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Thursday, July 5, 2012

Battle is joined to win new e-book market


In highly literate and gadget-loving Japan, e-books are curiously rare — but the battle for the largely untapped and potentially lucrative market is about to commence.

News photo
Riding the wave: Rakuten has high hopes for its Kobo Touch e-reader, due for release later this month. AFP-JIJI

When e-commerce giant Rakuten unleashes its Kobo Touch e-reader later this month, it will fire the opening shots in the war for new literary territory, hoping for a slice of the ¥1.8 trillion that Japanese spend on books every year.

The Kobo will be joined later in the year by a Japanese version of the Kindle, Amazon's world-leading e-reader, pitting two of the planet's biggest names in e-books against each other.

At around ¥8,000 for either device — a price in line with Amazon's offering in the U.S. — both firms will be looking to lock customers in to their format with their eyes on the content prize, where the real money is.

"I want to start the reading revolution in Japan and in the world with Kobo," Rakuten Chief Executive Hiroshi Mikitani said Monday as he announced the July 19 launch.

"Kobo is a global device, a global platform, which allows anyone in the world to enjoy a variety of content."

Material in Japanese will initially be limited to about 30,000 titles, but Rakuten said it is aiming to grow that figure to about 1.5 million over the coming years.

Japan's existing e-book market is largely a niche segment, mostly comprising manga for cellphones.

Only a limited number of novels and nonfiction titles have been digitized in Japan, where the unique language protects publishers from foreign competition.

The situation has long frustrated IT-ready Japanese bookworms, some of whom have made their own e-books by cutting apart printed works and scanning the pages for their tablet computers.

But that is about to change.

Late last month Amazon broke years of strategic silence and said it would soon announce Kindle's launch in Japan.

Sony is also trying to cultivate the market with its slick Reader device, supported by its own e-book store with nearly 60,000 Japanese-language titles.

That is more than enough to cover best-sellers but still woefully incapable of keeping up with the 80,000 new books published in Japan every year.

Publishers, already facing falling printed book sales, have so far been reluctant to digitize their books for fear that e-books could kill physical sales.

But with the coming of behemoths such as Amazon, they have been galvanized by fears that a market-rejuvenating platform might slip from their grasp, said Yashio Uemura, a communications professor at Senshu University.

"The industry is feeling a sense of crisis that, if they do nothing and stay passive . . . huge foreign IT firms could take the e-book market," said Uemura.

The sector should more than double to ¥150 billion in 2015, from ¥67 billion in 2010, according to a study by Yano Research Institute, but it will still be dwarfed by sales of physical books.

Other research firms have given more aggressive forecasts amid high hopes for the Kindle.

The market for e-reader devices should soar to a whopping ¥70 billion in 2015 from a mere ¥2 billion in 2010, Yano Research said.

Amazon's entry, it said, "could trigger a significant expansion of available digital book titles over the next two to three years".

Kindle, launched in 2007 in the United States, has enjoyed phenomenal success among English-language readers.

In the U.S., e-book sales in the adult category surpassed those of hardback books in the first quarter of 2012, according to the Association of American Publishers, jumping 28 percent year on year to $282.3 million, compared with $229.6 million for hardbacks, up 2.7 percent.

Uemura is a key member of a new firm, created in April by a group of top publishers and a government-backed investment body, tasked with helping Japanese publishing houses digitize 1 million book titles in five years.

That means making e-versions of all books that can be purchased in Japan, plus a selection of out-of-print titles.

"In this country, where people love new gadgets, it's inconceivable that digital content won't enjoy strong sales," he said.

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