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

By Paul Biba

Editor’s Note: I’m proud to present this first-hand report from Robin Birtle who is based in Tokyo. His contact info is at the end of the article. PB

The Japanese eBook industry is crowded and awash with activity but is making no progress. In a recent edition of the eBook Journal, Yashio Uemura of Tokyo Denki University laments that the current eBook boom in Japan is in reality a boom in eBook seminars.

This sense of frustration within the industry may seem at odds with annual revenues, as reported by Impress R&D, of $600 million and growth in excess of 20% per year. These impressive numbers belie the fact that comics make up 75% of the revenue and apart from comics and magazines there seems little significant advance in broadening the eBook customer base within Japan.

eBooks had been available in the US in various formats before Amazon launched the Kindle. The pre-Kindle US market for eBooks shared a number of characteristics with the current Japanese market; no large repository of current eBooks, the typical buyer was gadget oriented and no major retailer was selling the concept of eBooks. Amazon addressed all of these issues and then masked the immense complexity of its undertaking with the simple to use Kindle reader. Japan has never had that push. Instead, it was consumer pull that triggered the huge growth of the eComic market and to understand the reason for that we need to look to Japan’s crowded commuter trains.

Around two million people commute into Tokyo by train every day. The busiest stations on the central line bound for Tokyo use two platforms in a single direction to accommodate express trains arriving as frequently as one every two minutes. Train overcrowding is unpleasant and unavoidable. Clearly, commuters are not the only audience for eBooks but extreme environments like this can foster periods of rapid innovation. In 1999, NTT Docomo launched the i-mode mobile phone series which provided access to email and a range of curated web content through a device which could be operated by a squashed passenger with one hand while hanging on to an overhead strap with the other. Commuters immediately took to the service and sought out more content to read on the device.

Manga (Japanese comics) were an obvious category for consumers to ‘pull’ from the publishers for two reasons over and above their inherent popularity. Most importantly, manga collections are typically very bulky – more like carrying a phone directory than a normal magazine. Even on the less crowded return commute from Tokyo it can be extremely difficult to even open one of these tomes. Secondly, some readers may prefer others not to see what they are reading, especially if the manga contains explicit sexual content.

In contrast to manga, paperback novels are published in a compact size known as bunko (pronounced ‘boon-koh’). Bunko dimensions are equivalent to A6 and hence a bunko sized book is noticeably smaller than a US paperback (see figure 1 for a comparison). If a novel requires more space than a single bunko book can accommodate it is published in two or more parts. Physically, then, novels are manageable on a crowded train. With large bookstores at the main commuter stations in central Tokyo it is easy to pick up another novel on the journey home and since booksellers wrap any bunko book with a plain paper cover at the point of sale, it happens that by default a commuter does not disclose his or her reading tastes to other passengers.

So, at the time of the eComic boom there was no pull from consumers of novels and to this day the eBook market has struggled to gain broad acceptance. eBook readers have come and gone but none have gained traction. Currently there are two dedicated readers in the market, the Sony Reader and the biblio Leaf, which is available through the mobile carrier KDDI. These devices have, however, been overshadowed by the iPad, iPhone and a huge variety of Android driven tablets and smart phones.

The patchwork of online eBooks stores which sprung up during the eComic boom have been joined by an array of sites run by traditional booksellers, printers and publishers anxious to maintain a position in post-digital book world. The catalogues of these stores are tiny in comparison to those in the US, with most being in the tens of thousands of titles compared to around a million paid titles for the Kindle or Nook. Even the online store of the Electronic Book Publishers Association of Japan (EBPAJ) lists a total of less than twenty thousand titles from across its 43 member companies. The Papyless store stands out in having nearly 200,000 titles listed although around half of these are English titles sold in cooperation with Overdrive of the US.

A consumer confused by the array of eBooks stores will find preparing to read the eBook is no easier than buying it. Using a PC or Mac rather than a dedicated reader device requires the installation of reader software from a different company to the eBook vendor. A single store often provides different books in different formats. Some reader software only works on Windows and others have pre-requisites such as a particular version of the .NET framework. Users of iPads and iPhones are spared this mayhem if the eBook store provides an app as most of them do. Of course, a separate app is needed for each eBook store and one store even provides two apps – one for Comics and one for regular books. The full effects of Apple’s revised rules related to reader apps have still to be felt. The policy revision has been described in the Japanese media as the ‘Apple Shock’ but how each player will react is still unclear.

What is the push that will move Japanese eBook marketplace into the mainstream? The push will come in the form of a vendor that makes the entire eBook experience drop dead simple and provides a substantial breadth of content that includes current titles and a large back catalogue. That vendor must have the credibility to be believed when it tells mainstream customers that the market is mature enough to enter without the fear of ending up with the eBook equivalent of the wrong type of HD player. Billing is also critical and it would certainly help if that vendor already had a credit card relationship with several million potential eBook buyers.

Six companies are capable of giving Japan this push. The three Japanese companies in this group are Sony, Rakuten and Yahoo! Japan. Sony may have lost some of its shine in recent years but it is still a domestic powerhouse and trusted brand in Japan. Sony has the ability to provide competitive reader devices and simplify the user experience. Rakuten operates the largest online shopping mall in Japan with over 30,000 merchants and 8 million active customers. Finally, Yahoo! Japan has a far greater presence in Japan than its namesake has in the US. Yahoo! Japan dominates in auctions and leads in search. Think of it as the Japanese equivalent of a combined eBay, Google and yahoo.com.

