Category Archives: books

VAT on eBooks, and yet more reasons to dislike Amazon

We all know that Amazon doesn’t pay tax. It’s a matter of public record and the subject of many a vainly attempted Christmas boycott. One of the many wheezes they use is to sell all of their digital books from a Luxembourg subsidiary. They do this because Luxembourg only charges 3% VAT on digital goods, whereas the UK government levies 20% VAT on ebooks.

This means that the largest retailer of digital books in the UK pays only 3% VAT on its ebook sales, but any UK based retailer is forced to pay 20% VAT. This dramatically skews the market in Amazon’s favour, and is hugely detrimental to any attempt by another retailer to break Amazon’s grip on digital reading.

Right now, for example, a book sold at £4.99 by Amazon nets Amazon £4.84 after tax, but only nets a UK based retailer £4.16. In a retail sector with such aggressive competition that 68p is vital and at the moment is heavily favouring Amazon’s position.

Amazon are also playing fast and loose with the VAT rules in other ways. Right now a self published author through KDP only pays the 3% rate that Amazon pays. This means that the author lists their book at £1.93 and it appears for sale at £1.99 on the Amazon site. However, Amazon is charging traditional publishers the full 20% rate, despite only paying 3% themselves. In other words, they are screwing additional margin out of the traditional publishers while further tipping the balance in favour of the self published authors (and, one assumes, those published by Amazon themselves).

Currently there is a ruckus about VAT on ebooks in the UK, with a legal challenge to the validity of the tax underway. Physical books are VAT exempt in the UK, and there are two strong legal arguments that ebooks should be too. Firstly the book VAT exemption simply uses the word “book”; a digital book is still a book and any attempt to levy VAT on an ebook could be ruled a misinterpretation. Secondly, previous case law has ruled that where an item meets a consumers needs “in the same way” it should be classified similarly for VAT purposes; clearly an ebook satisifies this criteria too.

I’m hoping HMRC rules that digital books are VAT exempt:

  • Physical books are already VAT exempt for a good reason; as we move to digital by default we don’t want a stealth tax on reading
  • The UK government doesn’t get any revenue from ebook VAT anyway, as Amazon pays its VAT in Luxembourg
  • It’s hugely skewing the UK market in Amazon’s favour, making competition even harder
  • If the EU does force France and Luxembourg to increase their VAT rates on digital goods while we are VAT exempt it will create an advantage for UK online book retail throughout Europe

Back in 2001 Gordon Brown scrapped Betting Duty (where the punter paid 9% on either their stake or their winnings) because offshore gambling sites that paid no Betting Duty were skewing the market and killing UK bookmakers. Now is the time for a similarly enlightened view on ebook VAT.

[1] Amazon force publishers to pay full VAT

[2] VAT may be dropped on eBooks

[3] Gordon Brown scraps Betting Duty

A dirty race to the bottom

tl;dr: When there’s only one book retailer (and increasingly only one publisher) reviews are the only differentiator between books, yet they are being widely abused. At the same time there is a rapid race to the bottom of both content quality and marketing tactics. The utopian vision that Amazon’s self publishing tools presents is tainted and won’t get better until Amazon accept some responsibility, or until an alternative retailer can make a big enough dent in the market to matter.

A story for you.  My wife has written a diet book.  Claire is doing the diet herself, it’s working for her, and the text and recipes within the book are her own original work.  And people are (or were) buying it.

Let me also state right now that, despite how it will doubtless sound later on, this is not intended to be a whinge about competition.  As dispassionately as possible I’d like to discuss how Amazon, as sole retailer and publisher, also owns the only way consumers can discriminate between products, and how this is fundamentally broken.  I’ve deliberately not linked to the books in this article to try and avoid making this anything other than a story about some stuff that happened.  That this is based on Claire’s experience is a necessary fact, but not the point.

Claire’s book is published via Amazon’s KDP and Createspace services.  This is an increasingly common way for authors to bring their books to market; between them they provide both digital and physical publishing tools to allow authors to self publish their work on the Amazon network of sites.

