Is Google Eating into Amazon’s E-Book Revenue Appetite?
The recent agreement between Google (NASDAQ:GOOG) and French authors group Society Men of Letters of France that ended their years-old dispute over publishing books on the Internet may be bad news for Amazon (NASDAQ:AMZN). Under the agreement, more than 600 French publishers and a writers group will start selling digital versions of their books through Google, while only requiring the latter to keep track of the copyright.
However, according to a report in French newspaper Le Figaro and on the publishing site ActuaLitté, the agreement does not allow the publishers to distribute the digital books via Google’s direct competitors, such as Amazon. The news has come at a terrible time for the online retailer, which is trying to make a bigger push into Europe with the Kindle e-reader.
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If Amazon does not act fast enough, the Google deal could present a big strategic threat, especially considering that the agreement would allow for reading of books on devices made by Sony (NYSE:SNE) and Barnes & Noble (NYSE:BKS), or through the Google Play app on Apple (NASDAQ:AAPL) devices. The agreement also coincides with a French law that creates a new royalty collection mechanism for e-books.
But Amazon can still take some quick measures to escape this exclusion. The French e-book market is worth only about $38 million currently, less than one percent of the country’s $7.85 billion overall book market. In addition, Google’s collection at the moment is largely made of out-of-print works and does not include many new books or bestsellers. According to the publishers’ group, the agreement was reached to promote initiatives to develop digital books, which clearly have a huge unrealized potential in the country.