During the Beijing Book Fair, someone asked me, where is the exhibition area for e-books? I thought for a while and told him that there is no e-book exhibition area this year, but there are many live broadcast stations.
This is the current state of e-books.
In the year 2022, or even in the past two or three years, the domestic e-book business has had a very difficult time (the e-books in this article only refer to the ones with ISBNs, excluding online literature).
The three major e-book platforms based on e-commerce have chosen the strategy of reducing business or gradually exiting the market in 2022. Dangdang’s digital business team has been reduced from more than 40 people at its peak in the past two years to less than 10 people today. The business is still there but basically let loose. Kindle's WeChat official account still maintains high-quality updates, but it is said that this official account is outsourced. The business operation has obviously slowed down its pace, and it is clear that it will be terminated in June 2023. Kindle e-book store will be closed and its operations in the Chinese market are coming to an end. JD.com’s e-book has adjusted its organizational structure and business direction and continues releasing new titles until early 2023. The relevant person in charge said, "JD e-books have turned losses into profits, and daily active users and sales are increasing." The other two e-book platforms, iReader and China Literature, are not having a good time. iReading Technology announced on January 30, 2023, that the net profit attributable to parent is expected to be 52.4 million to 62.9 million yuan in 2022, a year-on-year decrease of 58.24%- 65.21%. Net profit after nonrecurring items are expected to be 43.2 million to 51.85 million yuan, a year-on-year decrease of 65.69% to 71.41%. It is said the decrease is due to the spending on strategic transformation, free reading, marketing and promotion, organizational construction, and technological infrastructure.
China Literature Group achieved revenue of 4.087 billion yuan in the first half of 2022, a year-on-year decrease of 5.9%， with 232 million yuan profit, down 78.5% year-on-year. China Literature has gradually canceled the e-book supplier subsidy policy that has lasted for several years since the beginning of 2022. Although it internally stated that it is not all cancellations, but "subsidies for the best", there is no difference from the complete cessation of subsidies. Subsidized small and medium-sized suppliers are complaining. At the same time, WeChat Reading is operated independently from the overall content procurement framework of China Literature Group. For China Literature Group, the traffic and resources have been reduced by a level in disguise.
"Digital business can be said to face comprehensive downward pressure this year." Zou Jichuan, deputy general manager of Booky New Media, said in an interview. Although the business of the above-mentioned platforms has come to a standstill, publishers and other platforms all hope to undertake this part of the business market and traffic, but so far, no one has done so. "The vacated e-book/audiobook market left by the withdrawal of a few large platforms has not been filled up by others as imagined. The scale of readership and their time has not increased significantly." The “advance+minimum guarantee", which kept the income of content providers, is seriously affected and becoming fewer as the funds of the reading platforms are tightened. In the words of a director of a reading platform, "We have been subsidizing for several years, no matter from the perspective of the industry or the market, we have done our best."
With a number of high-quality digital copyrights from writers such as Gabriel García Márquez, Eileen Chang, and Lu Yao, Thinkingdom made a lucrative business and kept the discourse power among major digital platforms in the past few years. From the first three quarters of 2022, the revenue for its digital business increased by 4.21%. However, due to the year-on-year increase in copyright costs, the operating cost growth has also reached 5.14%, which gave the gross profit margin of digital business -0.34 %.
"The sales of e-books continues weak growth in recent years. The income of most platforms is flat or even declining. In the middle of this year, Amazon will stop Kindle e-bookstore in China, which is also a result of reading content diversification of consumers." Zhuang Hongquan, vice president of Tsinghua University Press, believes that the decline in digital business represented by e-books is an inevitable trend. The sales of audio and video products, which have been booming in the past two years, have also slowed down gradually following the rise of short-form video and live broadcasting.
Xiron Group terminated its listing process in 2022. According to the company’s previously submitted prospectus documents, in the three years from 2018 to 2020, the revenue from digital reading has continued to decline, from an annual income of 84 million yuan to 72 million yuan. However, if we consider the impact of the pandemic over the last three years, the data shall not be optimistic.
A digital business professional who just resigned from a large publishing group said that the KPIs set by the publishing house have been getting higher and higher in the past two years, but the market has become worse and worse. Although a number of so-called big titles and bestsellers are published, at the end of the year it is still difficult to achieve the expected target when it comes to digital business.
In addition, many publishing firms told the interviewer that the e-book business was not doing well this year, and the results were lackluster, and finally declined to discuss further.