Private pressings (or “vanity publishing” as it’s sometimes disparagingly known in the trade) have always existed.  Having invested long years of your life in preparing your magnum opus it’s obvious (if you have the resources, at least) that the shortsightedness of a closed, cliquey, distant few shouldn’t affect whether or not people have access to your book.  After all, we all have a book inside us; self publishing allows those with a little cash to taste the pleasures of seeing their name on a dust jacket.

It used to be that when an author approached a specialist book binder they were gently talked down from a print run of thousands, while at the same time talked up into taking additional services such as proof reading, editing and jacket design; all the things that help turn a manuscript into a book, in fact.  And so what might have been two thousand error strewn paperbacks stored in the spare bedroom for years to come becomes 100 or so beautifully bound and grammatically correct hardbacks for distribution to exactly the right bookshelves.  The author’s goals are met, the printer’s margins have been increased and the practical realities of the dead tree publishing industry explained and (in most cases) understood.

Like with so many old school media industries a few years ago the Internet began to change all that.  First there were print on demand services like Lulu, and then five years ago Amazon waded in with KDP (Kindle Direct Publishing) that allowed authors to sell digital versions of their books directly on the Amazon site.  And then two years ago Amazon bought Createspace (a print on demand rival to Lulu).  At this point the circle was complete; with a few simple tools an author can now get both paper and digital versions of their books for sale in the world’s largest bookshop, linked together, consistently listed and ranked.

As a long term resident of the Internet I whole heartedly approve of yet another dinosaur of an industry being disintermediated.  Seriously, an industry where the recommendation is to send a copy of your manuscript to upwards of 50 people from whom you are warned you shouldn’t expect a response within 6 months is ripe for being torn a new one.  Amazon saw that, and started tearing.  And more power to them, frankly.

In this process we have disintermediated traditional publishers who took, on average, 75% of net receipts (this is important – it means the author bears the cost of discounting to retailers) and replaced them with a retail channel that offers 65% to 70% of list price (meaning that any discounting is borne by the retailer).  A £7 paperback published by a traditional publisher will earn the author around £1 per copy.  Traditionally published ebooks are sold at the same price and under the same contractual terms, so that £7 book as an ebook also earns the author £1.  Published via KDP for £7 the book will net the author around £4.55 per copy.  Sold as a print on demand paperback via Createspace it will earn about £2.10.  And let’s not forget that due to the structure of publishing deals (net receipts again) if that £7 traditionally published book is sold in Tesco it might only earn the author 10p per copy sold.

So if you know, in your heart of hearts, that your book is not going to be one of the 10 a year that get the full marketing weight of the publishing house behind it (and that’s increasingly true for many major authors let alone new ones) then why go through the heartbreak of dozens of rejection letters when you could get straight to market via Amazon, sell your book digitally for £4 a copy and earn £2.50 a sale?

Of course, you’d be advised to buy freelance proof reading at a minimum (no one can proof their own work. No one), and maybe editing too.  Proofing costs somewhere in the region of $150 for a medium sized novel (there are literally hundreds of people offering this service in the Kindle forums), so hopefully won’t break the bank.  And jacket design isn’t quite as important as it once was, now that people only see a postage stamp sized thumbnail of the jacket before buying.

All very utopian, no?

The big question, of course, is how does the author market their work?  65% of no sales works out just the same as 25%.  In the traditional publishing view of the world there is poster and TV advertising, weekly book supplements in the newspapers, placement on the 2 for 1 table in Waterstones and a myriad of other ways where the publisher’s resources ensure a route to market.

Self-published authors can’t tap into those routes.  There are no posters, no adverts, no ready and willing newspaper columnists with a deadline and inches to fill and no two for one table upon which to place their books.  Instead, after self publicity through channels like blogs, Twitter and Facebook authors are singly and utterly reliant on Amazon reviews.

And therein lies the rub.  Amazon’s review system places very few controls on who can review what.  You can’t, for example, leave reviews on the same item from different accounts that share a credit card, but that’s about it.  That’s not much of a control though; all it takes is a quick ring round your friends to get the reviews up.  Or if you’re too embarrassed to ask your friends you can buy them on Fiverr instead.

