The new novel from J. K. Rowling, author of the wildly successful Harry Potter series, debuted yesterday and is being sold at a celebrity price. For the hardcover version, it’s just business as usual. But for the ebook? At $17.99 in the US, it’s more than twice the country’s average ebook price of $8.19. And in Europe, The Casual Vacancy is even more expensive.
In the five European countries listed above, the outsized price tags aren’t just about Rowling’s star power. Ebook prices are generally higher in these countries than they are elsewhere in the world, because ebooks, considered an electronic service, are subject to each country’s full value-added tax. Print books, a good, are not.
The full tax rate ranges from 18% in Spain to 20% in the UK and Italy. By contrast, print books are taxed, at most, 7% in Germany, and not at all in the UK.
Many countries aren’t happy about the disparity. Flouting EU law, France dropped taxes on ebooks to 7% this past January. In July, the European Commission responded with a formal investigation.
The Germans aren’t quite as upset as the French. Having a longstanding cultural obsession with books as physical objects, and an ebook adoption rate of only 1%, Germans will likely pick up their copies of Ein Plötzlicher Todesfall at the corner bookstore and not give much thought to the ebook tax.
Then there’s the US, the biggest ebook market by far, with 20.2% of sold books being in electronic form. Hachette, the publisher of The Casual Vacancy, along with two other major publishing groups, recently agreed to a $69 million settlement with the US Department of Justice, which had accused the publishers of colluding with Apple to raise the price of ebooks.
As a result of the settlement, the publishers have to relinquish doing business under the so-called agency model—the scheme that allows them to decide how much their ebooks will sell for. Instead, they’ll switch to a wholesale model, in which they sell to distributors, like Amazon, who then get to charge whatever they want.
But the transition isn’t happening all at once. Hachette has already had to sever its contract with Apple, but the agency-model-agreement that it has with Amazon will still stand for a couple of weeks.
As paidContent pointed out, this strange window actually makes the $17.99 asking price for Rowling’s new book possible. Apple’s pricing rules would have forbidden Hachette from charging more than $16.99 for The Casual Vacancy. But with Apple temporarily out of the picture, and Hachette with one of its biggest releases of the year and only a few weeks left to set the price, the publisher decided to take full advantage.
By the way, in the wizarding world that made J.K. Rowling famous, the Kindle version of The Casual Vacancy would cost a cool 1.77 Galleons (based on the US price and an exchange rate calculated by Harry Potter fanatics).