Digital books cost way cheaper than the print in China but are not cheap to create at all

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Dangdang, one of the leading online book retailers in China, made 3 million Yuan in digital book sales in 2012 but spent approaching 5 million Yuan in formatting text files received from conventional publishers, according to Wang Xi, vice president of the company. He complained that what they got were half-products is frustrating.

Chinese publishers or other content providers would simply send e-book sellers plain text. Dangdang spends 100 – 200 Yuan on reorganizing the layout of an average book and up to 1000 Yuan for well-designed picture books. Some digital book retailers, such as Tangcha and Duokan, may spend more on redesigning every single book, purchasing fonts and the like.

If 5 million Yuan isn’t a big deal for a book seller like Dangdang, it must be a huge cost burden to everyone that wants to offer up to millions of digital titles.

Another problem on cost with Dangdang is content licensing fees publishers ask are high and not based on the book content but kind of on how eager they want to make one-time money. Publishers would ask a price for several hundred titles no matter what books they are.

Duokan, an e-book platform that was acquired by Xiaomi last year, hasn’t turned a profit after having invested 30 – 40 million Yuan in formatting and helping publishers promote digital titles in its two-year history, disclosed by Hu Xiaodong, its vice president. Not only would it do the formatting and layout for every book, but also do marketing for third-party books on its own platform or through other marketing channels like social media.

There were only one thousand titles on sale in 2012 and Duokan hopes the number to grow to 20 thousand by 2014.

Duokan now has over 30 thousand paying users, out of seven million registered readers. The monthly sales are about 30 thousand items that each is priced at around 8-9 Yuan, and more than half of first-time buyers would purchase again. He concluded that one million paying users could help Duokan break even. He estimates there are over 50 million reader pool in China to monetize and believes they can obtain the one million to pay on Duokan platform.

CITIC Press, a publisher who also operates a digital book business, thinks the point is the poor performance of digital sales. It’s no wonder publishers wouldn’t be willing to organize the layout of digital books for only several hundred Yuan went to content providers for a whole year, according to Huang Peijian, head of the digital media division of CITIC Press.

Digital sales are too low. It is said, on average, only 1% of total sales with publishers are from digital sales. Motie is one of the few that performed better with a 10% in the digital sales.

CITIC PRESS started distributing digital rights from 2010. Till last year it has returned 1% of its total revenues. However, Huang Peijian seems patient, saying it takes time for digital book market to grow in China that even Amazon’s entry cannot make a sudden change.