cultural Imperialism!

Brian De Fiore, VP of the Literary Division at AAR and panel moderator, said that the AAR organized the panel out of desperation since agents were increasingly reporting an inability to close deals for new authors in the US and the UK. With the UK demanding exclusive EU rights (for all 25 countries), and the US demanding open-market sales (while chipping away at the former British empire) agents were finding themselves caught in the middle and publishers were walking away from the negotiating table.

Until now, Americans have taken only a moderate interest in sales of their books in non-English speaking countries. The UK business model, on the other hand, has been built around its extended commonwealth and is more reliant than ever on export sales to float the tenuous UK home market.

As the outspoken Karl Heinz Petzler, Managing Director and Owner of Lisma Ltd. – a distributor of US and UK English-language titles within Portugal – and the organizer of an Open Letter urging publishers to resist closing the EU market said, “[UK Publishers] say that by closing off the market they would increase sales. They wouldn’t. They would increase prices. They have a messed up home market, and now they must bring down their prices in order to compete. They’re trying to solve homemade problems in other countries.”

On the other hand, UK Agent and President of the UK AAA, Clare Alexander was recently quoted in the Bookseller as saying that since the mid-80′s, 80% of contracts for UK authors have given the UK exclusive EU rights – a figure US publishers and agents find excessive.

So why all the fuss? Is the English-language market really burgeoning, or are the Turf Wars just a matter of principle? Are US-UK publishing relations deteriorating over a few hundred copies of The Brooklyn Follies?

Currently theoretical, the Turf Wars are potentially anything but. A stalemate threatens, huge conglomerates must develop their own internal consensus about their position (at least three of the majors have declined to speak to PT), and the outcome may depend on where the power of ownership resides.

The Famous 100 Copies Debate

All relevant factors point to a growing global English-language market. Cyrus Kheradi, VP & Group Sales Director International at S&S says, “The export market for US and UK publishers is growing as English continues to grow as the lingua franca of international trade, the internet and various global media.” Indeed, the number of ESL speakers in Europe alone (which excludes all English speaking expatriates living in the EU) tops 136 million – 30% of the current total EU population, and a whopping 46% of the entire US population.

Gail Hochman, President of the AAR, says it’s naïve to think that the increase in English-language speakers will lead to a bustling export market. “If people speak English, they’ll do their business in English, but they’re not going to sit down and read War and Peace in English. They may speak, but I don’t think that necessarily means they will read.” As a whole, she says, in terms of book sales – especially trade book sales – “The numbers are small, no question about it.”

On paper, the numbers aren’t just small, they’re bleak. According to the US Dept. of Commerce (which provides the most accurate export sales, according to publishing stats- master Al Greco), there has been a decline in both units and sales of all book exports since around 2000 in essentially every European country except Spain.

UK exports, on the other hand, have been on the rise. Even without the decline, when US and UK export revenues are run parallel, the disparity is astounding. In 2004, numbers (from Commerce and the UK DTI Statistics Directorate respectively) show that the US exported $8.168 million worth of books (including academic, reference, trade and maps) to France, while the UK recorded $118.562 million during the same period. Germany shows a similar difference ($27.174 million to $176.823 million), as does Sweden ($4.477 million to $66.234 million), Belgium ($6.619 million to $45.828 million), and the Netherlands ($15.877 million to $122.085 million). Even in Spain, where exports have been on the rise, the US exported $4.5 million worth of books in 2004 to the UK’s $92.6 million.

Greco attributes the low numbers as well as the decline to several factors, from currency conversion issues to international opprobrium over American cultural imperialism. (Others surmise that with all that has changed since 2004 – the EU-15 increasing to EU-25, coupled with the low dollar – numbers should now be trending up.)

Greco also emphasizes that US export figures – especially for books – are notoriously faulty, while UK numbers are known to be much more accurate, causing them to look more divergent than they actually are. “Most publishers don’t indicate the actual value of their shipments, instead they list unit manufacturing costs for insurance purposes,” he said.

Another possible explanation for the soft numbers is the ambiguous nature of international internet sales that could or could not be reported as export sales depending on the shipping location. The growth of multi-national chains confuse things further. Rick Vanzura at Borders International says that as a general rule, orders are placed independently by geography since rights vary by country. As a general rule, PT found that most booksellers claim to honor publishers’ territorial agreements.

Off-shore printing can also complicate export figures – especially in juvenile and illustrated co-editions. A US children’s book printed in Singapore, for example, can have its EU orders shipped directly from the printer. “Sales fall through the cracks,” Greco said.

S&S’s Kheradi does not agree with the claim that UK export sales to Europe are significantly higher than US publisher sales. “At S&S we have enjoyed double-digit percentage net export sales growth annually over the last five years and we have always regarded Europe as a key export market; a region where we have had a major presence for over 40 years.”

Leakage & Growing Pains

Chitra Bopardikar, VP International Sales at PGW, says that, “growth is especially apparent in regions like Eastern Europe where we are seeing an expansion of book retailers.”

[Note: Bertelsmann’s Direct Group just announced their purchase of 48-store Portuguese book chain Bertrand Livreiros.]

Jan Andersen of the Politikens Bookshop in Denmark (and one of the signers of the Open Letter) says that he has seen solid increases of 5 to 10 % of English-language titles every year for the last 25 years.