On June 13th, Sony and Rakuten announced, as part of a four company group, that they would investigate enabling interoperability between their services and devices. The other two companies in the group are Panasonic and Kinokuniya, a major bookseller with physical stores and online sales. Furthermore, these companies will examine the use of Booklista infrastructure to facilitate such interoperability. Booklista is a company that was set up in 2010 to provide infrastructure for eBook stores and already runs the online eBook stores for the Sony Reader and the biblio Leaf reader. Booklista is owned jointly by Sony, KDDI, Toppan Printing and Asahi Newspaper.

The June 13th announcement offers hope for a better experience for Japanese eBook consumers but it is not the forerunner of a push which would herald a move into the mainstream. To truly push the Japanese marketplace, Sony or Rakuten would need to do the opposite of what has been announced. They would need to focus on building a compelling eBook offering regardless of the legacy of the current marketplace and the actions of their competitors. Interoperability at any level will lead to some degree of compromise in offering not to mention the diversion of management and technical resources.

The third Japanese company, Yahoo! Japan, has not shown any indication that it will enter the eBook market, which leaves three foreign companies as potential providers of the needed push. Not surprisingly, these are Apple, Amazon and Google.

Google has no eBook presence in Japan right now and since the Google eBooks apps for iOS and Android are not available in Japan it is difficult for a local company to even experiment with Google. Although Google’s search is popular in Japan, the company lacks a billing relationship with local consumers and it is difficult to imagine Google catching up with Apple or Amazon.

Neither Apple nor Amazon have a localized eBook offering in Japan but both have established billing relationships with Japanese customers through iTunes and amazon.co.jp respectively.

Amazon customers can have a Kindle shipped to Japan and buy books through the US website. Some books are unavailable in Japan but it is otherwise a normal Kindle experience for English language books. Amazon does not allow submissions of Japanese language content for the Kindle and has not announced any content deals with local publishers. If Amazon releases a Kindle or tablet that fully supports Japanese writing and it can put in place the necessary content deals it will be well placed to replicate its US success.

Apple can already claim to support Japanese content albeit with some serious limitations regarding Japanese text handling. Despite these limitations there is already one publisher, Jazz Japan, that sells video enhanced back issues of its print magazine for the iOS devices. Unfortunately, when reading Jazz Japan it is noticeable that the single Japanese font included with iBooks is not well suited to long text passages. Furthermore, since it is not yet possible to sell in Japan through the iBookstore, it is necessary to purchase issues of the magazine through the Jazz Japan website and manually add them to iTunes.

Apple participated in the development of the ePub 3.0 content standard that addresses the key requirements for displaying Japanese text and is clearly capable of releasing a version of iBooks that fully supports Japanese content. The key unknowns for Apple, then, are the speed with which it can open the iBookstore in Japan for purchases and the time it needs to negotiate with a broad range of Japanese publishers.

Apple or Amazon? Fortunately, it doesn’t have to be either-or. I expect we will see both companies start to push the Japanese eBook market during the first half of 2012.

Robin Birtle is the CEO of Sakkam KK, a Tokyo based technology company. Contact Robin at robin dot birtle at sakkam dot com. You can find the english version of Sakkam’s website here

A bunko size novel compared to a standard US paperback.

The Japanese eBook market seen through Apps

①　Four leading comic focused apps. Renta!, Book☆Walker, eBookJapan and honto Comic. Renta! is the sister site of Papyless and provides comics on a rental basis. (Papyless itself does not have an iOS app). Book☆Walker is primarily a vehicle for content from the Kakugawa group. eBookJapan is a content partner of Rakuten. honto Comic and honto Book form the online eBook store of 2D facto, a company jointly owned by Dai Nippon Printing, NTT Docomo and Maruzen Chi Holdings.

②　Four leading general book apps. Paburi, Voyager Books, shinanobook and honto Book. Paburi is the eBook store of the Electronic Book Publishers Association of Japan. Voyager Japan created the .book format which is widely used in the Japanese market and Voyager Books is a mall style site with separate eBook stores within it. shinanobook is the eBook store of the Shinano printing group.

③　Four leading magazine apps. Fujisan, Viewn, Magastore and Zinio. Fujisan is a long established distributor of print and digital magazines. Viewn is a subsidiary of Softbank that was set up in 2010 to aggregate magazine content. Magastore is a collaboration between advertising giant Dentsu and the technology and design firm YAPPA. Zinio is the only non-Japanese organization fully operational in the Japanese eBook market.

④　Four non-apps. None of these are apps but are illustrative of the structure of the Japanese market. The first three are links to the online stores for that provide content for the Sony Reader, the biblio Leaf and the Sharp Galapagos series of mobile phones. Sharp’s site is a tie-up with Tsutaya, a leading retail and rental chain. The fourth link is to Google eBooks since the app itself is not available in Japan.

⑤　Competition meets Cooperation. The Sony and biblio Leaf (from KDDI) readers are competitive products but both of their online stores are run by Booklista, an organization jointly owned by Sony, KDDI, Toppan Printing and Asahi Newspaper.

⑥　Interoperability. Sony and Kinokuniya have jointly announced with Panasonic and Rakuten their intention to investigate providing interoperable eBook services.