Transcript: Global E-Book Report 2014

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With: Ruediger Wischenbart & Javier Celaya

For podcast release Monday, May 12, 2014

KENNEALLY: Sell globally, publish locally. As the eBook market develops and matures, observers are noting patterns that repeat themselves from country to country. Infrastructure is critical of course. As access to the Internet grows, online distribution channels and reading platforms follow closely behind. And yet location still matters. From tax policies to legislated pricing levels to legacy habits in buying and reading books, no two countries are exactly alike.

Welcome to Copyright Clearance Center’s podcast series. I’m Christopher Kenneally for Beyond the Book. For news and analysis on the latest market trends and developments in eBooks around the world, we welcome back to the program Rüdiger Wischenbart, author of The Global eBook Report. He joins me on the line from Vienna. Welcome back to Beyond the Book, Rüdiger.

WISCHENBART: Hello, Chris.

KENNEALLY: It is very good to have you back. We last spoke with you, Rüdiger, in Frankfurt at the Frankfurt Book Fair, and comes time again for a bit of an update. We’ll tell people that Rüdiger Wischenbart is the founder of Content & Consulting, based in Vienna, which specializes in serving international culture and publishing markets. In addition to the Global eBook Report, he’s the author of the global publishing market survey for the International Publishers Association, and The Global Ranking of The Publishing Industry, updated annually since 2007. Rüdiger also serves as director for international affairs for Book Expo America, and he coordinates BEA’s global market forum.

Rüdiger, this is a fast-paced story, one that is really very much a developing story, and we’re seeing a lot of interesting developments. In particular in Europe, we’re seeing very quick growth, very rapid growth. But some countries are really distinguishing themselves. Quickly sketch that marketplace for us.

WISCHENBART: The fascinating thing is that on the one hand, we do have certain patterns that seem to apply to very diverse markets. It is always the strongest readers, a little bit more elderly, about 40, those who really are the best book buyers, book consumers who are adopting eBooks first because they are traveling. They want to have a good read in their pocket and don’t carry around too much weight. You also see the distribution channels and adoption of publishers who need to turn their new fiction titles, notably, into eBooks are a prerequisite. We see that pattern to get repeated in Germany, in Spain, in Italy.

But then there are some exceptions, like France. For some reasons, France is lagging behind or very hesitant at adopting eBooks. The Global eBook Report tries to understand what drives these similarities and what drives the differences. I do that really on a global basis, so not only Europe, but also Brazil, Latin America, China, India, etc.

KENNEALLY: Right. One of the things that our North American listeners may not be familiar with is that in Europe, pricing for books of any kind, print or digital, is often set by legislation. Can you point to a couple examples where that’s having an impact on the marketplace?

WISCHENBART: It is the publisher who defines the price of the book. But the retailer in many countries in Europe has no possibility to discount the book. For instance, in Germany, you have a law saying the price as set by the publisher is the price which the retailer asks from the consumers. There’s very little or next to no variation in this.

As a result, one very strong element in shaping eBook markets, it’s not around there, because eBooks are kept as high in the pricing as possible by the publishers. But what we see as a result is quite an interesting confusion in the marketplace. Because obviously at the same time, you have self-published titles, and those authors are free to lower the prices. So suddenly in a book market, when you buy an electronic book, it can cost €1 or €20. You don’t know quite exactly what makes difference. And (inaudible) going on. And you see also that different countries behave very differently. So it’s confusing, but it’s also very fascinating, because it allows you to understand how a market is forming.

KENNEALLY: Yes, and I think that certainly a reason behind all of that is the effort by the established publishers to hold onto their legacy business, the book business, the print book business. Yet you’ve got some numbers about how that particular marketplace is changing. It is shrinking mostly, and eBooks are, in some sense, replacing those lost sales, but not always. Help us understand that better.

WISCHENBART: Exactly, Chris. We have, at first glance, paradoxical situation. The print book market is shrinking literally everywhere. But only one market in Europe so far, the United Kingdom, has managed to grow eBooks to a point that they compensate for the loss in print. All the other markets are just going down, some very dramatically, like Spain because of the economic crisis. Others, like Germany or France, are pretty stable.