Dookbook could be one of the few companies with faster digital growth in 2022. Its financial report for the first three-quarters of 2022 shows that the digital content sector increased by 34.01% year-on-year from January to September 2022, which was contributed by signing famous writer’s copyright, publishing e-book/audiobook version of bestsellers or hit films and TV, and adding physical books sale links on its e-book/audiobook platforms. But even so, Hua Nan, owner of Dookbook, still said in an interview with the media that in the past five or six years, Dookbook has been in the leading position in the field of digital publishing, but for the company, physical books will remain the core of the core business, with the digital sector coming after it. The future of the former is predictable, therefore Dookbook is firmly operating around physical books.
In December 2022, COL Digital Publishing Group Co., Ltd., the first domestic public digital publishing company, announced that "Digital Publishing" will be removed from the company's name "in order to fully reflect the company's industrial layout and the actual situation, accurately reflect the company's future strategic development direction, and further exert the brand effect."
The third quarterly report of COL in 2022 shows that the company’s revenue in the first three quarters from digital reading and digital publishing based on e-books was 909 million yuan, and the net loss attributable to parent was 123 million yuan, a year-on-year decrease of 314.5%. The aura of digital publishing is not as dazzling as it used to be, and it really no longer fits the current COL’s active expansion of "IP cultivation and derivative development, intellectual property protection and metaverse exploration".
Whether this change is a positive adjustment of e-books or just leaving it at that is hard to say.
Gu Qing, Director of the Commercial Press, said in an interview with Bookdao that the success of the e-book business of traditional publishing houses depends on two criteria: first, the business must become the main income of the publishing house; second, it must able to establish branding outside the publishing circle, i.e., transforming from a business to an industry.
Yet neither of the above criteria is accomplished in the e-book business.
Since the start of domestic e-books around 2010, the situation has not fundamentally changed after more than ten years, and the rhetoric of "overturning the traditional publishing industry" seems to be still ringing in my ears.
The proportion of e-book business in the revenue of publishing firms has been low for a long time. The "2021 China Digital Reading Report" released by China Audio-Video and Digital Publishing Association in 2022 shows that the overall revenue of domestic digital reading in that year was 41.57 billion yuan, of which 30.25 billion yuan was for mass reading. This further splits into subscriptions, advertisement, and copyright， representing a market share of 18.17%, 47.73%, and 34.10% respectively. The mass reading mentioned here includes published e-books and online literature. Compared with online literature, the e-book business mentioned in this article is only a part of subscription revenue. In advertising and copyright revenue, the figures are not worth mentioning.
In publishing firms, the proportion of e-book revenue is not much either.
In 2022, Booky New Media's digital product accounts for about 8% of the company's total revenue, and this also includes revenue from e-books, audiobooks, and IP operations. For CITIC Publishing Group, Thinkingdom, Xiron, and other publishing firms, the share of the revenue from digital business accounts for 8 to 10%. In some professional publishers, this ratio may be even lower. For example, Tsinghua University Press’ digital business, which includes e-book retail, e-book database, audio and video products, digital teaching products, and knowledge service platforms, etc, only accounts for 2% of the total revenue. For China Machine Press, the accumulated revenue in digital publishing in the past three years is about 15 million yuan, including 15,000 e-book titles, over 600 video courses, and digital printing. But that is just a tiny fraction of its total revenue.
For major reading platforms such as iReading and China Literature, their main income comes from online literature. The proportion of e-book revenue has been fluctuating around 10%. Compared with each other, it is very obvious which is more important. New digital reading platforms such as Fanqie Novel and Qimao Novel simply gave up traditional e-books and specialized in online literature.
Kindle’s e-book business accounts for over 50% of the revenue of many publishing firms. With June 30, 2023, approaching, the withdrawal of Kindle, and withdrawals from some platforms in 2022 is going to leave a big hole of 300 million yuan market. The chance of filling it up is yet to be seen. The subsidy from China Literature has become a thing of the past. WeChat Reading, which has been in the limelight for the past two years, has separated itself from the framework of China Literature to operate independently, but the effect is not yet known... Dedao was estimated by many publishing firms to undertake part of the traffic. Its e-book revenue in the first half of 2021 was close to 20 million yuan. Given the market situation in the past two years, it is almost impossible to double it.
The bigger challenge to the e-book industry lies in who is still reading e-books.
Before the rise of the Internet and the mobile Internet, books became one of the most important channels and ways for readers to acquire knowledge and information, and readers used to spend trunk of time spent on books. However, the Internet and mobile Internet provide readers with more diversified ways to obtain information and cut users' time into fragments. The role of books and their successor e-books for readers has gradually changed from rigid demand to accompanying, and gradually lost the privileged time rights from readers, and had to compete with various videos, audios, live broadcasts, games, etc. for a limited time.
