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Publishing: the future

February 7th, 2013 (02:30 pm)

[twitter.com profile] 0tralala linked to the Hansard report of this speech in the House of Lords by Lord Lucas (Ralph Palmer, twelfth Baron Lucas, a hereditary peer, accountant and publisher of The Good Schools Guide) concerning Amazon's business model and its effect on publishing. An informative read. The rest of the debate - including contributions from Lord (Michael [House of Cards]) Dobbs and Baroness (Ruth) Rendell of Babergh - I've only skimmed, but there's more of interest, including concerns about open access publishing and the application of a model designed for STEM academic publishing on the humanities.

Also posted at http://sir-guinglain.dreamwidth.org/579054.html.


Posted by: king_pellinor (king_pellinor)
Posted at: February 7th, 2013 03:29 pm (UTC)
P Knight

Interesting comments on VAT, with a suggestion that it advantages Amazon's e-books sales.

Books are goods, and so for VAT purposes are supplied where they arrive with the customer. That means that when Amazon SARL sells a book to a UK consumer it is zero-rated, as that is the UK rate for books, so no VAT is due.

E-books are services, and when services are supplied to consumers the supply is where the supplier is. That means that when Amazon SARL sells an e-book to a UK consumer it is taxed at 3%, as that is the Luxembourg rate for e-books.

So if anything VAT is a disadvantage for e-books: Amazon would pay less VAT is they sold you a book instead.

Of course if Amazon were located in the UK and sold an e-book the VAT would be at 20%, so VAT isn't as much of a disadvantage as it might be.

The anomaly really is that all software is classed as "services", and I think that this isn't really how people think of e-books - and probably other software like MS Office, which I just bought from Microsoft SARL with 15% VAT on (Luxembourg rate). Redefine consumer software as a good, and suddenly you get a bit more coherence. At least in that sphere, though defining consumer software might be tricky. E-books yes; games yes; subscription to a MMORPG, or office software on an annual licence with hosted storage... not sure.

Posted by: parrot_knight (parrot_knight)
Posted at: February 8th, 2013 02:58 am (UTC)

The general sense I am getting from the current tax debate is that a lot of tax legislation has not kept pace with the evolution of trade in recent decades; politicians seem to think that this has somehow all happened without them actually voting on it; and tax partners when grilled come over as rather superior, though this might be an understandable defensive tactic.

Posted by: king_pellinor (king_pellinor)
Posted at: February 8th, 2013 03:22 pm (UTC)

I'd agree with our sense. International tax law has a lot of tie-breakers in it about, for example, which country gets to tax certain profits. When those tie-breakers were agreed, the world was a very different place - it was a lot bigger, for one thing, and you couldn't realistically sell books to Britons from Luxembourg even if doing so would give you a tax advantage.

Because global trade, at both the business-to-business and business-to-consumer levels, has become a lot easier, the ties to be broken have become a lot more valuable. To keep things simple it was kind of assumed that for every winner there'd be a loser, and for every Luxemburger selling to the UK there'd be Britons selling to Luxembourg, buit of course with big global players that's no longer true. This makes tax competition a lot fiercer: you're not competing for a slightly larger share of the many businesses, you're competing for the whole of one or two.

So that sort of thing does need addressing. Amazon's presence in Luzembourg getss a very large advantage from the fact that merely distributing your goods is viewed as an ancillary operation to your main business of sales, but the core of Amazon's value comes from the distribution network. If say the permanent establishment articles of tax treaties were modified, such that distribution became an example of something that *might* be regarded as ancillary, rather than being defined as such, then the UK could be straight in there taxing Amazon's UK operations.

That of course would take a lot of international co-operation: the OECD has been revising its guidance on permanent establishment for years, and in fact is due to do an update fairly soon.

The problem with politicians is that they haven't kept up with it because they largely don't understand it, so they pass things through on the nod. They have voted on it, or have at least been given the chance to, but they haven't paid attention to what they were doing. They're now engaged in that classic defensive reaction of making a loss of fuss about fixing something to distract attention from the fact that you broke it in the first place.

The tax partners were trying to make some very good points, but of course didn't get the chance to. I'd love to see what the Lords Finance Bill Committee would make of them: I'd expect a lot less heat but a lot more light.

Posted by: helle_d (helle_d)
Posted at: February 7th, 2013 04:09 pm (UTC)

Most imformative - thank you!

Posted by: parrot_knight (parrot_knight)
Posted at: February 8th, 2013 03:01 am (UTC)

There's probably more I could have got out of it - there are a lot of leads to follow, and anecdotal evidence to check.

Posted by: daniel_saunders (daniel_saunders)
Posted at: February 7th, 2013 11:19 pm (UTC)

Interesting (and tangentially relevant to my MA!).

I feel conflicted about this: I like cheap books and DVDs, but I don't want publishers, authors etc. to go bankrupt stopping me from getting more books and DVDs. Also, I am naturally suspicious of monopolies and monopsonies.

Certainly the statement about Amazon Marketplace is troubling, if correct (I am suspicious of the remark about "this thing called Amazon Marketplace", which sounds a ill-informed).

It can be hard to get serious Jewish religious literature on Amazon and I suspect that is because the Orthodox publishing houses are small and can not afford the deals Amazon offer them (serious, scholarly Jewish books - annotated prayerbooks, annotated Tanakh and Talmud translations etc. are often subsidized by philanthropy, presumably because the relatively small market is not big enough to meet the large costs).

Posted by: parrot_knight (parrot_knight)
Posted at: February 8th, 2013 03:17 am (UTC)

I think the 'this thing' was being used rhetorically, to talk Amazon Marketplace down. I've suspected that there must be complicated deals going on somewhere in the world of DVDs, given how low some prices go after a while; the current period where lots of DVDs seem to be being dumped on the market through various routes as Play and other competitors to Amazon throw in the towel as the Channel Islands VAT exemption disappears and HMV shrinks.