Why ebooks in Quebec are a taxing issue

While NPR urges the world to stop the ebook versus print debate, in Quebec, the debate has shifted to how digital titles are taxed, and what constitutes a “real book.”

According to Montreal’s The Gazette, the Quebec government has treated print books as zero-rated for tax purposes since 1996, but ebook sales can still include the 9.5 per cent provincial sales tax.

Robert Hayashi, CEO of the digital publishing advocacy organization eBound Canada, disagrees with the discrepancy. “Just like there is a hardcover (print book) format and a softcover format, ebooks are just another format,” he told the The Gazette. “So if government is not taxing the hardcover book, we believe that government should also not tax the ebook.”

In another Gazette article, Kobo’s vice-president of finance, Daniel Budlovsky, lamented that Quebec consumers who purchase ebooks through Kobo are charged both provincial and federal sales taxes, while those who buy their ebooks through U.S. competitor Amazon pay no sales taxes.

Although Budlovsky said the discrepancy “should be atrociously viewed by the Canadian public,” Kobo isn’t ready to battle the Canadian government to change the tax laws.

“We accept the law for what it is and feel that it should be changed but that is a long and bureaucratic process,” Budlovsky said. “We work in a … fast-moving industry where we need to stay ahead of the competition by working on things that are under our control.”

Apple shakes up textbook publishing

Rumours of Apple’s entry into the digital textbook market were confirmed this morning with the announcement of iBooks 2.

The latest version of Apple’s e-reading platform focuses on media-rich, interactive digital textbooks designed for the iPad. Education publishers McGraw-Hill, Pearson, and Houghton Mifflin Harcourt – which comprise approximately 90 per cent of U.S. textbook market sales – have signed on as the first content partners.

But it’s not just international corporations that will have the capability to produce and sell e-textbook content. Apple also announced iBooks Author, a free DIY ebook app that has been compared to GarageBand, Apple’s audio-editing software that has made digital recording and sound engineering accessible to independent musicians and podcast producers.

“Education is deep in our DNA,” said Philip Schiller, Apple’s senior vice-president of world-wide marketing, at a launch event at the Guggenheim Museum in New York City. Schiller also noted that education institutions already use “more than 1.5 million iPads and have access to more than 20,000 education apps,” according to the Wall Street Journal.

Apple’s move into education isn’t all about the children. If a publisher wants to take advantage of the platform, it has to sign an exclusivity contract with Apple, and keep textbook prices at $14.99 or less (of which Apple takes its customary 30 per cent cut). While the lower price is great for students, there is the upfront cost of purchasing an iPad. And as tech website Engadget points out, with all the interactive graphics and video, the first released e-textbooks take up anywhere from 800MB to 2.77GB of memory, which means it won’t take much to fill a low-end 16GB tablet. Also, what happens when the classroom iPad breaks?

Reaction from Twitter users has been mixed:

Margaret Atwood illustrates In Other Worlds e-book

Nan A. Talese, an imprint of Doubleday U.S., is previewing illustrations from the e-book version of Margaret Atwood’s essay collection In Other Worlds: SF and the Human Imagination (McClelland & Stewart).

What’s most notable about these drawings, which demonstrate a variety of cartoonish styles, is that Atwood is the artist. The preview also includes a drawing of a superhero character named Blue Bunny the author did as a child.

Last year, Atwood surprised two fans by drawing superhero versions of their Twitter aliases, Kidney Boy and Dr. Snit.

Pop Sandbox launches interactive film version of The Next Day

Toronto transmedia company Pop Sandbox has launched an interactive Web version of The Next Day, which chronicles the stories of four suicide-attempt survivors.

The animated online documentary, a co-production with the National Film Board, accompanies the 100-page graphic novella of the same name. The book was released in early May during Canadian Mental Health Week.

Pop Sandbox is best-known for its graphic novel Kenk: A Graphic Portrait (a Q&Q 2010 book of the year), which, along with The Next Day, was just released in the U.S. An animated film version of Kenk is also in the works, as is a photographic novella adapted from an original Russell Smith story, shot by Toronto artist Jaret Belliveau.

Click here to read Q&Q’s profile of Pop Sandbox and to read a review of The Next Day.

“Giller effect” boosts e-book sales of Half-Blood Blues

The so-called “Scotiabank Giller Prize effect”  is already helping e-book numbers for Esi Edugyan’s Half-Blood Blues (Thomas Allen Publishers).

