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Why Spanish Publishing is the Next Digital Battleground

International digital players are targeting the 500 million strong Spanish-language market. It’s scary stuff for Spanish-language publishers, who need to prepare.

Editorial by Javier Celaya

Javier Celaya

A dramatic shift is happening in the Spanish-language publishing sector. In the last few months, the three largest publishing houses — Random House Mondadori, Grupo Planeta and Santillana — have taken a series of decisions (i.e competitive e-book pricing offers, launch of digital first collections, greater investments in e-marketing campaigns, etc.) that, when viewed collectively, signal the end of the first stage of the digital era in Spanish-language publishing.

Following an initial phase, known in the sector as the Libranda Era, which attempted to slow down changes in the sector by maintaining the current ecosystem in the book world, many book professionals in Spain believe that we will be entering a much more dynamic second phase, one I’ll dub the Internationalization Era. This new era is characterized by increasing interest by the main international players  — Amazon, Google, Apple, Barnes & Noble, TheCopia.com, Kobo, Yudu, among other — to enhance their platforms with content in Spanish from Spain and Latin America.

Spanish is the third most spoken language in the world after English and Chinese, and the revenue potential from a market made of 500 million Spanish speakers will not be overlooked. As we all know, the Internet has no frontiers and, therefore, once the English content market consolidates, the main international players will enrich their catalogs with content from other potential markets, especially the Spanish one. Barnes & Noble has already initiated this race towards globalization by aggregating more than 40,000 Spanish titles from various Spanish and Latin American publishers and offering them for sale online — an approach that will soon be imitated by the rest of the international players.

The upcoming academic year (2011-2012) will see the gradual arrival of each of the aforementioned players in the Spanish markets, which will undoubtedly accelerate the digital race. Spanish publishers, booksellers and librarians will have their hand forced and will henceforth need to make strategic decisions in reaction to the arrival of these international competitors.

In this competitive context, it is not surprising that Spanish publishers are testing dynamic e-book pricing policies in an effort to consolidate the increasing digital demand. Publishers are relying more and more on new Web 2.0 technologies to promote their books and authors. But, most important of all, we’re seeing a re-definition of their sales and distribution strategies to cope with this new book ecosystem.

The new sales and distribution strategies may be divided into three major channels: direct sales via the publishers’ websites, sales via specialized online bookstores, and, sales via multichannel platforms offering digital books, music, movies, magazines, and more. None of the above three channels excludes the other and are, in fact, entirely complementary. Depending on the type of publisher (trade, STM, K-12, etc.) one of the channels will have likely have a more significant impact than the other. But no publisher should refuse to market their products in any of the three categories, as this would limit potential for growth and undermine their ability to analyze consumer behavior using real time sales data from each category — the most important strategic management tool for any company in the digital era.

Various entities in the publishing sector have been directly selling their books via their websites for years. Excluding a few highly specialized publishers, most of them have indicated that sales have not been especially high, inspiring little trust in the direct channel option. Of course, placing a cart on a publishers’ website does not guarantee results. What’s more, those publishers who believe that an analysis of direct sales should simply be based on revenue derived from the total number of transactions will never truly understand the real potential of this channel. The fact is, beyond the simple e-commerce transaction, the true added value of a direct sale is the ability to glean first-hand knowledge of customer behavior during the purchasing process, as well as the post-sales process when the product is consumed and the customer expresses satisfaction or dissatisfaction.

If publishers fail to make e-commerce central to their new business strategies, results will always be limited. In the 20th century, distribution was publishers’ main competitive advantage and they, unlike potential competitors, were able to promote their products in the largest number of points of sale. In the digital era, any website or blog, or even a social network such as Facebook or Twitter, can become a point of sale for any type of book. The competitive advantage for publishers in the 21st century resides in the having first-hand knowledge of their customers and their behavior during the purchasing process and consumption patterns of their products and services.

We are entering a new era where the relationship between companies and their users (B2C) will have a greater impact than that of the current intermediary model, i.e. “from company to company” (B2B). In the digital era, a publisher’s main asset is creating a direct, trusted and value-added relationship with authors and readers, respectively. This should not be forgotten.

Javier Celaya is the vice president of the Spanish Digital Magazines Association (ARDE), member of the Board of Directors of  the Spanish Digital Economy Association (ADIGITAL) and CEO and founder of Dosdoce, an online portal analyzes the use of the new technologies in the cultural sector and publishes annual studies related to trends in the Spanish publishing sector.

DISCUSS: Is Customization and Personalization the Future of Book Reading?

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10 Comments

  1. Posted August 31, 2011 at 3:52 am | Permalink

    No question that the Spanish-speaking market is the next digital frontier, though I would argue that the argument should not be made in terms of absolute numbers of people speaking the language. French should not be overlooked: it is the language of a lively literature and of a very HIGH proportion of readers in the total population – certainly more so than Spanish-speaking people…

    The second very interesting point made in this article is the following observation: “The competitive advantage for publishers in the 21st century resides in the having first-hand knowledge of their customers and their behavior during the purchasing process and consumption patterns of their products and services.”

