« Growth Markets

Russian Publishing 101: What You Need to Know

Shockingly little is known about Russia’s book business, valued at $2-3 billion. Here’s an overview of Russian publishing, bookselling, e-commerce and foreign investment.

By Daniel Kalder

St. Petersburg, Russia

These days there is more buzz about Russian books than there has been since the days of Glasnost and Perestroika. At the London Book Fair in March, Russia was the guest of honor; Russia was again the guest of honor at the Salone Internazionale del Libro di Torino in Italy in May; and in 2012 Russia will once more be a guest of honor, this time at BookExpo America in New York.

Meanwhile more and more contemporary Russian authors are creeping into print in English — including major prize winners such as Vladimir Sorokin, Viktor PelevinTatyana TolstayaLyudmila Petrushevskaya, and Lyudmila Ulitskaya. This is all good news, as Russia is full of talented people and fascinating authors, all of whom deserve more of the international spotlight. Even so, many Western publishing professionals continue to find the Russian publishing scene — which is valued at $2-3bn annually and ranks in the top ten globally —  an intimidating mystery.

In this, the first of a two-part introduction, we’ll begin by looking at the major players and offering a reader-friendly overview of the publishing scene; tomorrow, we’ll talk about authors, agents, advances and popular genres in Russia.

To assist us, Publishing Perspectives enlisted a quartet of knowledgable guides. Julia Goumen, one half of Russia’s premier literary agency — Goumen & Smirnova; Alexander Ivanov, publisher of the legendary and highly influential Ad Marginem press; and Lev Danilkin, one of the top critics in Russia today, and yours truly, Daniel Kalder, a journalist formerly based in Moscow and author of Lost Cosmonauts (published in Russia in 2007).

Together, we’ll try to explain some of the basics that you need to know to begin thinking about working with the book business in the country covers one sixth of the land mass of the world.

Advantages & Disadvantages

First off you should know that Russians love to analyze the problems that face their country — especially the problems that they believe are utterly different from those faced by those pampered poodles living in “the West.” Hence the first question I ask: “What are the major difficulties faced by Russian publishers that European and American publishers might not face? Are there any advantages?

“The strangest thing in the Russian book business is pricing,” replies Alexander Ivanov. “We do not have a functioning cover price system. Instead of that we have the so called ‘publishing price.’ For example, the publishing price may be 100 rubles ($3-4). The wholesale intermediary then demands an average discount of 50%. Shops receive from him a book at 100 rubles, and then mark up the price from 70-100%. The price in the store is then 170-200 rubles. Thus, the publisher receives about 25-30% of the money that has been paid by the consumer. This is the biggest problem. Besides that, bookstores usually pay the money around four months after receiving the books. As a result, publishers often do not have enough working capital — even for printing more copies of a title that is selling well.”

Lev Danilkin adds: “People are accustomed to the fact that books are relatively inexpensive. They are cheap -– in comparison to Europe –- like gasoline. This is both a problem and an advantage. Also: the absence of properly functioning distribution networks, and the poor connections different regions of the country have with each other.”

Pricing and distribution have been major problems in Russia for the entirety of its post soviet history, not to mention all of the history that came before. In Russia then, conditions are radically different from what most Westerners are used to; anyone doing business there has to learn to live with ambiguity, paradox and contradiction — and to be willing to put up with a mountain of nonsense.

Fortunately it’s an infinitely stimulating country to experience and so long as you have realistic expectations going in, you are unlikely to be disappointed. At the very least, you will gain an education.

Indisputable Facts: Top Publishers and Booksellers

ACT Russia

There are, however, some things that are relatively straightforward. The identities of the biggest publishers for instance: ACT (which translates to AST in English), EKSMO, and the Atticus group, owned by oligarch Alexander Mamut (who recently purchased the Waterstone’s in the UK for $£53m). Better yet, for anybody seriously thinking of doing business in Russia these and most of the other publishers in the top ten are all based in Moscow, with a handful located in St. Petersburg, which is merely hours away by high speed train.

EKSMO Russia

ACT and EKSMO also own major book chains through which they sell (mostly) their own products — ACT controls Bukva (which means “letter”) while EKSMO runs Novaya Kniga (which means “A New Book”) and Bookvoed (located in Saint Petersburg). There are also independent networks such as Top-kniga, Labyrinth, and Barrister. Books are also sold in supermarkets, online and in kiosks outside metro stations.

As far as the independent chains go, they are all “in crisis,” says Ivanov, before adding: “especially Top-kniga.” Nor does the fact that major publishers sell their own books through their own storefronts benefit consumers as much as they could, since they don’t sell their rivals’ product.