A couple of fake five star reviews to kick start the book isn’t too bad.  Friends and family want you to succeed and are going to rate your book highly whatever.  What’s killing the Amazon review system is the lack of control of negative reviews from competing authors and publishers.  Consumers have to take reviews at face value, and a couple of scathing reviews completely destroy sales.

And here’s where we get to Claire’s experience.  The book she’s written is about the “5:2 diet”.  There’s been a bunch of publicity around the diet recently, following a BBC Horizon documentary and a couple of articles in the mainstream press (including one in The Sun by, of all people, Dom Joly).  The big publishers move too slowly to get books out quickly, and when everyone suddenly wants a book about this miracle diet it’s only the self published authors who are there to service that market (take note, publishers, by the way). I’d argue that this is one of the many beauties of the KPD/Createspace system.

Claire’s book was receiving some nice reviews and selling very well until the negative reviews started appearing.  And they were vitriolic: “Cashing in”, “Read the Times instead”, “rubbish”, “This book has been rushed and it shows”, “Nothing new”.  It’s hard not to take those sorts of comments to heart. We spent a lot of time staring at the book and wondering how some people could interpret it the way they had, and why the reviews were so polarised.  We certainly didn’t feel it was rushed, it wasn’t badly formatted, all the content was original, including calorie tables and tried and tested recipes, and the description of the product made clear that it was a short book.

It took us a while to work out what was going on, but eventually we twigged that other people had had the same idea as Claire to write a book about the diet, and saw negative reviews on her book as a way of boosting the sales of their own.  At one point, with some lovely (real!) positive reviews of the book, she was selling close to 80 copies a day.  Now that the book has been swamped with negative reviews (all completely at odds with the positive ones) she’s down to 10 copies a day and falling.  At the same time less scrupulous publishers are riding high in the charts, bouyed both by the positive reviews they’ve left on their own book and by the negative ones they’ve left on Claire’s.

We’ve complained to Amazon.  We’ve marked reviews as inappropriate. But nothing’s been done. And now we live in fear of another negative review hitting our main competitor, because each time a bad one lands on theirs, another negative one appears on Claire’s.

Of the ten 1 and 2 star reviews on Claire’s book 5 are not verified purchases.  (Of the verified purchases one is a genuine complaint about a misprinting by Createspace, one is from a nutter, and one is by the author of the “rival” book, but more of that later.)  Given that the book is published by Amazon and only available through Amazon it seems strange that such a high proportion of reviews are not verified purchases; the user leaving the review has to explicitly choose to remove the Verified Purchase message from their review.

Indeed, if we look at other KDP/Createspace books where there are lots of reviews (I used books with more than 30 reviews) and where the reviews are relatively consistent (i.e. not polarised) we can see that on average only between 10 and 15% of reviews are marked as not verified purchases.  On books where the reviews are polarised the reviews show the same characteristics as those on Claire’s – a disproportionate number of either the positive or the negative reviews are not verified purchases.

To continue this train of thought we can examine the reviews on the rival diet book.  Here we see that none of the 5 star reviews are verified purchases (and all were written in the same 48 hour period), yet both of the one star reviews do come from verified purchases.

And it’s not just the unverified reviews that can be untrustworthy.  One of the negative verified purchase reviews on Claire’s book is from a user that calls herself “Crafty Mama”.  She used to have a five star review on the rival book until it disappeared (one assumes because she tried to leave another review on the same book from an account that shared a credit card).  This user has reviewed very few books but appears to have very strong opinions about Ukelele books.  The Ukelele book she likes is published by the same publisher as the rival diet book.  The one she doesn’t is not.

There’s also an unverified 5 star review left on the rival book by “Cooking Mama” who has only reviewed one other book, published by the same publisher and being a book to which “Crafty Mama” has uploaded customer images.

With most fake reviews you can’t prove anything. If, like Cooking/Crafty Mama, you do it consistently there’s an easy to follow trail, but there’s no real way for a consumer to tell if a one off review is fake or not. And it’s not like most people would even notice those with the obvious trails – it’s just too many clicks.

