During Tehran Book Fair I had the honour to hold a presentation about emerging ebook markets. Attached you’ll find the slides in english and farsi and the transcription respectively the manuscript of my speech.
Summary: the smartphone will be the leading ereading device and push the emerging ebook markets like south america, africa, asia and middle east.
Welcome from my side for today’s event, “Ways to enter the digitale marketplace successfully“.
I am very pleased to be able to discuss with you the digital markets and their development. After all, this is one of the major future markets for publishers.
But the question is: how do these markets work? What is the state of development? Where will the journey lead ?
On the basis of worldwide studies, I would like to talk about all this in the next half hour.
Another focus will be, which opportunities the digital growth markets have, such as South America, Africa, Asia and Middle East.
This keynote splits into three areas.
1 The situation of ebook markets, on the one site the existing digital core markets, like U.S., UK and Germany, and on the other side some markets which are develping right now, like Brazil and Russia. We will further have a look at the issues which these markets are actually facing.
2 The crucial point are the reading devices. Massive changes are happening these days, which will positively affect the developing markets.
3 In conclusion, I would like to point out some factors which are important for building up these markets and for developing appropriate digital products for them.
E -book markets are new, so data on e-book markets are often very difficult to obtain.
And often they are difficult to compare from country to country, even the identification of trends is not easy.
But I tried to provide the existing data in context, to prepare it and analyze it for you.
First I am mainly responding on the U.S. and European market, where you can find most reliable figures at the moment.
I will start with the United States, currently the largest market in the moment.
Whoever reads up on the topic of e -book market sooner rather than later finds this chart by the AAP (Association of American Publishers) from 2010 that shows the impressive growth of the e-book market in the USA.
A more recent analysis here from the last year comes from Bowker , an American market research institute.
On the one hand, nearly 30 % of all books purchased in the U.S. are ebooks. On the other hand, it is currently being discussed whether in 2012 it hasn’t already come to a first consolidation, since the growth stagnated.
But maybe we can find here a similarity to many print book markets where growth is often driven by a few bestsellers. If there are no bestsellers, there is no large significant growth.
Whether it really comes to consolidation of growth or the markets continue to grow, we will probably know in a few years.
Whether or not further growth: at least the volume of the e-book market in the U.S. has grown impressively in a few years and is, according to AAP in 2012, more than 1.5 billion dollars.
The entire book market in 2013 was about 27 billion US-Dollar.
And the Number of ebooks: Amazon claims in early 2013 to have 1,700,000 ebook titles in their catalog, the vast majority of them is in English.
Overall, growth is a fact. For publishers that offer usually not all topics as e-books, it is also interesting, in which segments this growth is particularly large. This shows, which audiences have the greatest interest in digital books.
Here is a graph of the AAP, divided into adult fiction, adult nonfiction and children’s books. The largest part here is in the area of adult fiction, almost twice as much as in the other two areas. The disproportionate growth especially in children ’s books is quite interesting for publishers offering these kind of products
From the U.S. market to my home market : the German e -book market.
Sales of the German Bookmarket recently are about 9,4 billion Euro, whereof approximately 500 Million Euro will be ebook-sales.
Here sales figures have been requested across all respective disciplines. Now the picture looks quite different, especially as in Germany scientific and non-fiction publishers started offering e-books quite a while ago. Individual academic publishers now account for more than 50 % of their sales with digital offerings. And in 2012 nearly 10% of German publishers‘ revenues were made with ebooks. Rising trend. By the end of the decade, we can expect that 25% of all publishing sales will be achieved with digital products. >>>>
More and more publishers produce printed as well as e-books, and therefore change their production workflow accordingly. And the number of especially small publishers producing digital products only is rising
One major concern of German publishing is the concentration of the market places where our e-books are sold.
In 2012, Amazon had a market share of 41%. In second and third place are two German bookstore chains , Thalia and Weltbild, who have joined force in the e –book business. They formed a joint e -book initiative and also offer their own e-reader, the Tolino. And in fourth place at 10%, there is Apple with its iBookStore.
In Germany we still have the fixed book price for printed books and e-books. That means, every book or e-book must cost the same everywhere.
This prevents that large market participants exercise pressure on the rest of the market or publishers with low book prices. If this system should fall , we can assume that the prices of e-books will immediately fall massively. Simply because the major platforms will attract more buyers with low prices. But then the margins of publishers will fall.
From the German e -book market to the United Kingdom.
In this graph you will have a look at the UK population who have bought an ebook between 2011-2013, a study from Nielsen BookScan.