Yet over time, the markets go down, and the legacy publishers try to keep their business in place. But you have also the same forces as everywhere else who try to create their niches. Romance, erotic fiction, fan fiction, science fiction, fantasy are all niches where suddenly the market share of eBooks tends to explode to 20%, 25%, up to 30% for new titles. Suddenly what used to be one rather compact, homogeneous marketplace for books and reading stuff is disintegrating, fragmenting, and reinventing itself.

KENNEALLY: There’s a lot to cover in the Global eBook Report, which is available for downloading online. We’ll make sure to link to that from our Beyond the Book website. I wonder, Rüdiger Wischenbart, if you could tell us a bit about the UK marketplace, which is the one that most resembles, at least to my eye, the American marketplace, where you have some segments of the book market with eBook titles and sales approaching 50%.

WISCHENBART: Yes. The UK is similar to the US, insofar as there is no price regulation, and you have number of the same big corporate publishing companies like Penguin or Random House or Macmillan. They are very serious about eBooks, and they really have learned how to do this properly. They make sure that normally every new title is available in eBook formats, but also that they have started really very differentiated marketing strategies, and try to understand, driven by big data analysis, how you can pitch those eBooks to the readers.

There comes one very, very big question mark into play, discoverability. How, in the huge numbers of books, of new titles, can you identify that one book that you want to read tonight? That’s very similar between the UK and the US, as compared to continental Europe, where, for instance, that targeted pitching, that analysis of sales numbers, of geographical differences, sales channels, is lagging way, way, way behind. I guess that will be one of those interesting arenas where we will see lots of change in all those marketing places.

KENNEALLY: Rüdiger Wischenbart, he’s the author of the Global eBook Report and founder of Vienna-based Content & Consulting. It is indeed a global eBook report. We don’t want to focus entirely on the US and the European marketplaces. You do have some interesting reports regarding the BRIC countries, and in particular you declare that for Brazil at least – and BRIC countries of course, Brazil, Russia, India, and China – in Brazil, this is the first year of a real eBook market.

WISCHENBART: Yes. The fascinating thing is Brazil has been growing their economy over quite some time. When you grow an economy in a developing society, that raises the demand for culture, for learning, and therefore, for books. Brazil was the market that every publisher, all the big players in distribution, Amazon, Apple, wanted to get into.

And now a little bit more than a year ago, they all arrived. Last year, 2013, has been the first year when all those international actors competed, not only among themselves, but also had to find their ways with the local players. Brazil has a number of really very potent local players. What we see is that there is quite an open space for interesting competition. For instance, Apple somehow tops Amazon. Local players try to get into partnership agreements with the internationals. So there’s a lot of local versus global, new versus old, etc., going on. We are very fascinated to see how that will continue throughout 2014.

KENNEALLY: I imagine, Rüdiger, that we could expect to see echoes and ripples from all of this that will move out from those particular countries back out into the global space. If Apple is doing particularly well in one particular region, it may have an impact, and it may have lessons for Apple that will help it in the US.

WISCHENBART: I have a little bit of a theory which is not sufficiently backed up by data, but somehow like a number-driven feeling. In marketplaces where you don’t have a very old, established, traditional book value chain with bookshops, retailers, distributors in place, and still now you have growth in education, etc., these are the places where Apple outperforms everybody else, because everybody has an iPhone or a tablet. That offer, to have books next to music, next to educational stuff, next to movies, that’s the alternative way of dealing with books, as compared to traditional, specific book-driven channels.

We see that kind of a pattern emerging in Brazil. We see it in similar ways in Spain. And I had the opportunity to observe it also, for instance, in the Arab world, where Apple is a very popular gadget. Those who are educated and want to read would rather do it through these platforms. So we see, again, quite significant differences between those markets.

KENNEALLY: Well, an interesting theory, and one that really does remind us that the devices are as critical to this particular marketplace as anywhere at all. Let’s continue our look around the world. Joining us on the line from Bilbao, Spain, is Javier Celaya. He is the CEO and founder of Dosdoce Digital Culture. Javier, welcome back to Beyond the Book.

