Japan is trying to rewrite the sad ending the United States has given the electronic book. So far, the e-books concept has failed spectacularly on both sides of the Pacific. The punctuation of its failure have been the announcements from retail bookstore giant Barnes & Noble and technology and media concern Gemstar-TV Guide International Inc., both of which pulled their e-books services last year. Five years ago, a Japanese e-book consortium of more than 150 companies, including electronics firm Sharp Corp., pulled the plug on their service before it was launched. All of these ventures attempted to display e-books on either a dedicated reading device or a standard PC. American consumers were never convinced to shell out hundreds of dollars for an e-books device. The PC lacks the paperback's portability and familiar page-flipping format. But Japan's market for e-books is quite different from that of the United States, or even the Japan of a few years ago. Several factors are now playing into Japan's latest e-books offerings: the mainstream popularity of manga (graphic-based novels) in Japan, the vibrant screens of the latest PCs and cell phones, and the fact that more than 50 million Japanese are subscribing to entertainment content services on their cell phones. Throw in Japan's huge train-commuting population, with the common habit of packing cell phones and hand-sized paperbacks to pass the time, and you have fierce competition for the eyeballs of mobile readers.
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"A successful business model will evolve on the keitai if it evolves at all."
--Evan Owens, director at a technology media consulting firm |
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Publishers in chargePerhaps the most aggressive new e-books venture in Japan is eBook Initiative Japan Co., a Tokyo-based company founded in May 2000. Rather than pursuing a mobile audience, the company has tried to establish a manga-reading audience in its early stages. Led by Yuusuke Suzuki, a 30-year veteran of Japan's largest publishing company, Shogakuken Inc., the company publishes mostly manga titles on its PC-based e-books service, 10daysbook.com. The company began selling a dedicated reading device in March that displays titles from 10daysbook.com. The device, named Sigmabook, was made by electronics giant Matsushita and sells for $370. Many believe the Sigmabook is doomed to the fate of the previous e-books devices from Gemstar and Sharp, which built the prototype viewer for the now defunct Japanese e-books venture. Although some in the industry say companies are drawn to e-books -- they are cost-efficient and can reduce copyrighting hassles -- it's harder for consumers to read from electronic devices than from traditional books. Nevertheless, while Sharp has redirected its e-books efforts into its line of existing cell phones, Suzuki believes he can succeed where others have failed because of his access to Shogakuken, his company's largest shareholder, and other publishing company investors. "The failures before, they all failed because of the same reason. They were started by a company outside of publishing," said Suzuki. "We're trying to expand our business by cooperating with publishing companies." To date, the company has raised $5.7 million from a group of investors that include Shogakuken and other book publishers, as well as consumer electronics-makers Kyocera Communication Systems Co. and Matsushita Electric Industrial Co. (maker of the Panasonic brand) and several venture capital firms. Currently, 10daysbook.com has a selection of 4,500 titles and is adding about 200 new e-books per month. The company will continue to lean heavily on manga readers in the short term, though it plans to make business books, text-based novels and photograph collections a larger component of total sales. The site currently sells 40,000 e-books per month at prices ranging from about $3 to $12 each. Customers pay by credit card, prepaid billing or through the billing systems of certain Internet service providers. The e-books are downloaded once and have no expiration. Suzuki's company is hoping to catch on at a time when the global market for e-books appears to be increasing. The Open eBook Forum, the electronic publishing industry's trade and standards organization, estimated that for the nine months ending Sept. 30, 2003, e-book sales revenues rose 32 percent to $7.6 million. Developing its own operating system for the Sigmabook devices has been a considerable cost for eBook Initiative Japan. Suzuki declined to give specific numbers, but admitted that continuing to develop compression technology for transferring books from paper to digital form will require a significant future investment. The amount of investment could be extensive and would require the company to grow its subscribers to 50,000 per month to cover its costs. Manga leads the way More than 80 percent of the e-books the company sells are manga, a diverse genre of graphic novels that are widely read in Japan by adults and children alike. Considering that most estimates show that half of all books and periodicals sold in Japan are manga, it's no surprise that 10daysbooks.com has focused on this segment first. The most popular title on 10daysbook.com is a manga called "Black Jack," a series about a miracle-working amateur surgeon who cures patients deemed incurable by hospitals. The 22-book series, written by renowned manga author Osamu Tezuka, sells about 3,000 copies per month at a price of about $3 each. Another reason for the focus on manga is that the genre is considered especially suitable for viewing on PCs. The high-resolution drawings require data-intensive graphics, necessitating a broadband Internet connection. Japan's recent growth in broadband Internet usage has been a boon to 10daysbook.com as a result, said Suzuki. But on both sides of the Pacific, manga publishers familiar with the struggles of e-books are dubious. Following a plot from beginning to end while sitting in front of a PC is a tough sell, whether it's a text-based novel or manga. The typical eBook Initiative Japan novel is several dozen pages long.