Naturally the dominance of bookselling by publishers discriminates against smaller, independent publishers. Efforts made by Alexander Ivanov of Ad Marginem to set up an alliance of independent retailers against the titans of Russian publishing have thus far borne no fruit.

E-Books and E-Commerce

And what about the digital market in Russia? These days book trade publications are awash with repetitive stories about digital books, digital reading devices and so on, ad infinitum, ad nauseam. But any publisher in Russia would have to be more or less insane to expect large profits in this area. The reasons are twofold:

  1. Very few Russians own credit cards. Thus the whole question of online commerce is virtually moot, at least if you are expecting to be paid for it.
  2. Epic, I mean, Homeric levels of piracy.

Indeed the digital piracy situation in Russia is so bad that in the early 2000s the crime novelist Boris Akunin, who is the single most popular contemporary Russian writer abroad and who has sold 20 million copies of his books in his home country, made many of his books available online for free. Why? He explained: “I had no choice. Everyone in the Russian Internet is a pirate, you cannot catch and hang them all. I told myself: let this work as promotion for my books. A person would start reading them online, then maybe get hooked and go to a bookshop. It often works.”

Ivanov notes that it can be an effective marketing tool — like in the West — for the print edition “Sometimes,” he says, “publishers and authors decide it would be more profitable to post a book for free to ‘spin’ it and increase the offline sales. All publishers are trying to sell books through online networks, but the returns from this are very small — less than 1-2% of total sales.”

Ozon

As for e-commerce sites such as Amazon, analogous services exist in Russia, including Ozon and Labyrinth, but purchasing a book from them can be troublesome. Five years ago I tried to use Ozon to order a book that was difficult to come by in the Moscow stores, but found that it required my filling out an online form, waiting for it to be delivered, and then paying in cash upon receipt. The service was both expensive and irritating. Danilkin confirms that little has evolved since then. “Precisely: expensive and irritating. [Ozon] ought to make it their slogan.”

But Ivanov points out that it is cheaper for readers in remote regions such as Vladivostok to order their books from Ozon than to purchase them in shops where they cost 2-3 times more as in Moscow.

Goumen also sounds a more positive note, and says, “I know many people who use the services of online bookstores…especially since bookstores keep shutting down and the assortment of books in chain stores depends on which publishing group controls shares of this chain.”

One upstart, Bookmate has taken the unorthodox strategy of encouraging readers to scan and upload their own titles to Bookmate’s cloud library, which they can then download for their personal use to various devices (readers in Japan also digitize their own books because the e-book market has been slow to develop).

Foreign Investment Comes to Mother Russia

Until earlier this year there was no foreign investment in any Russian publisher. Then, in March Lagardere Publishing bought a major stake in the Atticus Group. Says Julia Goumen, somewhat pithily: “Mamut [owner of Atticus] found selling it to a foreign group the best way to deal with his investment into Russian publishing.“

And yet there is money to be made in Russian books. According to Ivanov the total value of the book market in Russia is $2-3 billion each year, and the owners of AST and EKSMO are both multimillionaires.

Certainly it will be interesting to see how Lagardere’s bold first step develops, and whether this encourages other publishers to invest in Russian books, or whether the uniqueness, and-shall we say unruliness of the Russian business environment will leave Western innocents appalled.

SURVEY: Which BRIC Are You Prioritizing for Publishing Biz Dev?

This entry was posted in Growth Markets and tagged , , , , , , , , , , , . Bookmark the permalink. Both comments and trackbacks are currently closed.

2 Comments

  1. Posted August 8, 2011 at 11:52 am | Permalink

    A quick note on the Russian ebook market is developing nicely. MintRight has partnered with with both AST and EKSMO to bring Russian language books to the global audience. Over 14,000 Russian ebooks are now available across the major ebook sellers, including Apple, Barnes & Noble and Sony. Kindle is unfortunately suffering from its archaic mobipocket format and does not yet support any non-Latin based languages, but we are hopeful that Amazon’s upcoming tablets would cure these ills soon.

    Always happy to discuss global ebook distribution with publishers.

  2. Posted August 11, 2011 at 12:34 am | Permalink

    Hi,

    Its very interesting to know about the Russian book publishing business & impress with Russian communities who dedicate or devoted to our work!

  • SIGN UP NOW!
    Enter your email address below to receive daily news updates from Publishing Perspectives.
    Click here to learn more about our newsletters
  • Monetize Your Backlist

    Organized by Publishing Perspectives

    Hear experts from publishing and technology discuss strategies and tools you can use to generate more revenue from your backlist content.

    What: Monetizing the Backlist event
    When: 9am–1pm on April 24, 2014
    Where: Scholastic Headquarters, NYC

    Buy your tickets now!