Yesterday, Half-Blood Blues was listed 3,376 on Amazon’s bestsellers list for Kindle e-books. As of noon Wednesday, the book had risen to 360, a significant increase in sales overnight. In the Apple iBookstore, it is the third top-seller, just below the e-book and enhanced e-book versions of Stephen King’s 11/22/63. Patrick deWitt’s The Sisters Brothers (House of Anansi Press) is the only other Giller Prize finalist in the iBookstore’s top 10, at number five.

Giller finalist Michael Ondaatje’s The Cat’s Table (McClelland & Stewart) is the fifth best-selling e-book at Kobo, the only e-commerce site that is prominently merchandising Half-Blood Blues as the Giller winner.

Ondaatje’s book is also the top-seller in the new Canadian Google eBookstore, which launched last week. As part of its roll-out strategy, Google tailored the store for a Canadian audience, dedicating a section on its homepage for the Giller shortlist, however, Half-Blood Blues is conspicuously absent. According to David Glover, Thomas Allen’s marketing manager, the publisher is working with Google, and the title will be available soon.

Prices for the e-books also vary between websites. At the high end, Half-Blood Blues is available in the Apple iBookstore for $20.99. Kobo is carrying the e-book for $15.49, and Amazon, $9.60.

(Photo by Tom Sandler, courtesy of the Writers’ Trust)

Kobo to be acquired by Japanese e-commerce company Rakuten

Kobo announced Tuesday it has entered into a definite agreement under which it will be acquired by the Japanese e-commerce company Rakuten. The deal is expected to close in early 2012.

According to a press release, Rakuten intends to “acquire 100 per cent of total issued and outstanding shares of Kobo for US$315 million in cash.” As part of the agreement, the e-reading platform will continue as a stand-alone operation, maintaining its Toronto headquarters and employees under the leadership of Kobo CEO Michael Serbinis.

In the press release, Serbinis said:

“From a business and cultural perspective this is a perfect match….We share a common vision of creating a content experience that is both global and social. Rakuten is already one of the world’s largest e-commerce platforms, while Kobo is the most social e-book service on the market and one of the world’s largest e-book stores with over 2.5 million titles. This transaction will greatly strengthen our position in our current markets and allow us to diversify quickly into other countries and e-commerce categories.”

Kobo was founded in 2009 by Indigo Books & Music before it was spun off into a separate company 10 months later, with Indigo remaining as the majority shareholder. Indigo will receive approximately $140 million to $150 million in the Rakuten deal. In a separate press release, Indigo CEO and chair of Kobo Heather Reisman said:

“Notwithstanding the sale, Indigo will maintain a very strong relationship with Kobo, supporting the products and the services both in-store and online…. The success of Kobo confirms that Indigo is a great brand and a strong platform on which we can continue to innovate and grow.”

In October, Kobo announced it would be offering self-publishing services and launched the Kobo Vox, a tablet to compete against the Kindle Fire and iPad.

Google launches Canadian eBookstore

After almost a year of delays, Google has launched its Canadian e-books platform.

According to a press release from Google, “hundreds of thousands of titles will be available for purchase” in Canada through its eBookstore, and through online resellers McNally Robinson in Winnipeg and the Campus Bookstore at Queen’s University. Built using open cloud technology, Google e-books are compatible on most popular platforms, devices, and e-readers.

Google also announced its first Canadian publishing partners as Penguin Canada, Random House of Canada, and HarperCollins Canada, as well as independent publishers House of Anansi Press, Dundurn Press, and McGill-Queen’s University Press, with plans to bring “more publishers into the eBookstore ecosystem in the weeks to come.”

In the U.S., where Google’s e-book retail site launched last December, over 200 resellers sell Google e-books through a partnership with the American Booksellers Association.

Mastering the art of e-cooking

Meryl Streep as Julia Child

Although the Internet has revolutionized the way people discover new recipes, e-cookbooks have not yet made a big impact in the kitchen.

It’s not that home chefs are too busy thumbing their old recipe index cards, there’s simply been a lack of e-cookbooks available on the market. In a New York Times article, Jennifer Olsen, manager of digital production for the Knopf Doubleday Publishing Group, explains, “Cookbooks often have incredibly complex layouts. They are very tricky to produce as e-books.”

