Overseas attendees at this week’s Tokyo International Book Fair can leave their phrase books at home since they will only need the line “atsui desu ne?”, the ubiquitous Summer greeting that means “It’s really hot, isn’t it?”. Temperatures in the high 80s will be compounded by crushing humidity that can stifle even the liveliest of debates. The eBook International Session boasts three respected executives for its speakers but these speakers may find the session’s agenda is more of a hindrance to debate than the weather at Tokyo Big Sight.

The session blurb promises answers to questions such as ‘retail price determination rights, the outlook of DRM, synergy of printed and digital books and promotion of e-books’. On the face of it these are reasonable questions for an eBook conference and they could easily take up the entire two-hour session. Dig deeper though, and it is clear that each point is either a fait accompli or unrelated to the real issues facing the publishing industry in Japan.

Like one of Grimm’s Fairy Tales, fixing the retail price of books is a story that is repeated throughout the World with each country adding its own twist. Publishers, by and large, want the right to fix prices and economists want retailers to be free to discount as they see fit. In Japan, the publishers play to type and want to extend their price fixing rights from print to digital. These publishers have sufficient clout to make this purely an academic question. Independent eBook sellers in Japan have little incentive to take on the publishers and we should expect agreements that allow the publishers to determine eBook prices. A survey of the prices of bestselling books across Japanese eBookstores suggests that, whether formalized or not, that is the current practice today. A recent announcement by three publishing giants, Shinchosha, Kodansha and Gakken, gives us insight into what the actual prices will be. The three companies will set prices at around 70 to 80 percent of the print price and we should expect other large publishers to follow suit.

The battle lines over digital rights management (DRM) are similarly drawn. The publishers and suppliers of DRM solutions, who view their approach as the only true way to prevent content theft, line up against the consumer rights contingent who point out that DRM does not stop the pirates but does hurt the customer. The recent announcement that the Pottermore site will sell the Harry Potter eBooks sans DRM is a fillip for the consumer side but the publishers can respond that four leading Japanese companies are already investigating interoperability of Japanese eBookstores to ease the consumer experience. Again, debate is somewhat academic. DRM is a fact of the current eBook market in Japan and this will not change, if at all, for many years.

Interestingly, Sony is both the technology partner for Pottermore and one of the four companies investigating eBookstore interoperability in Japan. One of the speakers at the e-Book International Session, Fujio Noguchi, is from Sony and may be able to provide some clarity as to Sony’s position on DRM for eBooks.

The synergy between printed and digital books and the promotion of eBooks are worthy topics but run the risk of framing publishing as an industry in isolation. Far from being isolated, the publishing industry is just one of many players in a zero sum game that takes place every single day for the attention and budget of Japanese consumers. The key issue facing the industry is how to out-innovate the other players in this zero sum game.

Who will innovate in the Japanese eBook market and what will impede them?

The key impediment to the innovators will be a tendency to view the eBook market merely as an extension of the print publishing market. Such a tendency will impose a particular mindset on how the market should develop at a time when even the very notion of what is a book should be challenged. Books as we know them will never go away but not every book needs to be written with the expectation that it will be consumed linearly in a single or small number of sittings. During my wait at a checkout line I’ll not launch the reader app on my smartphone because books are not written to be consumed in one-minute chunks. Instead, I’ll play a game or read a newsfeed. Now, if my Sony Reader were to send one minute’s reading worth of backstory to my phone based on what I had last read, an author in my reading list would be able to vie for my slots of micro-downtime. These snippets may be tangential to my core reading experience but, later, when I actually have more time will influence whether I pick up an eReader or the remote control.

The major publishers look set to control eBook pricing as they do that of printed material. Given that, will we see innovation along the lines of the Amazon 99c promotion of Lady Gaga’s Born This Way or the Barnes & Nobles Angry Birds promotion which is driving people to physical stores? A few publishers will be willing to experiment with daily changes to eBook prices but will hit the practical problems associated with propagating price changes to the disparate systems of ten or more major eBook sellers (Kodansha had to put in place arrangements with 14 eBookstores for its Summer ‘natsuden’ eBook campaign). Some smart publishers will work through these problems but the smartest ones will also study the pricing experiments in the music and games industry. At a recent games industry seminar, a Bandai executive described the model of a single download fee for a game app as a sure way to lose money. The ‘freemium’ alternative, though, of free download plus in-app purchase provides a huge range of ARP (average revenue per person) from zero to megabucks. The result is an appropriate price point for every potential player and higher takings overall for the game publisher. eBook publishers must similarly understand and develop new pricing models. Making the first 10% of an eBook available as a free sample does not constitute a new pricing model.