You can see that until today almost 20% of the population bought an e-book already. Among other things, this is an indication that the UK is, after North America, the second largest market for e-books in the world.
Here you see the connections together with trending. There are more e-books sold than ever before, but the profits went down. Therefore, caution is always advised with price wars or generally with lower prices for e-books.
This is one essential point which publishers have to consider seriously: The pricinig for their digital products. On the one hand buyers of digital products often are not willing to pay the same prices as for print-products. On the other hand high sales figures of low-priced products do no automatically lead to higher revenues.
If it comes to the worst the revenues will decline. That’s why the pricing of ebooks is a significant question for publishers.
At this moment it is not clear if the classical transatlantic ebook-markets, in particular US and UK, already reached their zenith, or if further increase will be possible. This certainly is a very exciting question.
But a far more question for me is, where the emerging ebook markets can be found, which possibilities arise thereof, which technologies can be used, but also, which risks will occur.
The question remains how the global spread of e-books will develop. Here is a forecast of PriceWaterhouseCoopers, worldwide, until the year 2016. With very impressive growth numbers. The focus here is clearly in U.S. America , Western Europe and Asia. However, Northern America and the european market, in particular UK and Germany, make up more than 75% of the international market – realating to sold ebooks.
For a timeframe of 3 years, I mainly agree to this. Personally I believe, that here Asia , South America and Africa will play in future a much more dominant role. But more about this later.
The picture changes if you look at the individual countries in detail. Here are, along with the US who currently clearly dominate the market, India and Brasil in the forefront.
In fact the financial turnover in ebook revenues of these two countries still lie behind, if you look at the last slide. But this is only an indication for the fact that the sales numbers in these countries are quite high, but the prices still very low at this moment.
Not only the ebook-prices are important, but also the general willingness to pay at all. Let’s have a look at the Russian book market, which has a volume of 1.8 billion Dollar. And even though 70% of all Russian readers claim to read ebooks, the ebook-market share is less than 1%. So these are only about 18 Million Dollar in the year 2012.
The reason for this that 92% of the readers download the ebooks for free from the internet, 36% copy their friends ebooks – and only 15% pay for the ebook. Piracy and the general tradition not to pay for content can become a enormous problem for authors and publishers.
According to representatives of Eksmo, Russia’s largest publishing house, up to 95% of all downloads of ebooks are pirate copies, something that results in the annual losses to the industry of about 4 billion rubles (120 million US Dollar).
Another interesting aspect comes up when looking at the distribution of the reading devices. The largest part, 42%, uses the personal computer, 38% use the notebook, and other e-reading devices have the same share.
Let’s have a look at another growth market: Brasil. The complete volume of the bookmarket is around 3,7 billion US Dollar, the ebook-share is 2,5% in the year 2013. In this statistic which comes from Carlos Correnho, a Brasilian publisher and expert for the ebook market, we can see another interesting detail.
To reach the ebook-customer, we do not only need the products, but also the right platforms, where these ebooks will be sold. And these should offer a large choice of ebooks, as simple as possible for the customer.
The market entry of Apple, Amazon, Google and Kobo in 2012 gave a powerful and no doubt crucial lift to the Brasilian ebook market.
We have seen how ebook markets evolved in some countries. We have also seen which important role they meanwhile have for publishers.
Now I’d like to focus on another aspect, the devolopment of digital reading devices – and which effects this will have on future ebook markets.
The spread of transatlantic ebook markets was and still is closely connected to the distribution of so called book- close readers. Devices in the form and size of a paperback, with functions like turning over book pages. This is quite typical for new technologies, which often simulate the handling of previous technologies in order to then finally detach from these.
First, the relationship between the expansion of the necessary hardware, classic eReaders (here the amazon kindle), and the expansion of an e -book market.
A driving force in this market is the continuing price decline of eReaders.
Amazon in US shows how quick these devices spread, as soon as the market price fits.
So a sufficiently large amount of ereading devices is an extremely important factor for a big ebook market.
And on the other hand it’s a correspondingly wide range of literature available for it.
Here’s another graphic from Amazon for the US market. Already in the beginning of 2011, Amazon sold through the growth of its ereaders more digital than physical books.
As I mentioned, technologies tend to take the form and functional elements of their predecessor technology. Just as the ereader imitates the printed book.
Some day we will reach the point where new technologies and devices with a completely new functional background will become accepted.
I would now like to have a closer look at these so called multi-purposed devices.