"People do not seem to want to read entire books onscreen," said Jeremy Ross, editorial director at the Los Angeles office of Tokyopop Inc., a distributor of Japanese manga for the U.S. market. "If the e-book is the only way to get the material, they often print them out." EBook Initiative Japan's tactic of using the popularity of a well-known author to generate publicity has also been attempted in the United States. Like Tezuka's manga series, Stephen King released a novel exclusively as an e-book. In March 2000, his 66-page e-book "Riding the Bullet" was a hot buy on major retail Web sites. More than 400,000 copies of the e-book were downloaded in the first 24 hours of its availability on Barnes & Noble's now-defunct e-book service, according to Box Office Prophets, an entertainment industry publication. King's publisher Random House launched an e-book business later that year, but has since scaled it back considerably because of a lack of demand. Dedicated devices The history of e-books failing on the PC screen is one reason eBook Initiative Japan is hedging its bet with the mobile Sigmabook, which is about the size of a large school textbook and weighs about 1.1 pounds. The Sigmabook is sold at retail bookstores and on the 10daysbook.com site. It has two 7.2-inch non-color LCD screens that run on two AA batteries, which power the viewer for three months, assuming an 80 page-per-day usage, according to Matsushita. No early returns on sales of the Sigmabook were available. "For these kinds of devices, we think novels and text-type books will be better," said Suzuki. The awkwardness of using the Sigmabook, along with its price, has already stirred skepticism from consumers. Users must download e-books from the 10daysbook.com site, transfer them from their PCs to the Sigmabook using a connector cord and store them using a memory card. Unlike the PC-based service, which uses Adobe Acrobat software to read content, the Sigmabook uses a less memory-intensive, proprietary operating system made by eBook Initiative Japan. "E-books sound OK," said Tomonori Yoshida, a Web designer in Tokyo. "Sometimes I want old comics, but I don't buy them because I don't have the shelf space at home. But paying 40,000 yen ($377) to read e-books is too expensive. It should be around 5,000 yen ($47)." The keitai is king Besides cellular carriers, other domestic competition is emerging for eBook Initiative Japan. In November, a joint venture of 15 companies formed another e-books consortium, Publishing Link Ltd. Led by Sony Corp. and a host of major book and newspaper publishing companies, the company will aim to sell e-books over the Internet and through dedicated Sony devices. The similar approaches being taken by Publishing Link and eBook Initiative Japan are bold considering recent history. In an announcement last July, Gemstar said its Softbook and Rocket eBook digital reading devices, which Gemstar acquired the rights to for an estimated $400 million, would be discontinued because of lack of demand. While the dedicated device concept has never been commercialized in Japan, Sharp in October 1998 announced a strategic partnership with NuvoMedia, maker of the 22-ounce, paperback-sized Rocket eBook reading device. Sharp never commercialized a Japan e-book device and instead launched an electronic manga service for its Zaurus personal digital assistant line. But the continued decline in sales of PDAs since then has caused Sharp to focus on distributing e-books on cell phones. Working with mobile content publisher Cybird Co. Ltd., Sharp began distributing e-books last June for some of its cell phones running on Vodaphone K.K.'s cellular network. EBook Intitiative Japan plans on an eventual keitai offering, but has nothing in the works yet. Even so, the company believes current cell phones are too small to view anything resembling an e-book. "It's very hard to read manga on that kind of device," said Suzuki. But the company may be overlooking early signs of Japanese cell phone users taking up e-books. An e-book called "Deep Love" recently became a million-copy bestseller after the author drove grassroots interest in the book in the streets of Tokyo's youthful Shibuya shopping district. (See Week in Review 03.10.04) The book was sold in short, e-mailed installments using condensed language suitable for the limited character displays of cell phones. Other publishers have also launched their own cell phone-based e-book services, including Shinchosha Co.'s Shincho Keitai Bunko ("Shincho Mobile-Phone Collection"), Kadokawa Shoten Publishing's Bunko Yomihodai ("All-You-Can-Read Collection"), and Sharp's Space Town. U.S. publishers and electronics makers have yet to try e-books concepts on cellular services, but are expected to in the next few years.
"A successful business model will evolve on the keitai if it evolves at all," said Evan Owens, representative director at CrossWire LLP, a Tokyo-based technology media consulting firm. Struggles in the States
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"The failures before, they all failed because of the same reason. They were started by a company outside of publishing."
--Yuusuke Suzuki of eBook Initiative Japan Co. |
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The recent round of U.S. e-book failures didn't lead to total destruction of the platform. During the 1990s heyday, tablet-based services drew the headlines. But even though last year saw those devices buried along with major bricks-and-mortar book giant Barnes & Noble's online e-books service, there continues to be life in e-books in the United States. But this time around, software has taken the lead.E-book reader software-makers Adobe Corp. and Microsoft Corp. have continued to develop their services around their respective products, Adobe eBook Reader and Microsoft Reader. Bookseller Amazon.com and Random House have developed their e-book offerings around these software products. A variety of book publishers, from mainstream booksellers to academic library publishers, have gradually increased the number of e-book titles they publish under the Adobe and Microsoft formats. Microsoft claims the recent upsurge in e-book activity is directly attributable to improvements in its e-books reader software that improve readability and offer something closer to the traditional paperback experience. The software giant expanded its number of e-book titles to over 20,000 last summer during a 20-week summer vacation promotion that featured three new releases each week. It included titles from mainstream authors such as Amy Tan and Bill Bryson. More American-made e-book reading devices may yet emerge. Media company Tribune Co., publisher of the Los Angeles Times and Chicago Tribune, is currently working with Kent State University's Institute for CyberInformation on developing a suitable e-newspaper format for tablet-based services. The Los Angeles Times developed a prototype service in conjunction with Kent State before shelving it last year. The newspaper decided the e-book device developed by the university would be too expensive for both consumers and the newspaper. "At the time it seemed the market for tablets would get greater consumer penetration, but the device was too huge and expensive," said Joe Russin, assistant managing editor of multimedia at the Times. The paper had committed five employees, from copy editors to Web designers, to creating investigative content and the e-format for the prototype. "It required too much manpower," Russin said. "We shouldn't be worried about the mechanical platform, as our business is having the information available and ready." That doesn't mean, however, that another publishing company has given up on the e-book format. Pending an improvement in Tribune Co.'s financial performance, the newspaper plans on restarting the project later this year, while Kent State continues to develop the e-newspaper format, Russin said.
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