Wu Xiaobo, a best-selling business writer and publisher of Blue Lion, a financial publishing company, talked about digital publishing in China in an interview lately. As he is also a scholar studying emerging businesses in China, he knows exactly what’s going on in the digital book market here.

Wu compares establishing the digital book industry in China is to reconstructing a new world after a disaster — the piracy disaster. He believes when reconstruction is completed, publishers with specialties on vertical subjects will have occupied certain territories.

The total digital reading market in mainland China in 2012, he estimated, was no more than 3.5 billion yuan ($560mn) – very small. 2.6 billion, 74%, is generated from China Mobile’s reading platform. Wu sees the market grow at a rate higher than 60%.

In 2012, the total digital sales of Blue Lion were 6-7 million yuan, over thirty times of that in the previous year. He hopes the number to jump to forty million in 2013.

Wu agrees with most people that widely adopted smartphones shorten the distribution chain and help boost digital reading.

No Dominant Platform

Workers by Mr. Wu are on more than ten digital reading platforms, including the three telecom operators’, major e-commerce retailers’, Taobao’s, Tencent’s, Doukan, Xianguo, Douban’s and so on.

China wont’ see, Wu estimates, a dominant platform like Amazon but several with similar sizes. Hence middlemen are needed to do marketing tailored to different platforms. The existing publishing organizations, who are only responsible for managing book numbers and printing, will become agents for authors.

Low prices in mainland China

Prices of the digital in mainland China are about 15% – 20% of the print, way lower than that, 50%-60%, in the West and Taiwan — even though the print books have been much lower-priced in mainland China.

Wu’s latest book is sold for from one cent – as a group-buying offer – to twelve yuan, 27% of that for the print, on different digital platforms. Those are of reasons that Taiwanese publishers are hesitate to enter the mainland China market.

Different Sales Models

Selling models in China are different; for instance, China Mobile sells digital reading content in bulk. He estimates that subscription-based or enterprise-facing models will work better. Blue Lion is working on customized digital reading products for enterprises.

The company also plans to help authors produce videos. Not only can they sell videos, but also they can make money from offline lectures the publishing company would organize.

China Mobile brings most revenues to authors, so far.

Wu’s latest book, debuting on China Mobile, generated over 200 thousand yuan in sales and he received a half as revenue share.

Other platforms bring authors way less income. They often pre-pay a certain amount of money as kind of licensing fee. It is unknown how much more they can make, or whether they can make any profit at all.

Business writers with Blue Lion can only earn one tenth the print book sales revenue from digital sales. Only a small number of best-selling writers have benefited from digital sales so far, according to Wu.

Digital First

Wu is considering launching the digital version of his new book, going to debut in the coming March, before sending the finished manuscript to the printing company. Videos, images or charts will be included in the book. He believes more and more books will go digital first.

Problems & Concerns

The biggest problem Wu thinks is still piracy, although he doesn’t think piracy would have impact on his income. Only when a book has potential to sell more than 500 thousand copies, should the writer worry that some readers would buy pirated copies.

Another concern is regulatory restrictions. It takes one or two months to go through a regulatory process for a digital title that business books could miss timing. To add more formats of content like video, publishing companies need to apply for respective licenses. It takes more than one year for Mr. Wu’s company to obtain all the licenses needed.

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com

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