    In other words, there’s a SHIFT occurring in the publishers’ competitive advantage, from B2B to B2C. Before the digital revolution, brick and mortar bookstores were the publishers main advantage. Today, with digital platforms permitting direct distribution of ebooks to readers, there’s a direct opening to readers that any publisher wanting to succeed in the new digital world must be ready to grab. Amazon knows this well and has been the first to take advantage of the detailed knowledge it acquires as its customers buy products. They know exactly what kind of book you buy so they offer purchasing options accordingly. That is precious knowledge – new knowledge – that up to now, publishers have never had. And that is the knowledge they must grab if they don’t want to be replaced by the likes of Amazon!

    Well done, this is a fascinating article!

  2. DDTPZ
    Posted August 31, 2011 at 4:37 pm | Permalink

    Hi Javier,
    I tend to agree with you, but we are lacking two mayor ingredients in spain,

    1. the reight price of the ebooks readers, we have very high prices for cheap chinese devices, only the kindle is here, still no Kobo or B&N models.

    2. the biggest player, Amazon is still not here, althoug they BuyVIP control.

    Ii would like to know your opinion,

    tnx

    ddtpz

  3. Chuck
    Posted August 31, 2011 at 5:15 pm | Permalink

    Javier:

    You have described evolutionary movements amongst the legacy publishers, but you don’t offer any insight as to what is provoking this shift.

    I would add however, that success will require significant efforts in discoverability, a concept that is probably poorly understood at top floors of certain buildings on Aragó & Arribau. They will probably throw large sums at the problem whilst smaller, leaner operators who understand the concept execute it effectively for little or nothing. I am not certain that the big three get it or will get it. The barriers to entry are very low and an efficient, and dynamic upstarts could conceivably run circles around them before they have had a chance to wake up.

    Barriers to entry that existed previously, namely significant upfront investment in paper, printing and moving that tonnage back and forth from retailers, are no longer there.

    Amazon and B&N aren’t simply interested in the market, but have taken very significant steps and positioned resources to begin offering content in Spanish. I don’t see how Spanish legacy publishers will have an outcome that is any different than that seen by US legacies: 90% of distribution is in the hands of Apple, Amazon and B&N, and worse, customer profile data remains in the hands of the distributors.

  4. EBC
    Posted September 1, 2011 at 8:09 am | Permalink

    And don’t forget that printed books (in Spain and some other European countries) are under the “fixed price law” (the price of a book must be the same everywhere, so, there’s no price competition between sales channels) and Spanish publishers are fighting hard, making lobby in the European Comunity for consider ebooks under the same stupid law. And probably they will succeed.
    Also note that VAT is very different in Spain for printed books (4%) than for ebooks (18%). How much VAT is in the States?

  5. Brandon
    Posted September 1, 2011 at 12:16 pm | Permalink

    Very informative article!

    One question that is always in my mind when discussing non-U.S. e-book markets is this:

    What is the saturation level of e-readers (i.e. Kindle, Nook, Ipad, et al) in markets such as Spain?

    Just as important as readership in various languages (Spanish, French, Chinese) is technologcial culture. By that I mean: has this market already experienced the full-blown acceptance of digital content?

    I don’t know any market outside of the U.S.A. very well (I’m a recent grad with little experience, none in publishing – yet), but my impression is that e-readers haven’t taken off as quickly in non-American markets. Is this a correct perception?

    If so, wouldn’t content providers/publishers have to go about changing the culture of readership before promoting their content (e-books, magazines, newspapers, etc.)?

    Could anyone point me to a report or other sources on this particular topic?

    At any rate, thanks for the article.

  6. Posted September 2, 2011 at 7:09 pm | Permalink

    Yes we are anotare frontier.

    The vessels are here and the gates are open. In Latin America people have access to tools, technology and, more important, languages. A key issue here is that latin people is becoming bilingual. So, to add to Javier’s viewpoint, I think English, French and German books are going to compete against Spanish editions.

    Global sales and multilingual approaches are going to be key for the one that wants to dance to the attractive and sensual rhythms that our different cultures offer. The generation gap is the big wall to overcome: younger are tech savvy as much as older people are technophobic. The thing is that older have the power to decide, but younger have the buying power and attitude.

    Stage 1 was a slow and controlled contradanza. I guess step two is going to be closer to salsa, and that means mixed offer, biggest changes in steps and more daring exposure of the “dancers”.

    Let the music start… It’s not a race, it’s a party! :-)

  7. Posted September 2, 2011 at 7:11 pm | Permalink

    Errata: we are ANOTHER frontier. A vast Terra Incognita.

