Russian e-book market - En attendant Godot ?
It is fair to say that e-books have been popular in Russia amongst readers but, interestingly, not so much with publishers so far. According to various estimates over 20 million people in Russia read e-books with computers still remaining the main device for e-book reading. Amongst portable devices dedicated e-readers are the first choice of reader (56%) followed on by smartphones and mobile phones (25%) and also PC tablets.
The popularity of e-reading can be attributed to the limited number of independent book stores in Russia, around 3000 stores, and the difficulties of distributing books physically throughout the vast Russian territory. The adoption of e-reading by users has been helped by the recent availability of relatively cheap reading devices and wide spread 3G internet.
It is probably reasonable to assume that demand for digital books is higher than their supply by legal e-bookstores that offer from 5000 up to 70 000 e-book titles depending on the store. Russian publishers are concerned about selling e-books through fear that they will end up on pirate internet sites so they are not particularly keen to license e-book stores with their content. The absence of titles for legal purchasing boosts piracy which in itself ends up looking like catch a 22 scenario.
There is a history to the situation: The first e-book store in Russia opened in 2006 and set itself up as being DRM-free, this concept has only recently been taken onboard by international forward looking digital strategists.
However, the difference between the Russian market in those days and the current American e-book market is obvious. The market of digital content in the USA (with its developed infrastructure and ecosystems) has matured enough for reflection on and adjustment of viable business-models, whilst the original Russian e-book stores were set up by enthusiasts with very limited funds and employed basic technology. So from the very outset Russian e-book stores were not device specific and only included DRM-protection on occasion.
It was open distribution models that played a restraining role in the spread of e-reading in Russia. But as the market matures publishers are beginning to understand the business opportunities available to them in digital technology. Publishers, especially small and middle-size businesses that originally opposed any shift towards e-books, are slowly exploring the market. In 2012 some publishers made between 9 – 10% of their revenue from e-content whilst STM electronic libraries secured about 15% of the proprietors’ revenue.
As elsewhere in the world mass-market literature and especially bestsellers are doing well in e-book form. Russian best selling authors like Lukyanenko, Akunin
and Gluhovsky have set up their own e-book distribution platforms and are continually experimenting with different business models.
The infrastructure for e-book distribution has also been developing. Currently it includes two major ebook platforms LitRes and iMobilco. The online subscription based book libraries Bookmate and MyBook offer thousands of fiction and non-fiction titles. The major e-commerce retailer Ozon is developing its own e-book infrastructure that includes cloud storage, personal library synchronization and an option for reading on multiple devices. Also the Russian e-reader manufacturing company Wexler has set up its own e-book distribution platform.
About 16 electronic libraries sell subscriptions to corporates and universities to access their academic and professional collections. There have also been several self-publishing and print-on-demand start-ups coming to market. Such developments have brought along meaningful results. In 2012, the e-book market in Russia over stepped the 1% threshold of publishers’ revenue. Experts predict that in 2013 the e-book market in Russia will reach approximately 6 % of the total market value and the growth rate will accelerate.
Google, Apple … Who is the next to follow?
International companies that have been bypassing Russia in their international expansion seem to be changing their attitude. The first rather bold move into the Russian e-content market was made by Google Play in December 2012. Olma Media Group, MIF, and some others have already licensed their content to Google. Apple, which by the end of 2012 had 50 iBookstores internationally, is another likely contender to open an iBookstore in Russia. On the 4th of December Apple launched its Russian iTunes, selling music and video and in 2013 IBookstore is expected to start selling e-books to Russian users.
Unlike in Brazil where Kobo, Google and Amazon launched hours apart, Google Play has not been immediately followed by its rivals. By the end of 2012 the Russian book industry was weary of rumours about who was to be the next to enter the Russian market, Barnes & Noble, Kobo or Amazon.
In early 2012, Rakuten the largest online Japanese retailer with international ambition bought control of Kobo, which was then the property of Canadian company Indigo. This deal was closely followed by observers of the Russian market; Rakuten is also the biggest investor in Ozon, the largest Russian online store.
There are suggestions that Kobo will come to Russia with the backing of Ozon but this has yet to be confirmed. But it is expected that in 2013 Kobo will be operating in the Russian language. The expectations seem solid enough as according to Reuters W H Smith ‘plans to open its first stores in Russia next year (2013) as part of its broader global expansion plans’.
Barnes & Noble will also likely add a Russian-language interface to its book store. Unlike Amazon and Kobo, Barnes & Noble already has a catalogue of Russian books provided by the Russian e-book store Litres to address the global needs of 50 million Russian ex-pats. According to the Russian newspaper Izvestia the company has already registered its trademark brand ‘Nook’ in Russia so a Russian Barnes & Noble presence is to be expected.
Amazon the most entrepreneurial of them all is keeping its plans close to its chest. On being confronted with the question, an Amazon representative replied that ‘unfortunately we have nothing to share related to the Russian market’. Amazon Kindle sells thousands of Russian titles acquired through e-book distributors; however Russian language is not present in the KDP service for self-publication. There is still much speculation about Amazon opening its Russian data distribution centre in 2013. After all, the Brazilian scenario was quite unexpected: e-books first and Kindles to follow.
e-readers vs tablets
Russian consumers are shifting their interest from dedicated e-readers to PC tablets, echoing the sentiment prevalent in the rest of the world. E-readers will retain their niche as a relatively inexpensive dedicated reading device whilst tablet sales will increase substantially.
Tablets that provide multimedia enhancement are inducing publishers to create rich media content, enhanced books and book apps. There are no major companies in Russia that offer conversion and application development services but following demand this will change in 2013. We will expect to see the emergence of new content aggregators, the growth of recommendation services, self-publishing-platforms and on-demand printing.