In April 2022, the results of the "Nineteenth National Reading Survey" released by the China Press and Publication Research Institute showed that the contact rate of digital reading methods (PCs, mobile phones, e-readers, Pads, etc.) in 2021 was 79.6%, an increase of 0.2% from 2020. However, the 50th "Statistical Report on China's Internet Development Status" released by the China Internet Network Information Center shows that as of June 2022, the number of short-form video users in China has grown the most significantly, reaching 962 million, an increase of 28.05 million from December 2021, accounting for 91.5% of the total Internet users.
"The rapid diversion of traffic from the text-based WeChat public account, bypassing audio form, to the video has also kept publishers busy. Not only e-books but the comprehensive operation of IP has also been affected by economic fluctuations. Impact, such as media traffic-based business, advertising revenue are greatly affected downward in 2022", Zou Jichuan said.
Digital platform iReader Technology stated at the financial report analysis meeting for the first three quarters of 2022 that the loss in the financial report was mainly due to the increase in marketing and promotion, and the continuous organizational construction and technical infrastructure. The so-called "increase in marketing and promotion" here is to buy traffic. Under the pressure of many online products continuing to take up consumers' fragmented time and free content, even the top digital reading platforms have to embark on the road of buying traffic.
The publishing industry once worried that the rise of e-books would pose a huge threat to physical book publishing, but now it is found that both have entered a downward trend.
The e-book business once had its prime.
Today's Migu Reading, formerly known as China Mobile's mobile phone reading base, later developed into a mobile phone reading brand "AND", is the big brother of the e-book industry. In early 2009, it was initiated in China Mobile Zhejiang Branch. In May 2010, the mobile reading business was officially launched. With strong channel advantages, it continuously occupied the top spot in mobile reading from 2010 to 2014. From business bases to professional companies, as the e-reading distribution channel of China's largest telecom operator, Migu Reading has cultivated the reading habits of hundreds of millions of users, and the number of effective monthly active users in all scenarios has reached 110 million. At that time, the figure basically meant an absolute monopoly. In 2010, the average monthly income of the reading base exceeded 100 million yuan. In 2012, China Mobile’s income from mobile phone reading information fees was 2.5 billion yuan, and the average daily web visits reached 580 million times. China Unicom’s Wo Reading achieved an information revenue of 570 million yuan. By the end of 2012, the number of e-surfing readers of China Telecom had reached 105 million, the volume of content in storage had reached 221,000, and the revenue had reached 570 million yuan.
That was also the beginning of the explosion of the e-book business. As long as e-books are successfully included in the monthly subscription products of the reading base, the income will gradually increase, and a book can earn tens of thousands of yuan a month. The copyright holders ranked in the top 10 all had monthly incomes of several million yuan or even more than ten million yuan. Shanda Literature, which later became the overlord of online literature, was the largest content provider in the reading base at that time, and its monthly income exceeded 10 million yuan at its peak. CITIC Publishing Group, Posts &Telecom Press, COL, and Everight Book all got the first pot of gold in e-books at that time. The more than one-year income distributed by the reading base to some publishing units is twice its own digital publishing income. In August 2011, the 300 literary works permitted by the Writers Publishing House to the base earned about 2 million yuan from the mobile phone reading base in one year, and the Writers Publishing House paid 1 million yuan in digital royalties to its writers instead. There are more than 10 authors whose income in the mobile reading base is higher than their royalties from traditional publishing. This incident once caused great shock to writers and publishers: e-books can also get so much money! There are even rumors that some leading copyright holders have set up branches in Hangzhou, where the reading base is located, to be responsible for the e-book business, and the annual business cost in Hangzhou amounts to several million yuan. At that time, the copyright holders of e-books had a very high degree of cooperation with the reading base: they made ocf files by themselves or outsourced companies, sorted out cumbersome authorization documents according to the requirements of the base, and modified the document text word by word according to the background -- just to squeeze into monthly subscription products. There are even "brokers" in the market who guide and assist access to base reading and monthly subscription services.
The reading base has really opened up the market source of e-books. Today, these data seem to be out of reach. After all, Kindle, the platform with the highest e-book revenue, has an overall revenue of only 300 million yuan a year. It is a pity that with the adjustment of the operator's business model after the reading base became Migu Digital Media, this business has gone to another extreme. The e-book business has also gone downhill from the climax at the beginning.
