China, the new publishing and ebook leader
Asia is the main driver of growth in what is a flaccid market. By 2021, China will be the world’s biggest book publishing market. The country is also ushering in new reading habits: it has the highest e-book sales and rising online sales. But the Internet could also undermine publishers by creating a direct link between authors and their readers.
Asia: the rising powerhouse
The consumer book market is fluctuating only very slightly in most Western countries, and posting growth of less than 1% a year in most. The global market stood at close to 60 billion EUR in 2018. Emerging markets are displaying a very different trajectory, however, and especially Asia’s two biggest markets, China and India, which are enjoying double digit growth. China is now on par with the US, which has long been the number one market, ahead of Japan and Germany. And it is expected to become the market leader before long. If India’s consumer book market still trails behind, it its likely to have caught up with Europe’s largest markets by 2023, thanks to its close to 20% annual growth.
China poised to overtake the US
Progression of consumer book revenue in the main markets
A concentrated publishing market going head to head with Big Tech
The publishing sector’s revenue remains concentrated in the hands of a small number of American, British, Dutch, German and French publishers, despite the many publishing houses that exist. The world’s top 10 publishers account for around 20% of the book market – a percentage that has remained more or less unchanged over the past 10 years, despite the many mergers and acquisitions.
The real threat comes from Internet companies like Amazon and China Literature, who are cutting publishers out of the equation. In addition to selling books on its site, Amazon also has its Kindle Direct Publishing arm, which allows authors to target readers directly. The Tencent subsidiary connects authors and readers via both its own and its partners’ platforms, and monetises both online reading and adapting book rights on other media.
A market sitll dominated by Western publishers
World's top 10 book publishers
The book publishing sector remains the most luddite, resisting the transition to digital. While the US and the UK had been reporting a healthy uptick in eBook sales up to 2013 – 2014, they began to fall after that while physical book sales continued to rise. Meanwhile growth remains meagre in France, Germany, Italy and Spain, all markets where e-book sales represent less than 5% of total revenue, versus 15% in the UK and 12% in the United States.
Digital technology is helping book sales, but chiefly thanks to e-commerce. Online sales of physical books have outstripped sales in bookshops the United States since 2017. In China, online sales rose by 24% in 2019 YoY, while sales in bookshops dropped by 12% during that time.
Asia driving e-book adoption
E-books' share of book revenue, in 2018
New business models for book publishing
Structured around the sale of a printed or electronic product to a consumer, the traditional book selling market has very few avenues for branching out. But publishers are experimenting with different ways to rekindle growth. Three paths in particular are emerging:
- Rights sales, for adapting the book to other media, including TV or film. In France, adaptation rights sales represent only 5.4% of the sector’s revenue, but also rose by that much in 2018. In the UK, the publishing market grew by 22.6% between 2014 and 2018, in large part thanks to the sale of adaptation rights (+42.7%);
- Subscription services, similar to those that have paid off for music and TV;
- Being incorporated into multimedia services through partnerships and cooperation agreements.
Amazon is developing these last two approaches through its Kindle Unlimited service (1 million titles available for 9.99 EUR/month) and Prime Reading which is included in Amazon Prime memberships, along with Prime Video and Prime Music.