I can only assume that if this is happening to Claire’s book (a pretty niche title) it’s happening to hundreds if not thousands of others as you read this.

Ideally the vision of self publishing books via Amazon is that every author gets a fair crack of the whip in an open marketplace.  One of our friends (the lovely Sophie, whose second novel is out now) had huge success with her first novel last year, selling tens of thousands of copies via KDP, and it’s that type of story that Amazon would have us buy in to.  What we aren’t hearing so much about (yet) is the vast morass of books produced by unscrupulous authors/publishers who are unafraid of violating copyright or plagiarism, or of damning competitors with fake reviews.

Where the Amazon self publishing tools should really be helping is in the ‘long tail’ of low volume books where publishers are less and less inclined to take an interest. Unfortunately it’s exactly in these low volume books where the reviews are least well policed. There’s been considerable noise and bluster recently about established authors posting both positive and negative fake reviews, but down the sales ranks and in the niche subjects no one’s paying any attention. Yet it’s there that thousands of authors are trying to eke out a living with no external support.

Because the review system is so baked-in to the Amazon experience I would argue that it has to be managed very closely – certainly more closely than it is now.  Amazon’s success with the ubiquity of the Kindle is even more powerful than Apple’s early success with the iPod.  Right now the self published book market doesn’t have an editorial voice or a recommendation system outside Amazon.  Unlike, say, Pitchfork or The Quietus for music there isn’t an established independent voice (or voices) yet. The book social networks like Goodreads are a way off providing recommendations of the quality of And because getting content onto a Kindle by any other means than via the Amazon store is so cumbersome there’s little to no opportunity for direct sales via your own site or via an alternative service (like Bandcamp, for music).  In every way we are more tied to Amazon and the Kindle than we ever were to iTunes and the iPod.

The utopian ideal of disintermediating the large publishers is turning into a filthy race to the bottom, shepherded by Amazon.  Their apparent position of “as long as you buy something we don’t care” allows the unscrupulous to rise to the top in all but the very biggest genres, ruining the experience for authors and readers alike.

What could Amazon do to fix it?  I think there are a couple of easy steps.

Firstly, if a book is published via KDP or Createspace they should only allow verified purchase reviews. These books are only available through Amazon, so any review that comes from an unverified purchase is either too close to the author or acting against them.  It’s not a huge barrier to fake reviews, of course, but it stops a quick ring round your mates having quite the effect it does now.  This would solve almost all of Claire’s book’s problems in one fell swoop, and I imagine would solve a lot of other people’s problems, too.

Secondly, they need to take the ‘flag this review as inappropriate’ reports seriously.  If I can identify a proportion of the fake reviews simply from the public information available on the site imagine how easy it would be with additional information like account age, IP addresses and browsing history?  Claire’s income from her book has dwindled to nothing since the negative reviews started piling on; I don’t think it’s too much to ask from Amazon as the only intermediary between author and reader to at least investigate these reports and remove the obviously fake reviews.

A couple of relatively simple algorithms would make this easy, I think.  Viewed less then 4 items on the site?  Only bought one item?  Repeatedly view only the same one or two items?  Repeatedly logging in from the same IP as other users with reviews on the same item?  Always logging in from the same browser session as another user with reviews on the same item?  Always logging in from the same IP, but with no cookies set (using private browsing)?  Funded by gift card, rather than credit card?  Reviewing items negatively/positively in the same chart as items reviewed positively/negatively by related users (shared credit card, IP, etc)?

If 4 or 5 of those 8 questions come up yes, just don’t publish the review.  For a long time I had assumed that it was simply a case of the more reviews the better, but when upwards of 50% of reviews are fake this no longer holds true.  Only 3 reviews, but all good quality, is far better than 6 good quality ones out of a total of 12.

At the time of writing Claire’s book has 16 reviews.  We’re pretty confident that 9 of the negative ones are fake (and 2 more are just insane, but you can’t really adjudicate for that).  At the same time, the rival book has 10 reviews of which we’re confident 6 of the positive ones are fakes (timing, lack of verified purchase, links to other books from the same publisher, etc).

