By Daniel Kalder
Becoming a major global ebook distributor was never part of Jens Klingelhöfer’s career plan.
Indeed, prior to launching digital distribution firm Bookwire in 2009 he had a successful, decade-long career in the music industry, working both in artist management and running a record label, “doing nearly everything that you can do in the music business.” However as record labels and retailers struggled with the transition to digital between 2007 and 2009, Klingelhöfer realized that in the future it was going to be difficult for small and medium-sized companies to survive.
He and his business partner, John Ruhrman, started looking for new opportunities in other fields, where they could apply what they had learned in the music business. “We also considered games,” says Klingelhöfer but the ebook epiphany came when Ruhrman returned from a trip to the USA in 2009. “John told me ‘I saw lots of Kindles in the airport—it’s coming!’”
Klingelhöfer realized that their experience of the music world’s brutal shift to digital would be highly applicable in this new area: “We knew everything about distribution, about digital products, and about how to market them. And we totally knew about the passion to create great content, which was a big help when it came to understanding publishers’ needs and motivations.” Their plan was to transfer everything they had learned about working as distributors for medium and small sized companies in the music business to publishing. And so, Bookwire was born.
Focusing on Small Publishers at First
Bookwire’s first stop was Apple, which was opening the iBookstore in early 2010. “We knew all the iTunes people from our music times,” says Klingelhöfer — and more than that, he knew that while Apple wanted content for its new venture, the firm also had a “lean” company culture, and would not want the headache of juggling multiple contracts and accounts with hundreds of individual publishers. So Klingelhöfer phoned a contact in the German iTunes office and explained that he had just incorporated a company working as a distributor for smaller publishers that could aggregate content for the iBookstore.
“We knew that they were familiar with these kinds of service providers from the music industry, and they really appreciated that there was somebody aggregating all the small publishers and distributing them to the iBookstore in a technically clean way,” he explains.
Apple agreed, and says Klingelhöfer, “That was the first press release: ‘We can bring you into the iBookstore.’ This helped attract more publishers. “We started with 300, 400 titles we had collected in the first month.” Since then Bookwire has expanded to represent more than 80,000 ebooks and digital audiobooks from 800 different publishers. The firm has 30 team members on staff, and distributes titles to every major ebook platform.
However Klingelhöfer is keen to stress that there is more to Bookwire’s business model than just supplying the technical skills that smaller publishers may lack- such as converting files to the appropriate formats, creating metadata and uploading the end product to giant servers located in far-flung corners of the world. Instead, Bookwire’s vision is to be the “perfect partner” for the publishers they work with. “The core business is distributing the content into the right channels,” says Klingelhöfer, “But we go much further. Around that core service, we also offer assistance with sales and marketing. We can advise on what the market wants, on the right pricing and offer added marketing services, like sending promotional copies to authors, or creating voucher codes for marketing campaigns so that you can give away for free 10,000 books.”
The goal, says Klingelhöfer is to provide clients with “the tools to do everything they have to do in the digital field.” Nurturing personal relationships is a key part of the business model also: every publisher is assigned a dedicated account manager who helps with advice regarding which books they should convert to digital, and which channels are most important to address with their content. This type of service is important says Klingelhöfer, because “publishers may have great content, but usually they don’t have the digital expertise or the technical expertise to make the right decisions.”
International Expansion Focused on South America
Bookwire’s international expansion began slightly more than two years ago. With the German market “robust but not growing like a rocket,” Klingelhöfer and Ruhrman originally looked into the markets surrounding Germany, and were approached directly by publishers from Italy, Greece or Romania, seeking assistance with distribution. However, says Klingelhöfer, a “testing phase” in mid-2012, when Bookwire established small teams in Spain, the Netherlands and Poland revealed that a lot of European markets were not yet ready for the type of service they offered. However they did discover “huge opportunities” in Latin America and Spanish and Portuguese-speaking markets.
“We saw from our initial steps in Spain that Spanish content is sold all over the world. There are more than 500 million Spanish speakers, and a huge Spanish speaking population in the biggest market in the world, the USA, which has more than 57 million first and second generation Latinos living in this country. Portuguese is also spoken by more than 250 million people in the world. So we focused our energies on these emerging digital worldwide markets.”
Discussing Latin America, Klingelhöfer describes an exciting market full of potential, even if the region is still waiting for the big platforms to arrive in some of the markets. He suggests however that this partially “unformed” aspect of the book industry means that the publishers have a more positive attitude towards ebooks than in more developed markets. “The publishers were not so opposed to digital as they partially were in the mature world of Europe, where everybody is afraid of losing market share and physical sales,“ says Klingelhöfer. He adds that Latin America is also fertile soil because “the middle class is growing, publishers are growing, and reading is growing.”
In addition, ebooks have strong appeal to publishers because they can solve some of the problems connected with physical distribution in these markets. “In Brazil you need six or seven different distributors to be available in all bookshops,” says Klingelhöfer. “They don’t have an easy-to-handle wholesaler architecture like Germany has.” However via digital distribution, publishers can get their books in every online store.
Bookwire currently has a staff of four in Spain, local offices in Brazil and Mexico and partnership agreements with agents in Costa Rica, Ecuador, Peru and Colombia. The company has also been active in Russia since 2012: “We have already signed great publishers there but obviously the situation in Russia is not so easy at the moment. But we distribute their content worldwide. It’s just a smaller operation.”
As for the future, Klingelhöfer says that Bookwire plans to expand further, and while maintaining its focus on Latin America and the core German-speaking market, the firm is considering expanding its reach into other European markets again — other than the U.K., which Klingelhöfer says is already mature.
“I try to be a little bit humble about the overall vision,” says Klingelhöfer “But internally I would always say that Bookwire aims to be the leading or one of the leading distributors of the world in terms of ebooks.” He pauses, then adds: “However, we will do this step by step. It’s important to stay lean and reasonable!”