When we talk about reading devices for e-books, we talk about e-readers and tablets. It is often overlooked that an equally well-suited reader is the smartphone. And if we look at which devices are most widespread worldwide, the smartphone stands right at the top. Followed by Mobile Gaming Consoles , mobile media devices like the iPod – and only then gradually will follow e-readers and tablets.
Here’s another study from Bookbon which shows the spread of classic e -readers and tablets worldwide.
Particularly interesting is the distribution of tablets outside the Anglo- American region.
Again, this gives evidence. While there, the ratio of tablets to e-readers is about 2:1, it is much higher in Europe but also in India.
This is also interesting insofar as tablets reach a higher distribution, even though they are definitely more expensive than ereaders. But they are technical superior and offer many more advantages and functions than an ereader
This is also the reason why devices that offer only very few usabilities, such as MP3 players, cameras or Navigation devices will be replaced. Most of these functions are now offered by Smartphones . or – the other way round – the single-purposed devices more and more evolve into multi purpose devices, for example cameras with Wifi and access to social networks.
On this infographic of The Wall Street Journal you can see on the left the development of devices which fulfill several functions, such as Smartphone and tablet. On the right you see devices offering only one or very few functions, just as the classic ereader.
Without any doubt we can say that smartphones evolved into the dominating tool for communication and several other uses during the last decade.
Before turning to the subject „Digital reading with the smartphone“, we should have a look at the actual main markets of these devices.
This is an overview showing the development of the six biggest smartphone markets worldwide. And here we can see that the transatlantic dominance, which we discovered looking at classical e-readers, completely changed and reversed. This is an outlook for the year 2017, which is not so far away. And we clearly notice the dominating markets – which is China, still Northern America, but closely followed by India, Brasil, even in front of the UK.
Nearly half of the global Smartphone markets will then concentrate on these three countries – China, India and Brasil. And all this against the background that Brasil and India are offering a distinct growth potential.
Another enormous future growth market, which is completely neglected in current studies, is the Middle East and Africa
Here you can see an overview from 2010, so quite a few years old, which comes from Wireless Intelligence.
From the sometimes ignorant perspective of the Western world Turkey often is used as a benchmark, but if you look at the distribution of smartphones according to users, Nigeria clearly is in front here, followed by the Islamic Republic of Iran, Egypt – and then Turkey. But if you look at the reason why smartphones are so widespread in Africa, it will soon become clear why multi purposed devices will enforce very quickly.
Similar to the ereader the first smartphones imitated the features of the previous technology to a wide extent, main point was the transmission of vocal information – the phone call. In fact a smartphone basically is no „Phone“ – it is a Computer that provides wireless access via the Internet to many features that go far beyond making phone calls. In addition to vocal communication, there is the Exchange of written information like e-mails – but much more and explosively booming are all these exchanges on social Networks. at the moment the main access to Facebook for example, the dominating network in West countries, clearly is the Smartphone.
It is interesting that in Africa the smart phone or cell phone is also very widely used as a transaction device for paying, for example in the area of the micro-payment, due to missing Bank structures. Some time ago I read that many Africans who work abroad, are buying call time credits from certain operators abroad, and then transfer these home, where they can be sold or exchanged again. An extremely simple form of financial transaction – but it works very well.
This article here has just recently been published a few days ago by the Guardian. But it exactly confirms the presented forecasts:
The Unesco is pointing to a „mobile reading revolution“ in developing countries after a year-long study found that adults and children are increasingly reading multiple books and stories on their phones.
People in seven countries (ethiopia, Ghana, India, Kenya,Nigeria, Pakistan and Zimbabwe) – took part in the research, which found that 62% of respondents are reading more, now they can read on their mobile phones. One in three said they read to children from their mobile phones, and 90% of respondents said they would be spending more time reading on their mobile phones in the next year.
So let me quote this study:
“It is not hyperbole to suggest that if every person on the planet understood that his or her mobile phone could be transformed – easily and cheaply – into a library brimming with books, access to text would cease to be such a daunting hurdle to literacy.”
Here another survey, from Brasil again.
They investigated the media use especially of young people, which are far more enthusiastic smartphone users than the older generation.
„While watching TV and movies on mobile devices scored high with young Brazilians, consuming traditional media scored even higher. Around 71% of Brazilians aged 15-24 report reading books on mobile devices, while 67% read magazines and 58% read newspapers“.
“71% of Brazilians aged 15-24 report reading books on mobile devices”…this is an enormous number. And interenstingly there is a quite similar development – in my own home country.
It’s interesting to see that these trends do not only happen in the previously presented emerging markets: A joint study by the German Booktrade Association and the IT industry has shown thatin Germany such a trend exists as well. Even in Germany the classic ereader seems to loose its unique selling point. The main reading devices are smartphone, notebook and desktop, followed by Tablet. Only at the end you can find the classic ereader.