Yet the only way readers can decide between the two titles is by this review system.  It’s all a bit messed up.

Claire has just published a second edition of her book. What do we do if that starts getting poisoned by fake reviews too? Stoop to the same level and start slating our competitors? Or take some ineffectual moral high ground and watch sales plummet again? With the Amazon marketplace structured the way it is these are currently our only two options. Neither work for me.

Dead trees

Claire reads a lot more than me. Claire got a lot more books than me for Christmas. And yet our bed side tables look like this at the moment:

Despite my attachment to “book as object” it’s pretty hard to argue for dead trees when you see that.

Also two of the books I got for Christmas (Perdido Street Station and 1q84) weigh in at about 1,000 pages each. Frankly I find books of this size a bit off putting, to the point that I may not have asked for them if I’d realised they were quite so damn long. And then I saw this tweet from Neal Stephenson (himself author of many 1,000 page plus novels):

No one will ever call my novels bloated again because they won’t have the faintest idea how long they actually are.

When we were doing some work on the future of books for HarperCollins one of the things that really resounded was that novels are 3/4″ thick for a very practical reason; manufacturing. Charlie Stross blogged about this much better than I could, but it’s clear that eBooks are going to revitalise many forms of publishing; short stories, serialisations and epics. Tolkien would have got his way and had Lord Of The Rings published in a single volume if it were published now.

This never happens to me!

The Kindle edition of the rather excellent book Red Plenty is broken.  It has lots of footnotes in it that are completely unlinked from the body of the text.  This, combined with the Kindle’s inability to show footnotes in any other way than inline, means that at the end of every chapter you find yourself either undertaking a very fiddly process of trying to skip back and forth to reread the text, now with footnotes, or simply angrily flicking past them (which in the case of this book is 24 pages for the first chapter; or “click, pause” 24 times).

I’d been really looking forward to reading this, so I was genuinely pissed off.  I ranted a bit on Twitter (as you do) but then actually got angry enough to go and write a review on Amazon.  I’ve never done this before, but felt cross enough about the combination of a) poor execution of something so simple by the publisher, b) the fact that the Kindle edition was £1 more than the paperback, and c) that Amazon has no Kindle returns policy (even if it’s fundamentally broken), that I actually went and did it.  Spleen vented, I moved on (after checking that it had been published, of course).

This morning, through the contact form of our company website, the author got in touch with me.  He asked me about the problems with the book (not having a Kindle himself) and offered me an author’s copy of the book to make up for my poor experience.

Isn’t that awesome? (and doesn’t it show how hard it is for publishers to add value in a world of pure digital distribution?)

And of course I can’t let this pass without linking to this conversation on Twitter 😉

Sheet music

Having spent most of the Nineties in a darkened room listening to music that went “bang, bang, bang, bang” at somewhere around 140bpm I felt pretty musically adrift when, sometime around 2001, I started sleeping at the weekends again and techno stopped meaning quite what it had.

To find myself some new musical roots I started reading about all sorts of music, going right back to the Fifties. My theory was that I should start at the beginning and see where I ended up.

Along the way I’ve read some fantastic books*, recommended by some very knowledgeable people. I’m amazed to only just discover the existence of the Continuum 33⅓ series. Nigh on 100 titles, each book the missing sleevenotes of some of the greatest albums recorded. What an amazing list; from the cult, like Zaireeka, Maggot Brain, Radio City, Unknown Pleasures through the classics like Forever Changes and on to pop like Abba Gold and Sign O’ The Times. If anyone’s wondering what to buy me for a gift just start at the beginning of the list – I’ll have one of each, ta 🙂

* My favourite music book, by the way, is Fierce Dancing by C J Stone which documents, among other things, the transition from the free festivals of the Eighties to the open air raves of the Nineties. Is there a music book I should have read?