According to the article, that is starting to change. On Wednesday, Knopf released the tablet-friendly e-book edition of Julia Child’s famous 752-page Mastering the Art of French Cooking. Knopf first attempted the e-book conversion a year ago, but “the technology was not available to replicate Ms. Child’s distinctive two-column format, which allowed the reader to see the ingredients alongside the corresponding instructions in the recipe, step by step, rather than the more conventional format of listing ingredients at the beginning.”

The e-book has already won the praise of Judith Jones, the retired Knopf editor who acquired Child’s book in 1961 and who originally protested the e-book’s release. Jones was impressed with its live links and pop-up dictionary. “I suddenly saw the difference … You really could almost improve on how you read the book,” she says.

Kobo Pulse gets to the heart of “social in-book e-reading”

Kobo has released more details about Kobo Pulse, its new “social in-book e-reading experience”

Essentially a social media tool, Kobo Pulse will allow Kobo users to connect with other people reading the same book, comment on passages or the book as a whole, and view statistics (e.g., how many people are reading the title at a given time). According to a press release, readers can also post reviews and engage in online conversations. As more people join the conversation, the Kobo Pulse will turn “larger and brighter,” indicating the level of interaction.

Last Friday at F8, Facebook’s developers conference, Kobo CEO Michael Serbinis spoke about how the company’s e-reading app, Kobo Reading Life, will be seamlessly integrated into the Facebook interface. Today’s press release provided more details on the new features, which include the ability to follow friends’ reading activity; customizable privacy settings; automation of Ticker e-reading updates; and profile “‘call-outs’ for recently read books, most read authors, books that have the most time read and recent awards.”

A release date for Kobo Pulse was not available. However, the Facebook integration features will “roll out gradually over the coming months.”

Publishing at the polls: Foreign-ownership regulations

As Canadians head to the polls on May 2, Q&Q looks at key federal policies affecting the publishing industry. Stay tuned for upcoming features on federal funding and mass digitization.

When it comes to foreign ownership in Canada’s book businesses, the only thing all industry players seem to agree on is that the current policy is woefully outdated. Known as The Revised Foreign Investment Policy in Book Publishing and Distribution, an amendment to the Investment Canada Act, the current regulations have been in place since 1992.

Since that time the global economy has adapted to an increasingly consolidated business scene and the advent of digital publishing. In light of these massive changes, the federal government initiated a review of the guidelines and their effectiveness in the industry’s three main sectors – publishing, distribution and wholesale, and retail – four years ago. An announcement regarding the review findings and the government’s subsequent decision, officially slated for 2011, was unofficially expected sometime this month. And then the election was called, which halted any further discussion or review.

In July 2010, the department of Canadian Heritage released “Investing on the Future of Canadian Books,” a discussion paper that addressed the “evolving book industry landscape.” The paper presented policy review options available to the government, and solicited feedback from industry players. Phase two of the book policy review saw this feedback posted to Canadian Heritage’s website, where the public could comment on submissions.

The third phase involved three roundtable discussions with industry representatives, which took place December in Montreal, Vancouver, and Toronto.

Canadian Publishers’ Council executive director Jacqueline Hushion reports the sessions were well attended and represented an array of industry interests. On the publishing side, CPC members included David Swail, president and CEO of McGraw-Hill Ryerson; Kevin Hanson, president of Simon & Schuster Canada; Greg Nordal, president and CEO of Nelson Education; and Brad Martin, president and CEO of Random House of Canada, among a number of others.

The Association of Canadian Publishers was represented at both English-language events in Vancouver and Toronto. “Publishers who attended from the ACP at both of those roundtables all got the message that the status quo for the policy is not, in [Canada] Heritage’s view, a viable option,” says ACP executive director Carolyn Wood. “There’s going to be change.”

The ACP supports the current policy, and has pushed for increased accountability, as opposed to relaxing or repealing restrictions. “We think the current system needs to be more carefully applied, and that a greater degree of transparency would be valuable and productive,” Wood says. “We think the limiting of ownership to Canadians, except where net benefit can be demonstrated, is a sound basis. We believe the application, measurement, and reporting of the net benefits process need to be strengthened.”

So what’s to become of this intensive multi-year review? Wood suggests it may be “quietly shelved” for the moment, though she quickly adds it’s possible the Department of Canada Heritage will push ahead. Hushion agrees that once the election dust settles, there’s likely going to be a long delay getting the process back on track, but she’s confident it will happen.

“The process will have to go forward, because the process was something that came from Cabinet,” Hushion says. “It’s just now a question of how much later it will be completed.”