China: The next big market for digital publishing? 810,000 titles, 79 million readers of digibooks in 2008
By Tiffany Wong
Welcome to Tiffany Wong, our latest contributor, a co-founder of Aldiko Limited, developer of an Android e-reader! Her bio is at the end. Also see E-books in China: Develop and Use, by Liu Zheng and Sun Tan—a PDF to which Gary Price kindly pointed us. On relevant trade matters, check out a helpful WTO ruling and news that China may appeal it.
Many people think: Digital arena + Chinese market = great opportunity and growth.
China’s digital publishing industry, in fact, has grown steadily.
According to the statistics released last month for the Third Chinese Digital Publishing Expo, the overall income of the nation’s digital publishing industry realized a year-over-year growth of 46 percent in 2008. Overall income is expected to continue to grow at a rate of 40 percent in 2009.
Most of the publishing houses have spent effort to devise strategies and prepare roadmaps toward their digital transition; 90 percent of the 578 publishing houses in China have started to offer digital products and services.
810,000 e-book titles and 79 million readers in China in ‘08
Looking at the e-book segment in particular, as of 2008, there were 810,000 e-book titles available in China, 23-percent growth compared to 2007. The number of copies of e-books sold nationwide increased 15 percent, and the amount of revenue grew 24 percent. Science-fiction and non-fiction books still made up a large part of the e-book market, and the most popular genres among readers are fantasy and health.
There were 79 million readers of digital books in 2008, or 34-percent growth compared to 2007. An interesting trend is how e-books appeal in particular to young people. Readers below 24 accounted for almost 50 percent of the group. Unlike reading printed books, reading e-books is seen by the younger generation as a modern and fashionable activity.
In cities like Shanghai, wherever you go, you can see people reading with devices such as PSPs, mobile phones, portable media players (PMP), etc. In contrast, the proportion of older-ages is relatively small as this population of people are used to reading physical books. It is also worthwhile to point out that a majority of the content is read through mobile phones, PSPs, PMPs, netbooks or computers, as opposed to dedicated e-book reading devices, which accounted for just about one percent of the market.
The low traction for dedicated reading devices can be in great part attributed to their comparatively high price point and the fact that such a large segment of the market is constituted of teenagers and young adults with limited disposable income. Younger people, who already own a PSP, a smartphone or a PMP, are quite receptive to the idea of using these devices to read digital contents. Not only has e-book reading become a trendy activity, its popularity has also spawned a new generation of internet writers whose dreams are fueled by those few who have made a fortune through their success. Original content platforms or content-sharing platforms such as Qidian.com, 17xie.com, Shusheng and more have gained a lot of popularity in the recent years.
Although the e-book industry has shown signs of great potential, there are also a number of challenges preventing its rapid and smooth growth.
Copyright issues
One of the biggest concerns is copyright. The legal framework of copyright in the nation is not yet comprehensive and the public’s awareness of copyright is not strong. Authors sometimes are not clear what rights they own. It is often not clear who owns the digital right to a given body of work. In recent years, authors often find out their works were scanned and shared on the Internet illegally, or find out the digital rights of their works have been sold without their permission.
This trend is also observed in other parts of the world but in China, it is amplified by the lack of a solid legal copyright framework. A well-established framework to determine the ownership of digital right and distribution right, as well as a channel for these rights to be authorized and exchanged are necessary for the industry to continue to develop healthily.
No well-defined business model and profit model in the industry
Although e-book reading is becoming popular, its revenue is still relatively small compared to the publishing industry as a whole. Currently, free books and pirated books constitute the main sources of e-books for consumers. The question of how to create an effective business model to make people who are used to having “free-lunch” willing to pay for contents and the question of how to link free contents to paid contents are actively discussed within the industry.
Another challenge in the industry is the lack of a clear profit model within the industry chain. Compared to traditional publishing, the industry chain of digital publishing is far more complicated. Content providers, technology providers, dedicated e-book reading device manufacturers and carriers all want to get a bigger power and share of profit in the value chain.
