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For Russian Readers, E = Free

The market for digital books is a cinch for rapid growth, if Russian publishers can convince pirates to become paying customers.

by Vladimir Kozlov 22 February 2012

MOSCOW | Russia appears well-placed to become the European e-book leader. The market for books is the largest on the continent, with 140 million people in Russia and millions of Russian speakers in neighboring countries. Internet use is on a long-term upward trend; Russia now counts about 55 million Internet users, more than any other country in Europe.

 

While Russian publishers and booksellers are sure the e-book market will start to take off, few are willing to venture when that might happen. Publishers face two major hurdles: the steady decline in book sales and widespread copying of digital books.


Already, the digital book market is more than doubling each year, although its share of total book sales is minuscule, said Polina Knyazeva, a spokeswoman for Eksmo, one of Russia’s leading publishers.


Knyazeva forecast that 30 to 40 percent of the market for fiction could be in digital formats in two or three years, based on the rapid growth in both Internet use and sales of e-book readers.

 

russian_ebook_reader

 

However, annual sales of e-books currently amount to just 90 million rubles ($3 million), or one-thousandth of the total book market, said Alexei Chebatko, marketing director at Wexler, a company that produces e-book readers and sells digital books.


He added, though, that sharp and unpredictable growth is likely to occur in the segment, likening it to Russian social networking sites such as Odnoklassniki, which first became popular and then saw their user numbers multiply in a few months.


Alexei Avramenko, head of CIS content projects at the e-reader maker PocketBook International, is more cautious. From authors to publishers to readers, Russians have been reluctant to get on the e-book bandwagon, he said. Ukraine-based PocketBook dominated the e-reader market in Russia last year, notching 43 percent of sales, according to the SmartMarketing research agency.


“First of all, Russian authors still trust paper more. The majority of readers also still prefer regular books. And, finally, entrepreneurs don’t consider selling digital books a profitable enterprise,” Avramenko said.


He is convinced e-books will eventually command a bigger share of the market but will not predict when.


“In a year or two, the share [of e-books] could be 5 percent, 1.5 percent, or 1 percent, with equal probabilities,” he said.


E-book sales in Europe, however, continue to lag well behind the United States, where digital books now command nearly 20 percent of the market, according to a November article in The Wall Street Journal. The estimated share of e-books in 2011 was only 0.9 percent in Germany and about half a percent in markets such as France and Italy, the article said.


Publishers don’t see the growth of legitimate digital books as a major threat to sales of regular books.


“There is some element of competition, but, at the same time, a printed book and a digital book complement each other very well,” Eksmo’s Knyazeva said. “For instance, digital books are more convenient for traveling, while at home it’s more common to have a bookshelf. And some kinds, like children’s books or gift editions, often work well only in a printed format.”


“[Digital publishing] is just an extra channel for book sales, as long as a convenient system for finding and purchasing a book is in place,” Chebatko said.


The real threat to commercial publishing could come from two directions at once. On one hand, the industry is still in the doldrums after the beating it took during the financial crisis, when book sales fell by one-third from 2008 to 2009 and revenues dropped by one-fifth. There is little sign of recovery so far: in 2011 book sales were down 7.5 percent from the previous year.


Reading is finding it hard to compete with the welter of other leisure activities, especially television and online social networking, Chebatko said. Russians’ propensity to heavy drinking is another factor: “The more people drink, the less they read,” he observed.


It also seems to be true that the more people read on screens rather than paper, the less they spend.


Currently, the digital book market is dominated by illegitimately distributed content. In 2011, sales of e-book readers increased threefold to just under a million devices, which is a much higher figure than the increase in sales of digital books. The conclusion is easy to draw: the lion’s share of users prefer illegitimately downloaded content.


According to Chebatko, the legitimate segment accounts for only 10 percent of the Russian digital book market.


Avramenko said the most popular book downloading sites list about half a million titles. One of the most popular is Flibusta, which claims to operate on the same principle as Wikipedia: all digital books are uploaded by users, and there is no charge for using the “library.” Flibusta claims to have logged more than 4 million unique site visits in the second half of 2011 and 1.1 million in January alone.


Other sources of online texts claim to operate legitimately, although their activities may take place beyond the reach of Russian law. BookMate, registered in the United States, started off as a clearing house for user-generated content then began allowing access to commercial publications. Although the service claims to have agreements with a number of Russian publishers and offers a way for rights holders to request the removal of content, the system is complicated.


At a legitimate online book service, bestsellers may be priced well below the sticker price of the print version. Walter Isaacson’s biography of Steve Jobs sells for around 250 rubles ($8) as an e-book, compared with 650 rubles ($22) for the print version at Moscow bookstores. Meanwhile, most digital books retail at around 60 rubles ($2).


So far Russian publishers have not used the method applied by an alliance of U.S. and European publishers that recently won an injunction against two Irish-domiciled book downloading sites, iFile.it and Library.nu, claiming their owners were earning some $11 million worth of illicit profits annually. Russian industry insiders say digital book piracy can best be fought with technology, such as digital rights management – and a better offering.


“One can and should fight piracy with new content services that are simple and available to an average user,” Avramenko said. PocketBook readers come preloaded with a collection of e-books, and the company is developing its own online store, he said.


“The illegitimate market is several times as big as the legitimate one, and our task, and that of the entire sector, is to create the widest selection [of e-books] for those who are ready to pay for them,” Knyazeva said. “The best protection against piracy is a quality alternative in the legitimate market.”


Traditional publishers could even be encouraging piracy by not providing digital versions of their books, Chebatko said. Some publishers don’t see any economic point to releasing e-books since the legitimate market is so small.


“[Publishers] that don’t want to transfer their books into a digital format and negotiate distribution provide an advantage for pirates,” he said. “When a legitimate digital version of a book is not available, pirates will make one anyway.”

Vladimir Kozlov is a freelance journalist in Moscow.

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