  8. John Warren
    Posted September 2, 2011 at 7:44 pm | Permalink

    Excellent, Javier.
    When digital content providers begin to realize the potential of Spanish-language books globally, not just in Spain, it will be a huge market. There are significant hurdles, however, particularly rights issues… In print, rights have usually been separated by territories, even within the same publishing house, but that is simply not going to work in the global e-book market. It will not be possible to sell one edition as an ebook in Mexico, another in Argentina, another in Ecuador, etc. Personally, I don’t envision ebook readers (Kindle, Nook) as a significant market in Spain, or in Latin America especially, but the ubiquitous smart phones and tablets will open up new pages… Computers have never really taken hold in the home in these markets, for a variety of reasons, but everyone has a smart phone.

  9. Posted September 3, 2011 at 11:54 am | Permalink

    As the creator of Books4Spain, a soon to be launched online independent bookshop specialising in English language books set in, or about, Spain, I read this article with interest since it touched on one of the most important debates raging across the book world today – which are the correct channels to market for leading publishers.

    Reams have been written on and offline about the need for publishers to directly “engage” with readers by “leveraging” their “brand” and creating “communities” in order to mitigate the affects of the digital revolution.

    Frankly, in my view, with very few exceptions, this is flawed thinking. Quite simply leading publishers are no different to major manufacturers of fast moving consumer goods or even pharmaceutical companies. Do the vast majority of consumers interact directly with Nestle, Unilever, Kraft, GlaxoSmithKline, Astra Zeneca etc. No, they go to a retailer and where they select from a range of similar products based on a number of criteria but mainly price, performance and availability. Slightly different as far as medical products are concerned but do you ever go to your Dr or pharmacist and ask for a specific brand? You just want the product that does the job best – whoever makes it.

    I don’t think publishing is any different – all I want to do is read my favourite author, read a book a trusted person has recommended or try a new book because the cover or genre or marketing of the book itself appeals to me not because Penguin, Random House or Simon & Schuster have published it – does it matter who the ultimate publisher is?

    One of the common links between fmcg manufacturers/brands and publishers is the fact that over the years “own label” products have increasingly been encroaching on their “turf” (self published authors and niche publishers in the case of publishing). As a result, they have been forced to invest in raising awareness about themselves and their products BUT they are not, and never will be, the seller of last resort for the vast majority of their products – that privilege lies with retailers, small and large, who are in the best position to have a direct relationship with the public as aggregators of products.

    There is no doubt that the digital revolution impacting on book publishing and retailing requires a response from publishers and book retailers alike but for leading publishers it is about raising awareness about the quality of their titles and authors not actually selling these titles directly to consumers. I’m not going to go to Procter & Gamble’s website to buy Head & Shoulders and Unilever’s website to buy Dove hand cream – I’ll pop down to Wallmart or Tesco etc. to but 80-90% of my fmcg requirements. The brand may influence my decision but not as much as convenience, availability and price when I’m faced with a shelf full of the same product category from different manufacturers.

    Admittedly, books are different but lets face it, best sellers are fast moving consumer goods and the major factors in buying such a book are who the author is and the price NOT who publishes (i.e. manufactures) it. Even for non best sellers it is usually the author or the subject matter that are the main factors influencing the purchasing decision not who publishes it.

    As I say there are some exceptions amongst leading manufacturers for example Dorling Kindersley is a recognisable, trustworthy brand which may influence a purchasing decision. At the same time new, smaller, niche publishers who are highly focused and who are using the digital revolution to create and support their brand are also prospering but, overall, leading publishers should forget trying to sell directly to consumers but instead work on identifying and nurturing talent and working with retailers to bring their “products” to the attention of the buying public.

    Barnes & Nobles Spanish language e-book initiative is a great example of how a retailer is the best party to sell a wide range of books to consumers and there are already a number of well established online bookshops in Spain such as Grammata and Publidisa (via http://www.todoebook.com/) and Casa Del Libro (part of Planeta) and publishers should be focusing on supporting the growth of sales of physical books as well as ebooks via such players not becoming retailers themselves.

  10. Allison P
    Posted September 9, 2011 at 7:19 pm | Permalink

    Javier:

    It sounds like you’re talking more of what *should* be happening among Spanish publishers. Your readers would appreciate concrete examples of what they are actually doing, when you mention: ” In this competitive context, it is not surprising that Spanish publishers are testing dynamic e-book pricing policies in an effort to consolidate the increasing digital demand. Publishers are relying more and more on new Web 2.0 technologies to promote their books and authors. But, most important of all, we’re seeing a re-definition of their sales and distribution strategies”. If you have industry insider information of concrete steps they are taking, that might dispel the general impression that they are giants moving at snail pace (like Tolkien’s Ents (Treebeard/Barbol)). Or maybe they are? REading between your lines, I get the notion that it must be frustrating to work in one of those giants, knowing what needs to be done, but not being able to convince the older directors about it.

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