Children’s books

I’ve been tagged by Rowan. This time to ‘fess up to the favourite children’s books in our house. This one I appreciate, as I’m always on the hunt for new books for our two. Amy is 4 and Irie is 2 and they both demand to be read to pretty much constantly. The age range makes for difficult choices, as Amy can happily sit through really quite long books now, while Irie is obviously at a much younger age. That said, all she wants is to be like her sister, so she’ll gamely try pretty much anything…

I’m assuming I can’t mention ones Rowan already has, which is a shame, as Irie’s favourite book by a country mile is Mr Wolf’s Pancakes… Still, there are plenty more…

Mr DizzyFirst up has to be Amy’s current favourite. She’s obsessed with Mr Men at the moment, and Mr Dizzy has her in gales of laughter when the oh-so-smug Elephant shouts “Dopit dopit!” with a knot in its trunk. My mum brought us a whole heap of mid seventies editions of Mr Men books from my childhood recently and I must admit to finding the moral a touch iffy in quite a few of them, but this one is (apparently) genuinely funny. There’s no accounting for taste, I guess.

Little Rabbit Foo FooFor Irie after Mr Wolf’s Pancakes it has to be Little Rabbit Foo Foo. He is so very naughty, which I think Irie rather digs. And his punishment only seems to cause amusement, not concern. Michael Rosen is cool, too, which helps.

Topsy and Tim at the FarmAfter the Mr Men Amy’s next obsession is Topsy and Tim. Yes, yes… I’m not sure quite how my kids got into the children’s books equivalent of seventies public service films either. That said, Topsy and Tim At The Farm (for example), holds genuine appeal. The utterly real nature of the stories gives us lots to talk about and Amy is quite happy to place herself in the story. Irie thinks they’re boring – and says so.

Rastamouse and the Crucial PlanRastamouse And The Crucial Plan is mine really. I love reading it (it gives me a chance to do my shit Jamaican accent); the rhythm of the words and the rather cheesy plot (they are mice, after all) make it great for Dads to read aloud. I also like the fact that apart from White Teeth it’s one of the few places you’ll find the word Irie defined, as there’s a helpful dictionary of patois at the back of each book in the series.

Harry the Dirty DogLast but not least it was a toss up between two ancient books that Claire and I loved as kids. I’ve gone for Harry the Dirty Dog, but it could equally have been The Tiger Who Came To Tea. Both stories are really a bit rubbish in modern terms, but the kids seem to love them and I’ve read them so many times that I can recite both off by heart.

What this makes me realise is that our kids, despite having tens, nearly hundreds, of books seem to go for the older ones. I’m guessing this is down to the fact that we own lots of books that Claire and I liked when we were children ourselves and so read them more often, but it does seem a little odd.

I’m pretty sure I’ll read anything that gets dragged off the shelf (except perhaps a rather appalling rendition of the nativity which makes my skin crawl) so maybe they’re choosing the Topsy and Tim, Mr Men, Harry the Dirty Dog and so on by themselves? Time will tell, I guess. If I find Amy with a Secret Seven habit a year or two from now then I’ll know it’s actually all down to me.

So, who to tag? Richard (if you’re reading this), Stef (leave something in the comments), Monty (after your “bat before ball” comment the other day I’m looking to your parenting skillz to get me through) and Francois (anything except Richard Scarry, the girls won’t buy it however hard I try). I’m desperate for recommendations, so any other readers with kids please take up the baton too.

Jane Austen? No ta

The author and the Austen plot that exposed publishers’ pride and prejudice

Now, don’t get me wrong.  I can understand entirely how this would have happened (if, for example, I was skimming this week’s submissions and saw someone sending me Austen, could I be arsed writing a specific rejection?  Probably not).  But…

It does, however, make me think of a current colleague of ours, who has written 4 novels, none of which have been accepted.  Instead of getting a straight rejection, though, she has been asked to send more work (hence the 4 novels and still working with us, rather than 1 novel and an easy life in the South of France).  Seems to me that as the publishing industry undergoes it’s own crisis akin to music and films getting that publishing deal is just going to get harder and harder.

No longer is the powerful debut novel enough; instead they want to see if you’ve got a series in you that they can milk for the next few years.  The literary equivalent of Die Hard 4.0 or the 20th, 25th, 30th, 35th anniversary edition of Dark Side of the Moon.  Oh joy.