Geoff Cowen of Windsorbooks, a UK international distributor for many US imprints, acknowledges that they have seen a substantial growth in sales in Eastern Europe, with the best sales coming from “the old bits of Yugoslavia, Slovenia, Serbia” where their rep unearths new customers all of the time. Despite the boom market, however, he says that the customers still take a long time to pay, if they pay at all. “I can’t see sales of our sort of stuff ‘going through the roof.’”

Rene Prins, Head Buyer and Sales Manager at Holland’s Van Ditmar Distribution says that although the English language market isn’t experiencing significant growth in the countries he distributes into (Belgium and the Netherlands), he agrees that Eastern Europe is developing and Germany is a market that has “certainly grown.” One big factor in Germany’s growth, according to Prins, is that German wholesalers (such as Libri and Petersen) have started exporting US and UK editions to France, Switzerland and other European countries.

On the distribution front, German competition not only makes it harder for the UK to distribute into the EU (Cowen says that in older markets like Germany, France and Holland customers constantly search for the cheapest supplier) but it also adds fuel to the UK argument that US export editions could make their way into the UK.

The evidence of this leakage has yet to materialize for either US or UK export editions (a sticking point for many), and although it legally could happen, most doubt that it actually will. According to Prins, no European wholesaler would risk exporting the US editions into the UK for fear of affecting their business relationships.

Lisma’s Petzler agrees. “No one can forbid me to sell a product into another EU territory once it’s entered the EU,” he said. “I’m not [re-exporting] because I have a certain respect for my colleagues, and because it would be a very complicated matter doing business internationally.” Petzler emphasized that the UK chose to sign free circulation treaties with the EC (European Commission), and that although the leakage argument might be a valid concern, they should not answer with protectionism: they should find a way to compete. “Living in a globalized world, we cannot create islands of protectionism.”

On the UK side, representatives like Faber’s Stephen Page have made the argument that Europe is one market and it can only be protected by being exclusive.

Kheradi however equated the EC free circulation treaties to NAFTA saying that some of the arguments being made by UK publishers about protecting the EU could be made about protecting the US market from UK editions leaking in from Canada.

Two Editions, One Language, Multiple Tastes

The Bookseller recently announced that Tesco‘s book sales rocketed 52% to more than 20 million units in 2005-2006 (carrying anywhere from 40 to 3,000 titles depending on the size of the store). With outposts in the Czech Republic, Hungary, Poland and Slovakia (as well as EU candidate-country Turkey), the supermarket chain is just one of the growing number which has recognized Eastern Europe’s growth potential.

An article in Business Hungary this spring reported that after quadrupling since 1997, nationwide multi-language book sales have nearly stagnated as specialized sellers face rising competition from Hungarian bookstore chains and online outlets. Tony Lang, the owner of Budapest’s Bestsellers bookshop was quoted as saying that in 1992 70% of his customers were expats, while today that ratio has reversed – 70% of his customers are Hungarian English-speakers, and 30% are foreigners. In a trend seen across the EU, almost all of Hungary’s largest bookstores chains (Libri, Lira es Lant, and Alexandra) now have foreign-language sections.

The breakdown of US to UK editions in each store varies, and is most easily measured by distributor. At Van Ditmar, according to Prins, a steady 40% of the books they distribute are US editions. At Lisma Ltd., 80% are US. Prins says Van Ditmar’s UK weighted split is dictated by customer taste, while Petzler claims that Lisma skews American because US publishers offer a wider variety of small press publishers like Lisma distributee Soft Skull Press.

Kheradi said, “It is important to note that European booksellers are not used to being told which edition to buy, and their clientele clearly has grown with the supply of two editions which has worked for many decades…the EU is a vast collection of individual countries with local tastes, economies and specific cultural nuances that are not being erased by joining the EU for which I believe no single English language edition can fully satisfy.”

Bopardikar agreed and was forceful about the advantages of foreign retailers carrying both US and UK editions saying that it is “absolutely” beneficial for parallel editions to be sold simultaneously. “Overall, more copies are sold. India is a good example – no one edition covers every consumer need in such a vast market, and by opening up supply to both the UK and US editions, a title is likely to sell significantly more copies over time.”

Harkin Chatlani, CEO of India Books Distribution, confirmed, “Our experience has been that when two editions are available side by side, the sale of that title increases by at least 40% to 50%.”

While Prins couldn’t say how much Van Ditmar would lose if the UK won exclusive rights to the EU, Petzler knew exactly how much business he would lose – everything. And he doesn’t think that the loss would proportionally benefit British publishers. Lisma recently sold 500 hardback US English-language editions of Paul Auster‘s The Brooklyn Follies (Holt) to stores in Portugal. “I doubt that the UK would have sold 500 copies had the Americans not been here,” he said. “Even if they had, for the author, it wouldn’t change anything. It’s only the British publishers who are benefiting.” Furthermore, Petzler emphasized the importance of being able to choose to read an author in the original edition – something that wouldn’t be possible (except through online purchasing) if the UK won exclusive rights.

DeFiore offers a possible solution: that both sides of the Atlantic agree to monetize rights for each EU country thus solving many export royalty discrepancies while being fair to the author.

All squabbling aside, Clare Alexander echoed Petzler’s sentiment that the focus should stay on the authors. “UK agents will continue to put the interests of their clients first,” she said.