In the traditional publishing industry, upper-end players such as publishers have the most power in the industry chain. However, in the digital publishing world, the power has been shifted from upper-end of the industry chain to the lower end. Carriers, due to their ownership of one of the most convenient and profitable distribution medium, have a very strong bargaining power. Recently, China Mobile has expressed keen interest in the e-book market and proposed its own solutions (including its own format, DRM solution and billing solution) to content providers and dedicated e-book reading device manufacturers in order to vertically integrate the industry.
No standard format: Could ePub take hold?
This is not new to everyone! Currently, there are over 20 different types of e-book formats in China. Readers need to install different software to read e-books in different formats. This not only causes confusion and frustration, it also increases users’ switching cost. The lack of a standard format also causes headaches to publishers as they need to decide which formats to use in order to reach the most consumers and to maximize the profits.
As ePub gains momentum in the other parts of the world, there is hope that ePub will become a standard format in China. Some Chinese companies such as ePubsys started to offer free platform for reading ePub books online.
Lack of new content
Many publishing houses chose to enter digital publishing by digitalizing older titles instead of the new releases. Therefore, readers are driven to original content platforms where writers can write and share their novels, short stories or essays to a wide range of readers. On the other hand, for dedicated e-book reading device manufacturers or e-book reading software developers, being able to access content from publishing houses and original contents platforms is not easy because content providers may have their own plan.
As a result, some of the e-book reading device manufacturers resort to creating their own e-book stores. For example, manufacturer Hanvon created Hanvon e-book store; Founder International created Idoican. Having different e-book stores for different e-book reading devices further segments the market.
So will China be the next big market for digital publishing? It has the potential, but different parties have to work together to address the challenges, develop a standard format and realize multi-platform reading.
Bio
Tiffany Wong is a co-founder of Aldiko Limited, the company behind an e-book reader application for Android mobile devices. She has a background in Economics, Finance and Business. She is now managing operations and business development for Aldiko. Tiffany can be reached at tiffany.wongNOSPAMaldiko.com.
August 14th, 2009 at 1:10 pm
Some thoughts:
Beside the obvious question of whether copyright is morally acceptable for Chinese culture at all, I would like to ask if this is not the fault of the publishers. I have never seen a publisher claim to support the PSP or the GBA or my phone. I read e-books on Motorola Linux phones (this should apply well to the Chinese market as the Motorola Ming and its clones are seen everywhere in China). This means I have to “roll my own” books. I mostly read Public Domain works, but many people like to keep up with more current culture. What are the publishers doing to help them? Where are e-books when one walks into a book store? Can you walk up to the cashier with a book you want to buy and say, “No, I want that on my phone”?
The fact is, most people would be willing to pay for a little convenience, but the publishers seem to be out to make things as inconvenient as possible for people who are tired of paper. Enforcing copyright will only make people more angry at the insult of calling them criminals after the injury of forcing them to make e-books for themselves.
This a part of the problem I just described above. However, there is a standard that almost all devices support: HTML. It is only the publishers (and crappy systems like the iPhone and Android) that do not support it. All this digital content could be rendered usable on almost all of these devices over night if the publishers would just use HTML. It works with all screen sizes, it works with all web browsers, and everybody knows how to use it.
E-book formats are the result of precisely one thing: Greed. The publishers want to force users to buy special equipment and be locked in to purchasing books only from them. If one buys a Kindle, one cannot read Sony’s e-books. If one has an old Rocket E-book Reader, one cannot read books downloaded from Amazon. Each device is designed as an isolated market.
The simple solution for this is to separate the device manufacturers from the publishers. So far, however, that has not happened, and the market will never take off until it does.
I, for one, hope that people continue to find their own solutions until the publishers get their act together. If the publishers miss the boat, like their cousins in the music industry did, I definitely will not shed a tear.
August 17th, 2009 at 3:59 pm
What a great idea! There must be at least a couple of people in that country of 1.3 billion who doesn’t steal everything they want.
August 21st, 2009 at 3:57 pm
LuYu,
I agreed that the lack of a convenient channel for the acquisition of digital content plays a role in the piracy issue. This is actually a vicious circle.
The problem of html is that there is no standard way to define metadata, structure as well as table of content, and there is no standard way to package multiple html files or external CSS files into a single ebook file. And this is exactly what epub does: define how to package a bunch of multiple html files with the associated images, css files and etc. into a single ebook file, and define a syntax for describing metadata and book structure.