In a recent report from the Association of American Publishers (AAP), eBooks have surpassed traditional printed paperbacks as the most preferred book reading format in the United States. This was evidenced by the bigger sales garnered by eBooks over printed media, earning revenues of up to US$90.3 million dollars in February of 2011 alone – a 202 percent increase from the same period last year.
This trend is not unique in the United States, but rather, it is already widespread, and particularly in China. The transition there from traditional printed books to digital readers is fast gaining ground, estimated by DisplaySearch as reaching 3 million units in 2010. Although the volume is still quite small compared to the world market, the growing number of Chinese manufacturers entering this marketplace is steadily growing.
In a report from China Daily, over 80 percent of Chinese publishing houses are coming out with eBook versions of new and existing publications, with over 60,000 titles already in circulation. There is no denying the tremendous potential of eBooks in the Chinese marketplace. But with this promising market come several issues and challenges, which include pricing issues, copyright protection, piracy and the lack of technical and legal solutions to address these issues.
With the burgeoning eBook industry in China focused on curbing piracy and providing solutions to copyright disputes in 2011, the eBook market will certainly continue to flourish there. With over 50 percent of China’s 400 million internet users accessing the web via the use of smartphones and other mobile devices that are also capable of reading eBooks and other digital media, eBook popularity has nowhere else to go but up.
In a previous survey conducted by the Chinese Academy of Press and Publication for 2010, there were over 613 million eBooks read by Chinese people of ages ranging from 18 to 70. The survey indicated that mobile phones were the most favored eBook reading gadget used by at least 23 percent of the 19,000 respondents. Another 18 percent of these respondents read eBooks books directly from the Internet, 3.9 percent used eBook readers, while 2.6 percent used PDAs or MP4 players.
77 percent of these respondents prefer to read eBooks because of the relative ease and convenience of searching and downloading a particular book online. The survey revealed that 50 percent of eBook readers in China using mobile phones came from rural areas. It also indicated that 1.33 yuan, or approximately $0.2, was the acceptable price for downloading an eBook from the Internet, but up to 54 percent of the recipients would readily pay up to 3.45 yuan to download a good eBook.
Readers would spend an average of 42 minutes a day to read eBooks online or through their readers. These figures are expected to increase as new devices such as tablet PCs and the new generation of eBook readers are made available to the public, bringing with them a more convenient and efficient way of reading information from one’s eBook of choice. On top of that, the introduction of cheaper eBook readers and tablet PCs will make these devices readily available for more and more users.
The blossoming eBook industry in China is racked with several challenges based mainly on piracy and copyright infringement issues. Just recently fifty Chinese authors, the China Written Works Copyright Society and major online publishers such as Shanda Literature Corporation accused Baidu, China’s largest search engine, of violating copyrights and fostering online piracy. Shanda is China’s largest online publisher, owning over 80 percent of online publications in the country, and it operates seven of the leading literature websites in China. Shanda is claiming up to one billion RMB in annual losses due to online piracy.
In similar developments, Dangdang Inc, operator of the largest online bookstore in China and a major advertiser in Baidu, announced it will stop advertising with the search engine amidst clamors of piracy and copyright violations from Chinese authors and other members of the Chinese public. Dangdang has been an avid supporter of anti-piracy policies and these latest intellectual property infringement issues hurled against Baidu forced the company to stop the flow of advertising funds into the site. Dangdang has stated it will now in turn provide financial assistance to parties pursuing Baidu for piracy.
Such tremendous claims from publishers, Chinese authors, advertisers, copyright societies and other major Chinese players in the online publication industry are a clear indication of how serious the threat of online piracy is to this burgeoning eBook industry. The social uproar prompted the government and even China’s Premier Wen Jiabao himself to promise intensified efforts in curtailing intellectual property rights violations not only for eBooks but for other manufactured products as well.
Even before tablet PCs and smartphones came into popularity in China, it was not an uncommon sight to find people hunched over eBook readers or other digital media players, leisurely reading a downloaded book while on the bus, train or any other convenient spot. However, revenue forecasts this year for eBook readers will be far below what was previously expected, signaling the decline or potential end of this electronic device.
This early possible demise of the eBook reader in the Chinese market is being brought about by poor software support, as well as the tremendous competition these devices are getting from tablet PCs and other similar devices that are all capable of running or displaying downloaded eBook files. IT research company Analysys International projects eBook reader sales for this year at only 1.05 million units. This is way below previous sales estimates for these devices as well as that of tablet PCs, which are expected to reach at least 4.5 million units in sales for this year.
The shortage of high-quality e-Book screens is another drawback for the industry from a hardware standpoint. Manufacturing support is now more focused on tablet PC touch screens, making it easier for small and medium enterprises to get tablet PC screens rather than traditional eBook reader screens. Tablet touch screens are very much in demand and market projections have placed sales to increase from 15.4 million units in 2010 to a whopping 136 million units in 2014.
Screens are not the only hardware deficiencies eBook reader manufacturers are faced with. The shifting focus to tablet PCs has also prompted semiconductor manufacturers to shift directions in their chip architecture development as well. These chip manufacturers, however, are planning to develop a dual-purpose chip that can be used for both tablet PCs and eBook readers. With such scenarios facing the market, more than half of Chinese eBook reader manufacturers are being forced to recuperate their reduced profit margins by upgrading their production capabilities and venturing into the hottest device market hitting the industry – tablet PCs. Many companies have already switched production and some are planning to launch their versions of the tablet PC within this year. Only five or six of the biggest players will remain to maintain a niche market for eBook readers in the country.
While Google has lost its hold as the primary search engine in China amidst pressures from the Chinese government, it may renew its bid of expanding its market in China – this time in the eBook market realm. By the second half of this year, Google eBookstore, which is backed by a wide array of more than 4,000 eBook publishers and 300 million eBooks in its arsenal, will expand its global presence and compete in the Chinese eBook market.
To do this, Google will have to restructure its pricing scheme for eBooks to make them more suitable and affordable to the Chinese consumer. Currently, Google eBookstore is selling eBooks priced from US$10 to $15 each. While Google realizes the issues and challenges faced by the Chinese market, it still intends to strive to enter and compete there at the moment. As the largest Internet entity in the world, Google is poised to handle all these challenges and finally break though the Chinese market – and all it needs is a government pass.
During the recent eBook Industry Summit Meeting for 2011, the report on China’s E-Book Industry for this year was released, helping major players analyze the existing problems the industry is currently faced with and come up with necessary solutions to address these issues. The summit also focused on getting support from the government in addressing the needs of the eBook industry, particularly in terms of formulating and implementing more effective regulations.
Considering the tremendous forecasts in tablet PC and smartphone sales in the near future, coupled with similar forecasts for eBook adoption and sales, the future of the eBook industry in China looks very promising indeed. However, the need to address a myriad of challenging issues remains in order to avoid falling into the mistakes that other new media such as MP3s have faced.
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