Another interesting survey shows who primarily uses the smartphone as ereader. It’s the younger users, between 14 and 29 years, and the percentage of female readers among all smartphone readers equally is very high. So here a new generation of readers is growing up, and for them reading on the smartphone is a matter of course.
In summary we can state that many factors which can be observed worldwide clearly point out that in the future digital reading will increase, in fact enormously. And that the upcoming reading device for these contents will be the smartphone or a similar multi-purposed device .
And these factors will be the reason why during the next decade the transatlantic ebook markets will no longer stay the leading markets, but rather South America, Africa, the Middle East, Russia and Asia.
Octavio Kulesz, publisher and market researcher from Argentina, held an interesting lecture at the Publishers Launch during last year’s Frankfurt Book Fair. He said the emerging markets would jump into the digital e-book age without the detour of a large print book market. He said: “ e-publishing is Organic Growth in the Developing World… In Africa , physical books are thought of as printed ebooks „.
An interesting theory, I think. And completely understandable, understandable, as the emerging markets will jump straight into the future, from Gutenberg to the iPhone
So much for the golden glorious future. But this won’t happen solely and necessarily. The question remains, what conditions publishers have to meet to participate in this growing market. I’d like to discuss this in the following minutes.
The first lesson is the acceptance of digital markets. The printed book will not disappear, but the ebook will equally stand next to it. And the market share, even in your country, will grow enormously. Dealing with this fact, you should always exactly observe which devices are or will be used. Content follows Device. Which means: Not all content which works in a printed book will equally work on a display.
The production of ebooks is not really easy – especially if you don’t publish fiction, but technical literature. Here, you will face many questions: Do you have the right tools? Do you also have the right people for these tools? And above all, can you produce ebooks in an economic and reasonable way? And if we again and again talk about the content on the smartphone: not every content or any material will work on each device equally well. Think in display sizes, not in book formats.
And one last point: How do your ebooks reach your customers? Are there Platforms available which present your content in an appropriate way? Where your readers and customers can easily and conveniently shop? Above all, you must make sure that these markets remain balanced.
This means: In the transatlantic region, Amazon has a large dominance. But without Amazon, these ebook markets never would have been developped so quickly, that needs also to be said.
In Present times Amazon has a huge dominance, which must be watched critically. But in other countries such as Russia and Brazil similar developments are happening now. That’s why I was delighted when two weeks ago I read in Germany about Fibido.com, the first online book store in Iran, offering eBooks and Books in Persian language worldwide.
When our readers buy books online in future, we must ensure that we are easily found there. Somewhat provocatively: if we and our products are not found online, we do not exist.
Metadata and Visibility now sounds very theoretical, but also has very practical effects. If you want to find ebooks on digital platforms, the corresponding descriptive data, for example, the meta-data, must be available in certain formats. They must but available in each case. This applies for some data such as the ISBN. A Turkish colleague recently told me what happens if you don’t care about data maintenance or if you even don’t have ISBNs.
He shares my opinion in regard of market development, but he remarked that about 40% of Turkish literature has no ISBN, and so even is not available in digital stores. Metadata therefore is no rocket science but are absolutely essential and a necessary basis for a digital business.
Online marketing is another challenge for publishers: Online marketing requires brand new marketing techniques. The brick-and-mortar presence will no longer decide in the book trade, but search engine optimization. We no longer preferentially need to inform the bookseller about our new products, but we have to inform the reader directly via digital channels.
On the other hand, this is a great chance in countries without nationwide Bookstores structures. For Countries who can reach their readers straight on a digital way without having to serve the usual bookstores.
If you want to develop markets for digital publishers and authors you also need legal framework. Nothing is easier than to produce a digital copy and launch this online. Moreover, it is often the case that readers in certain regions basically have no sense for the fact that both authors and publishers should get paid for their work. This is what we have seen today by the examples of Russia and Turkey. You remember? Only 15% of readers pay for ebooks in Russia. There is an essential need for a copyright which complies the needs of authors and publishers on the one hand, and readers on the other hand.
And you also need mechanisms to enforce this law.
This in a nutshell is my personal view of the world of publishing and books now and in the coming years.
It was a pleasure for me to take you on this tour. A guided tour from the transatlantic to the emerging colorful ebook market, from the book to the smartphone. Whether this all will come true – the future will tell.
My advice to you is quite simple: be open minded!
Whichever way you will tread : I wish you every success !
Sepos kosar em!