A Battle of words

PUBLISHED : Wednesday, 18 July, 2012, 12:00am
UPDATED : Wednesday, 18 July, 2012, 12:00am


It's a scene that has become typical in Hong Kong - commuters in a packed MTR carriage, office workers and students, their shoulders brushing each other, eyes glued to the screens of electronic devices.

With a mobile phone subscriber penetration rate of more than 200 per cent, many with broadband connection, it is common for people to have more than one iPhone or Android device.

Smartphones are now having to vie with tablet computers for their owners' affections.

According to a global survey released last month by Ericsson, Hong Kong has the world's highest penetration of tablet computers. The Swedish telecommunications company polled 47,500 internet users aged 16 to 60 in 58 countries and regions in the first quarter. It found 34 per cent of Hongkong internet users own a tablet, beating Singapore, on 31 per cent.

With such devices becoming so ingrained in society you would expect electronic books would be booming. But digital book publishers say they are going through hard times.

Ian Chan Yin, the deputy editor-in-chief of Wan Li Books, one of the pioneers in the field that will be exhibiting at the Hong Kong Book Fair, says sales remain low almost three years since it began selling e-books.

A printed book is doing well if it sells 5,000 copies in Hong Kong, and sales rarely exceed 10,000 for a locally published book written in traditional Chinese characters.

Sales of e-books are much lower.

'For e-books, the sales volume and revenue is usually just 1 per cent of the printed version,' Chan says.

This means a readership of only a few dozen makes a book's e-version a best-seller in the city.

Britain's Publishers' Association, which represents 250 companies, put the value of e-book sales at ?92 million (HK$1.1 billion) last year, about 6 per cent of physical book sales.

As the most developed online e-book trading platform, Amazon is now selling more e-books than print books.

The limited popularity of e-books in Hong Kong indicates a difficult time for publishers, who say sales hardly cover production costs.

Their burden gets heavier in the face of a fragmented phone and tablet market: publishers have to develop different versions of an e-book to fit iPhones, iPads, Android phones and tablets, or personal computers that run on Windows.

The low return also makes publishers unwilling to embed costlier interactive features in e-books such as sound, video and maps, which are supposed to give digital books an advantages over print.

'People used to think travel books would be popular in the e-book market, but the outcome is not as good as expected. It is because publishers have yet to insert digital maps into them,' Chan says.

Still, it is Hongkongers' reluctance to pay for digital content, rather than production costs, that is the biggest issue restraining the development of e-books.

'On the mainland, people pay for the hardware [electronic readers] but not for content,' Chan says. 'Classics are available for free and the e-book business model is different from that in Europe or in the United States. In Taiwan, people are quite willing to pay for content. Hong Kong is somewhere in between the two.'

Although e-book publishers usually target youngsters who embrace new technologies, this group is less willing to pay for e-books than older people, Chan says. So far Wan Li's best-selling e-book is one about French and Italian wines, which has been well received in a niche market.

That is why publishers will continue releasing e-books despite incurring losses for the time being, Chan says. They have to identify which books are most popular, and what price readers are willing to pay.

'We don't care about profitability for now,' he says. 'It's like costs devoted to research and development.'

Chan's view is echoed by Terence Leung Wing-chung of Sino United Publishing, an alliance of major publishers including Joint Publishing HK, Chung Hwa Book, Commercial Press and Sun Ya Publications.

E-books normally sell just a few hundred copies, with only those costing 99 US cents exceeding 10,000, says Leung, who oversees Sino United's digital publishing. Apple charges 30 per cent of sales receipts if the transaction takes place through its App Store, further cutting into publishers' revenue.

Revenue hardly covers their investment in digital publishing. Without the profits derived from printed copies, it would be impossible to sustain costly e-book development, a cash-burning business.

This makes Leung sceptical of the government's initiative to encourage the used of e-textbooks in place of physical books in schools, which it claims will lower costs and ease the burden on parents.

'It is not cheap to make a digital book. Printing costs can be omitted, but a big sum is needed for paying rent and hiring IT technicians,' he says.

But Leung remains optimistic, saying the city is still testing the water and heading in the right direction.

Publishers will make a breakthrough by the end of the year, when they will introduce a joint online platform for the sale of printed and electronic books, published by both alliance members and others. Transactions can be made through a website or a phone or tablet application.

At the moment, each e-book published by Sino United members comes in the form of an application that is available for search and download in Apple's App Store or other, similar platforms. There is no platform for them to promote new books.

Such a 'central marketplace' will make it easier for readers to search for e-books and get to know about new publications. More than 1,000 e-books will be available when the online store launches, meaning publishers will release hundreds of new books in coming months.

'In the future, we hope we can make an electronic version for every book we publish,' Leung says.

But some companies deal solely in e-books, not physical volumes. They operate online e-book stores and publish digital versions of traditional publishers' books, or secure the copyright of works directly from the authors.

One of them is Handheld Culture, which saw its catalogue grow from 100 to 1,000 books from 2010 to 2011. It expects to more than triple this to 3,500 this year, director Bonnie Chan Tak-chi says.

It will take four years for the company recovers its initial investment, but Chan notes encouraging trends.

'Last year we priced our books at US$0.99 to US$1.99. Now the average price is about US$4.99. People in general are more willing to pay,' she says.

'Novels by martial arts writer Jin Yong are doing extremely well, selling more than 10,000 sets. Local readers also love classic comics such as those by Ma Wing-shing [known for the Fung Wan and Chinese Hero series].'

Given the limited number of readers in Hong Kong, it is vital to explore the overseas Chinese market, which now makes up half of sales. People in that market are prepared to pay more than US$10 for an e-book, Chan says, while locals tend to stick to cheaper choices.

Handheld's competitor 24Reader has 100,000 users, with 30,000 being active readers. It allows reading in two formats: either a user pays a monthly subscription to access a selected number of books and magazines, or he or she can buy one of the 6,000 books available in the catalogue. The number of books offered has doubled over the past year.

'We are seeing stable growth,' chairman Carlos Cheng Kar-lok says, adding that the company is exploring opportunities in Taiwan, Japan and Singapore.


Over all, e-books accounted for about this percentage of all books sold last year, according to Forrester Research