Later, e-readers represented by Amazon appeared, and e-book businesses on e-commerce platforms such as Dangdang, Jingdong Books, Suning Books, Taobao e-books (Taohua.com), and Winxuan.com were launched, as well as the addition of Internet platforms such as Baidu Reading, Fanshu.com, Duokan, Tangcha has continued the life of the e-book business: free source of content, a huge amount of open resources, and considerable income expectations. In the early stage of the business, the platform providers are like throwing money to publishers and pushing them forward on the road of e-books: paying in advance, giving minimum guarantee, and tilting resources. Publishing firms have begun to increase the proportion of e-book businesses, and specially arrange manpower to be responsible for this section. Some of the business is in the distribution department, some in the marketing department, and some in the editor's office. But just as Gu Qing said earlier, although a well-performed publisher has an annual income of tens of millions, most of the business income within the organization can only hover around 10%, and it is still unstable. So which part of traditional publishing should the e-book business be considered, and which sector should the income be settled into? No one can say it clearly.
This is the embarrassment of the positioning and income of e-books. If you count from the golden age in 2009, in the past decade or so, e-books are more often than not held hostage by the channel to promote and develop all just for the channel's demands, rather than e-books and even the publishing industry's own demands.
At the telecom operator stage, e-books are a module of their many cash flow businesses. For example, China Mobile has nine bases including a music base, video base, and animation base. Although the mobile phone reading business has considerable income for the publishing industry, it is insignificant when considered in the overall income of operators. Operators don't understand the content and don't publish it. They just want to use content to earn more money from mobile phone users. Reading is just a branch of their entire business ecology, and the content itself is not important. Given the natural advantages of operators as a channel, the publishing industry has no right to speak with them: fixed pricing power, and strict and abnormal content reviews.
At the stage of the Internet and e-commerce platforms, the positioning and publicity of e-books have changed again: a tool for luring traffic. With cheap pricing, low cost, wide variety, and zero logistics, e-books have obvious advantages in attracting new customers. An extreme example is that in 2015, Suning announced that all e-books on their site are free. Users only need to use the officially designated payment tool to pay 0.01 yuan, and they can read the e-books all for free. Copyright fees were paid to publishers in the form of subsidies. This business has attracted millions of new users to Suning's payment tool in just a few months. The copyright fee subsidized to the publishing firms is said to be more than 40 million yuan. The cost of attracting new customers is less than 10 yuan per user, which is a very cost-effective business. And the word "free" has a great marketing effect. Later, Dangdang, JD.com, Taobao, and other online e-book platforms all embarked on this path. The purpose of attracting new users is the same, the only difference is to use which business.
For those large companies that do not lack traffic, e-books have become one of their ecological entrances. Such as WeChat, the most important attribute of e-books is actually just a non-important part of the ecological closed loop. They are traffic masters, ecological masters, and market bosses, and they don’t expect every business to become a cash machine. All businesses and choices are to enrich their own ecosystem, so as to get the most return out of the best choices. Therefore, in the process of casting the net in an all-round way, they can ignore the cost, regardless of life and death, and may even destroy the inherent ecology of some industries. But unfortunately, although e-books have become an ecological link, they are definitely not the best choice.
If it is said that a few years ago, some people were worried that the development of e-books would affect the distribution of physical books, so they were hesitant to increase the number of e-books. So now, no one should worry about this problem anymore. Because the development of e-books for more than a decade has proved that they cannot disrupt the publishing industry at all, let alone the possibility of revolution. The publishing industry is a content industry, but at least from the current e-book market, the latter has given full play to its tool value and lost its content capabilities.
At the 2011 China E-book Industry Summit, Cheng Sanguo, the founder of Bookdao.com and a veteran in the publishing industry at the time, proposed three stages and forms of e-book development: e-book 1.0 is the digitization of physical books, and e-book 2.0 refers to the native e-book published on the Internet, e-book 3.0 is an enhanced e-book that includes interactions and games. In the blink of an eye, 12 years have passed. When it comes to e-books, it is still in the 1.0 stage. Paper-electronic synchronization is still a term that is particularly valued and often mentioned by publishing firms and e-book platforms.
E-books have never been separated from traditional publishing, and even cannot be separated from traditional publishing. Because the source of their content is still in traditional publishing, what they do is make increments and fill in the gaps in the traditional publishing plate. The positioning of e-books by publishing firms is to digitize their own physical books and then benefit from the platform under the situation that everyone has a share of it. Some publishing firms have simpler requirements for e-books: we don’t want to do it, but if we don’t, and there are a lot of pirated copies, so let’s do it, at least to offset the influence of piracy.