CELAYA: Thank you very much for inviting me back.

KENNEALLY: We’re looking forward to chatting with you because we want to zero in on the Spanish and Latin American marketplaces. We’ll tell people that Javier Celaya is, as we say, an entrepreneur based in Bilbao, Spain, with over 25 years’ experience in strategic business consulting. In addition, he serves as vice president of the Spanish Digital Magazines Association, and he is a member of the executive board of the Digital Economy Association of Spain. He’s also author of several books, including most recently from last year, Shared Culture.

We turn, not surprisingly, Javier, to the Spanish marketplace for some information from you. Spain, sadly, is a country that has been tremendously damaged by the economic crisis that began in 2008. Tell us about how it has had an impact on the book marketplace in Spain.

CELAYA: Yes, unfortunately we have been hit by the financial crisis, although all the economic signals tells the market that this is the year of recovery. Supposedly we hit the bottom, and from now on you will hear very positive news from the Spanish market. Nevertheless, as you said, in the last three years, we have lost €700 million in sales on physical books. Unfortunately, the digital side of the story has not grown fast enough to compensate the loss of revenue on the physical paper.

KENNEALLY: Spain has traditionally had a fairly strong book publishing segment, primarily because those books export very well. Tell us about the relationship that Spain and Spanish publishers have with the global Spanish-speaking population.

CELAYA: Actually, we represent over 500 million Spanish-speaking people worldwide. The Spanish industry, as you say, has been one of the strongest worldwide, because the books produced in Spain, 80% are then exported to the Latin American markets, as well as to the Hispanic US market. Actually, there’s more people speaking Spanish in the US, first-generation and second-generation American Latinos, that they work in English, they go to school in English, but when they go back home, they want to keep their cultural values, and they read in Spanish. They watch movies in Spanish. There are, I think, 57 million Spanish speaking people in the US, when we are only 46 in the Spanish market.

Basically the Spanish industry has been an export industry, very similar to the UK, the English industry that has grown and been one of the most dynamic industries because of their worldwide potential. As we said in the beginning, unfortunately because of the financial crisis, the domestic market, the Spanish market, has gone down for the last three years. But the Latin American market enjoys very healthy economic situations. You have growth in Mexico, in Colombia, in Brazil, in Chile, and Argentina. It has balanced and basically been the positive trade-off to the losses in the Spanish market.

Most of our big six like Grupo Planeta, Grupo Santillana, and even Penguin Random House, they balance their accounts with the losses in Spain with huge gains in Latin America, not only in paper, but also in digital. Digital is growing very fast in Latin America.

KENNEALLY: I was going to say, Javier Celaya, that the Spanish book publishers must really have to confront the challenge of the eBook market growth in Latin America almost before they worry about it in their own local marketplace, since in Latin America, one would expect the growth in the Internet access would be driving people more to the digital form than to the print form.

CELAYA: It is true. I think we will see in that region that the book industry will develop from the past to the future without going through the present, meaning that they will go from very limited physical books, because of the past situation in those markets, with very few bookstores, very few libraries, networks. And they’re going to go fast-forward into the digital because of their local governments, especially the Brazilian government, as well as the Mexican government, had basically put a strong bet and a lot of investment behind their digital programs.

For example, the Mexican government has announced, by the year 2018, there will be 50,000 files available in their market. Nowadays you will find less than 5,000 files in the Mexican market. The government is very, very behind fostering digital in order to reduce the bridge between the society in education as well as in reading and writing skills. It’s going to go everything through digital.

KENNEALLY: We’re speaking right now with Javier Celaya. He’s the CEO and founder of Dosdoce in Bilbao, Spain, taking a look with us at the Spanish-language marketplace for eBooks in Spain, as well as in Latin America. I wonder, Javier, if you could tell us about where self-published titles fit into all this. Because for the Spanish publishers, not only are they seeing tremendous changes in how people get their books, but also their dominance in title creation may be challenged by the growth of self-publishing, I would think.

CELAYA: Yeah, this is a business opportunity that unfortunately the traditional sector has basically ignored. As you described in your introduction self-publishing is a big, big business in the Spanish market, as well as – everything is being forecast in the same way into the Latin American market.

