In Brazil, Apple’s iBookstore Is More American Than Brazilian

One of the most famous Brazilian idioms is jeitinho brasileiro — or, to translate, the “Brazilian little way.” It’s the little improvisations that get one through the day, that little bit of rule bending that leads to a quick resolution to a tricky situation. Jeitinho doesn’t have to involve anything illegal, although it can go on very gray areas both legally and ethically. Creativity is at the core of the jeitinho Brasileiro tradition.

Every foreigner who has visited Brazil has seen the jeitinho in action. That car that is parked on the sidewalk in Rio — perfectly logical, because there are many streets where you can’t actually park — the one with the bumper held on by wire with the driver schmoozing his way out of a traffic ticket: that’s jeitinho. Flopping to the pitch after being (lightly) tackled and writhing in pain (an Oscar-worthy performance) to draw a red card and secure a penalty kick for the go ahead goal against Argentina: that’s jeitinho, too.

And now it seems like we are exporting this attitude, the most “Brazilian” of Brazilian products to America: after facing a series of difficulties to open a Brazilian iBookstore, especially due to the complex tax and accounting systems in Brazil, almighty Apple decided to adopt jeitinho brasileiro as if it was native to Cupertino, California. When Apple realized it would be a nightmare to use its agency-based business model in a place where books are tax-free, but book-related services are not, and where no lawyer can ultimately guarantee if agency or even retail price controls are actually legal, it decided to use their American iBookstore to sell into the Brazilian market in American dollars. What jeitinho!

The final result, therefore, is not a traditional Brazilian iBookstore, but a window of access to Brazilian content available in the American store. When a customer logs onto the  “Brazilian” iBookstore the sensation is similar to visiting one of the official Apple resale stores in São Paulo or Rio de Janeiro. The place might resemble a real Apple Store, but it is far from one. And just as Brazilians are still waiting for a proper Apple flagship store to open in their country, they will probably not have a real Brazilian iBookstore any time soon either.

Prior to Tuesday Brazilians could not buy any book at Apple. As of Wednesday, Apple has made 3,158 titles available in Portuguese to its Brazilian customers. These can be accessed through the iTunes stores or via iPhone and iPad apps. Among these titles, there are books distributed by Distribuidora de Livros Digitais, aka DLD, the powerful consortium that unites publishers Objetiva, Record, Rocco, Sextante, L&PM, Planeta e Novo Conceito in a bestselling catalogue of around 1,500 titles. There are also books from the aggregator Xeriph, but only from a handful of the publishers they distribute, such as Todolivro and Boitempo. Rio de Janeiro-based Intrínseca and Penguin-owned Companhia das Letras are selling directly to Apple and their books are already available for purchase. Companhia, by the way, is very visible in the store and accounts for some 494 titles. L&PM, a southern publisher distributed by DLD, is offering 435 titles. And the Record Group, another DLD publisher, has around 330 titles available in Portuguese at the iBookstore. The biggest absences are Saraiva, who owns the largest digital catalogue in the country, Globo Livros and its megaseller Ágape (8 million copies sold in two years), and Zahar, a publishers that has always been in the avant guarde of digital development in Brazil.

Let’s put it this way, Brazilians abroad should be very happy. After all, the books are priced in dollars. Yes, you can buy the same books in Brazil, thanks to an integration window between the Brazilian and the American iTunes stores, but this  this jeitinho-brasileiro solution also brings a series of problems that might become rather bothersome to the Brazilian readers.

The main problem is the IOF tax that Brazilians pay when using their credit card abroad. Since the purchase will be made in the US and in American dollars, the IOF will be charged and the customers will have to pay an extra 6.38% on their credit card bills. Apple, obviously, forgot to mention that visibly in the store, but the Brazilian authorities will remember to charge it — no doubt about it. In a country where books are absolutely tax-free, Apple was creative enough to be able to sell Brazilian books to Brazilian readers with a 6.38% tax involved.

A second problem is that the purchase must be carried out with an international credit card. According to the Brazilian Association of Credit and Service Card Companies (Abecs), only 15% of the Brazilian population possesses a credit card that allows purchases abroad and in a foreign currency. Other interesting data comes from Abecs: in the second quarter of 2012, Brazilians spent US$55 billion in domestic purchases and only US$ 3 billion in international purchases. Of course, the probability that an iPhone or iPad user has an international credit card is much higher than that of the whole population, especially considering the huge social differences in Brazil. So it iappears that many more than just 15% of iPhone and iPad users will be able to buy books in American dollars. Still, this limitation should be avoided, as well as the IOF impact.

A third matter is that the currency conversion only takes place when the credit card invoice is closed and, even though the exchange rate has been very stable lately, the customer will only know the final price they have paid once they pay their credit card bill.

However, had Apple offered prices that were lower than those of the competition, all these problems could be discounted— even the IOF tax could become irrelevant. Unfortunately, a quick comparison shows that Apple’s prices are higher in several cases. For example, Walter Issacson’s Steve Jobs in Portuguese costs US$16.99. If you convert the value and apply the 6.38% IOF, the final price would be R$36.60, while the same e-book costs R$32.50 at Saraiva. Bestseller Fifty Shades of Grey is on sale for US$12.99 at the iBookstore, or R$27.98 after conversion and taxes, but it costs only R$24.90 at Saraiva.

Even though Apple’s move to start selling Brazilian books is indeed progress, especially for the international public, it will not, for the most part, have much positive impact on the life of the Brazilian reader, and he will probably keep buying his local books at Saraiva. After all, Saraiva offers a catalogue of about 11,000 Portuguese titles, no IOF is charged, no international credit card is necessary, and the final price is ultimately cheaper. And since the Saraiva’s e-bookstore offers reading apps for iPad and iPhone, the consumer experience is practically the same. Another option is to buy the e-books at Livraria Cultura and transfer the file to a Kobo or Bluefire app. By the way, since we mentioned Kobo, we should remember that they plan to launch their store with Livraria Cultura next month, offering e-readers, apps and sales in reais, the Brazilian currency.

Last weekend, while Apple was offering its first Brazilian titles for sale, an interesting event, called FIM, held discussions in Rio de Janeiro about digital books and the technological disruption that is affecting the book industry. At one moment, the editor Julio Silveira, the event’s curator, noted, and we’re paraphrasing: “Kobo is a bookstore, Amazon is a compulsive jack of all trades, and Apple sells books in anger, since it would prefer to be selling blinking things instead.” So far, in Brazil at least, it seems that Apple is really more interested in selling blinking things. If it wants to be a relevant player in the Brazilian book industry, it will have to open a real and complete Brazilian iBookstore, one priced in reais. Until then, Brazilians will have to keep waiting. Just as they have been waiting for years for Apple to open a flagship Apple Store in the largest, fastest growing and most powerful country in Latin America.

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