The e-book business belongs to the category of Internet publishing in industry management. In the relevant regulations, "original digital works such as intellectual and ideological texts, pictures, maps, games, cartoons, audio and video reading materials in the fields of literature, arts, and sciences" and "compared with published books, newspapers, periodicals, digital works with consistent content such as audio-visual products and electronic publications" all fall within the scope of Internet publishing. Since the promulgation of the Internet publishing license, all publishing firms that can apply have applied for a brand for themselves, but the biggest use of this brand is currently reflected in the game version number, which is not much different from the traditional "selling book number". The e-book that was originally the most suitable for carrying business has become a tasteless one: e-books that already have a publication ISBN does not require an Internet publishing license; pure e-books that do not have a publication ISBN, sorry, most of the publishing houses are not involved. Previously, CITIC Publishing Group once launched a series of pure e-books "Chinese Stories" series on the Kindle e-book platform, and Zhejiang Digital Media once launched a series of pure e-books through cooperation with some institutions, but such cases are few and far between.
I once chatted with a publishing house’s digital unit a few years ago about the e-book plan. He said that he wanted to create a new digital publishing chain, which was different from the traditional book publishing path. From topic selection to online distribution of works, the digital business unit is done independently. But unfortunately, such an idea is too idealistic for a leading publishing organization. Later, he became a mere figurehead, resigned, and went to a new company, where he realized his idea through "content production + audio IP development".
If an e-book cannot achieve its own content attributes, it can only become a tool that is highly replaceable and may be replaced by new technologies and products at any time. Somewhat similar to e-books, there are audio markets and online literature.
The domestic audio market did not really enter the payment stage, until the rise of the knowledge payment business in 2016. The previous audio business relied more on "purchasing copyright - recording audio - free listening - accumulating users and monetizing", but the paid-for-knowledge products that began to emerge in 2016 added more content creation links, whether it is content reprocessing, or still the subjective interpretation of the anchor, which has already deviated from the form of a book, and it is enough to attract users to pay. Later, Himalaya FM, the leading audio company, created its own original literature website and its own anchor brokerage business and strengthened content strategy cooperation with more original content platforms. From content to anchor production to distribution, it formed its own unique audio production chain, which finally ushered in its first phased profit since its establishment at the end of 2022.
The pattern of online literature in the territory of digital reading is increasing year by year. From the two leading platforms mentioned above, we can see that content subscription, advertising revenue, and copyright operation constitute the overall revenue, accounting for nearly 90% of the revenue, and e-books are only about 10%. The origin of online literature is the original content so that it can form its own IP ecology in the later stage, and realize the maximum value of content through film and television adaptation, game development, animation authorization, etc. Today, no matter which direction the cultural industry is in, it is already inseparable from the participation of online literature content.
E-books are just the added value of physical books from beginning to end. They have been working hard to replace physical books, but they have been relying on the content production of physical books to barely maintain their own survival and development. But now e-books have touched their own ceiling, and physical books have more tools and methods to enhance their value and added value.
In 2022, Miao Lijin, vice president of China Machine Press, wrote an article saying that the digital business of the publishing house has achieved new results, from 1.0 (turning paper into electricity) to 2.0 (synchronization of paper and electricity, digitization and knowledge of content resources, diverse forms of expression, visualization and intelligent production process), 3.0 (in-depth mining of knowledge services, intelligence, data-centric, and deep industrial convergent development) and even a higher stage, "accelerate convergent development, effectively integrate resources, plan and develop a batch of double-effect excellent digital products and knowledge service projects, and initially build a digital business model that is adaptable to various industries."
Ten years have passed, and the three stages of e-books have not changed much conceptually, but there is more modern vocabulary in terms of expressions, and more carriers and possibilities in a business presentation. Can we have a bolder guess: the e-books that are released simultaneously with paper and electronics may not be the e-books we want?
The e-books that the industry was worried about that might impact or even subvert the publishing industry were not a product of the digitization of physical books, but a new business model and chain that might run parallel to the traditional book business. Now publishers no longer worry about e-books, because e-books are just a small branch in the development process of physical books, far from reaching the pattern of "usurpation".
Overseas, the situation of e-books is also declining: in 2021, the American Publishers Association report shows that e-book revenue will drop again to USD 1.97 billion, a decrease of 5.0%. Nielsen BookScan statistics showed that e-book sales in the UK also fell to the lowest level in a decade in 2021.
If e-books continue to go on the road of paper-to-electronic transformation, they cannot build their own industrial chain from the content side, and the ending will only become increasingly bleak. Today is the gradual shrinking or withdrawal of channels, and tomorrow may be a farewell.