For example, last year, we had 20,000 titles produced in different self-publishing platforms valued at close to €6 million. Which is not a big business yet, but clearly demonstrates, indicates, that its growth potential is going to have a lot of implications in the rest of the sector. Meaning that people who before they bought a book from the traditional sector, now they might enjoy reading books from outside of that production circle. And the traditional publishers, because they’re still not betting for this kind of self-publishing production, they’re missing this part of the pie. Whereas in other markets, like in the US and the UK, we’ve seen the Penguins and the HarperCollins and different big publishers going after, also creating platforms to go after self-publishing titles.

In Latin America, the same analysis, we were able to forecast in The Global eBook Report that we see this trend coming out as well in Mexico and in Brazil, in Chile and Argentina, where a lot of people before, because the sector was not fully developed, were not able to publish their own books. Because of the self-publishing platforms coming into place, especially the big players like Amazon Kindle Direct Publishing and Apple iBooks Author platform, as well as Kobo Writing Life coming into these markets, offering services to this community, and I think is going to be one of the major competitors in the marketplace.

KENNEALLY: Indeed. You stress the really rapid growth throughout Latin America in publishing and in book-buying. I wonder whether this translates – you should pardon the expression – into real opportunity for North American-based publishers, as well.

CELAYA: There is no doubt. As your next door neighbor in terms of market and growth potential, for any publishing company or any retailer or any distribution platform in the US, your market is very competitive. Your market is saturated in many of the areas. The only way you can grow is going international. The easiest way, I think, is to go to Latin America, translate your books, translate that content that already has proven to be commercially interest – you’ve been selling that in English in your market. So you translate it into Spanish and just sell it direct or sell it through different retailers to the Latin American market. You will have a new line of business, complementary to your traditional line of business in English. And I think it will be proven to be very effective, because the risk is minimized. You already have proven that your content is demanded by the market.

KENNEALLY: Indeed. For those listening, if they are in the New York area for Book Expo America in late May, they’ll have an opportunity to learn a great deal more about this, as the Global Market Forum this year will be all about translation, a full day’s worth of programs that Rüdiger Wischenbart is organizing, looking at translation in various marketplaces. Rüdiger, I wonder if you could comment on that as a way to kind of close out the program here, that eBooks, as we have been stressing, really are very much a local market first, but there is global business opportunity for publishers.

WISCHENBART: Exactly. At Book Expo America, the starting point for us was the observation that the business of translation and the distribution of translated books is about to be totally reinvented. Because through digital, over the Internet, you can cater to very spread-out communities. You can also be a non English publisher doing a professional translation directly, and then market around the world. And we could identify, on the one hand, the big houses who are really beefing up their efforts with regard to translation, also driven by the fact that in recent years several translated titles have been smash hits in the US, which had not been the case for long. Just think of Stieg Larsson.

But also we saw how many new companies are created and launched around the globe who get into the international exchange. That’s probably one thing that combines both what we report on in the Global eBook Report, and at BEA in the translation program – the number of new ventures, the amount of creativity to reinvent all those exchanges that (inaudible).

KENNEALLY: Rüdiger Wischenbart in Vienna, we want to thank you for joining us today on Beyond the Book and thank you for your latest updates to the Global eBook Report.

WISCHENBART: It’s my great pleasure.

KENNEALLY: We also enjoyed speaking today with Javier Celaya. He’s the CEO and founder of Dosdoce there in Bilbao, Spain. Javier, thank you as well for joining us.

CELAYA: Thank you very much.

KENNEALLY: Beyond the Book is produced by Copyright Clearance Center, a global rights broker for the world’s most sought-after materials, including millions of books and eBooks, journals, newspapers, magazines, and blogs, as well as images, movies, and television shows. You can follow Beyond the Book on Twitter, find us on Facebook, and subscribe to the free podcast series on iTunes, or at our website,

Our engineer is Jeremy Brieske of Burst Marketing. My name is Christopher Kenneally. For all of us at Copyright Clearance Center, thanks for listening to Beyond the Book.

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