In the eBook market who will be the innovators and what will they do? In the print world, the mainstream publishers are the de facto gatekeepers and will remain so but in the eBook market nobody needs permission to participate. There are five types of innovator that are either already present or soon to be present in the Japanese eBook market.

The most obvious type of innovator is the self-publisher. To date most self-publishers are authors that have not succeeded with the traditional route and have turned to self-publishing as a last resort. Increasingly we’ll see new authors choose to bypass agents and use the time saved in pursuing a publishing deal to market directly through social networks. Agents and publishers still offer immense value to these authors and once successful, most will sign with an agent and become part of the mainstream publishing world.

The second type of innovator is the solo superstar. J.K. Rowling, with her Pottermore site, is the only example we can expect to see of this for a long time. The impact of Pottermore on Japan will be limited to any lessons that emerge from the release of the Harry Potter books without DRM.

The least welcome innovators will be the eBook spammers. The spammers will generate huge numbers of low quality books often using what is known as Private Label Rights, or PLR, content. The sheer volume of these books in an eBookstore can reduce the credibility of the store and make it hard for a consumer to find worthwhile content. This will lead to an arms race between spammers and eBookstores but will also create the need for the fourth type of innovator, the discovery specialist. The discovery specialists will plug into a person’s Internet activity, buying history and stated interests to come up with recommendations that are relevant and spam-free. Their services will be the automated equivalent of asking for recommendations on today’s message boards and getting a prompt answer. (The message boards of tomorrow will be less valuable since they will be overrun by self-publishers promoting their own works).

The fifth and potentially most disruptive type of innovator will develop offerings that were previously impractical due to the high cost of entering the print market and the lack of integration between print and digital media. Here the eBook will be viewed as part of a broader digital offering. These ‘cross digital’ publishers will experiment aggressively with content combinations and pricing models and use tools that are commonplace in the Internet industry to determine what approach works best. The cross digital publishers will view other industries, not printed books, as their natural competitors and will form some unholy alliances with these competitors along the way to developing new offerings. Consider by way of example the Jack Reacher books. Written by Lee Child, this series of fifteen books has been immensely popular in print and digital and, as a consequence, Lee Child is one of only seven authors to have sold over a million books on the Kindle. In Japan, the success of the series has been somewhat muted with translation rights to only four of the series being sold. Of the translated books, none is available as an eBook and the first, Killing Floor, is now out of print. Would a company be interested in reinvigorating this franchise in Japan in a purely eBook form? When the Japanese translation of Killing Floor was published, the only bonus material that came with it was a small bookmark printed with descriptions of each character. The cross digital publisher would certainly develop a complementary micro-site and plan a viral marketing campaign. The eBooks themselves would be enhanced in a number of ways, the most of obvious of which would be Japanese explanations of some of the English used in the original text. This innovator may look to tie up with one of the national chains of English language schools but would probably give priority to talks with Paramount Pictures. Paramount have bought the movie rights to all of the Reacher books and would presumably see value in the Reacher franchise booming in Japan prior to any movies being released here. Real life innovations will differ in detail but the principle will remain the same; the only constraint will be the imagination of the innovator.

At this year’s e-Book Expo in Tokyo many of us will be keenly watching the large, traditional print publishers. These publishers have, to date, focused on working with all participants in the broader publishing industry to ensure the eBook market simply functions at all. Most innovations, though, are not industry-wide and must be driven by individual companies or even single departments within a company. The major publishers in Japan are well resourced, incredibly well connected and have very capable staff. They have done the groundwork to allow new works to be made available and sold in a digital format. It is their time to move beyond the procedural aspects of eBook publishing and truly innovate. Will they?

Robin Birtle is the CEO of Sakkam KK, a Tokyo based technology company. Contact Robin at robin dot birtle at sakkam dot com or through Twitter ID @birtle.

Previously: “Waiting for a Push: the Japanese eBook market in 2011 by Robin Birtle”

(Photo: MIKI Yoshihito)


  1. “if my Sony Reader were to send one minute’s reading worth of backstory to my phone based on what I had last read, an author in my reading list would be able to vie for my slots of micro-downtime.” So if the author has failed to adequately support their story in the book I bought, I should pay them some more to remedy their failure? No thanks. But otherwise a good overview.

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