Right now everyone in the English speaking blogosphere is focused on Brazil and Japan, but China could be where the interesting story is happening. China Daily is reporting that that the Chinese retail giant Jingdong Mall is pursuing aggressive discounts with their ebookstore.
This company was a latecomer to the ebook market when they opened the ebookstore in February with around 80 thousand titles as well as reading apps for Android, PC, and more. They were facing competition from Hanvon, Dangdang, and Shanda, a Chinese media conglomerate as well as a buying public which was reportedly resistant to the current average ebook price of 5-8 yuan. (And if you think there’s a disconnect between what US publishers charge and what the US ebook buying public wants to pay, that’s nothing compared to China where that average price of 5-8 yuan converts to $.80 to $1.26.)
And so Jingdong Mall had to come up with a better offer to attract consumers. That could be why they hit upon the idea of offering subscription access to ebook content. They recently announced a plan to offer 1 thousand titles for a single fee of 30 yuan ($4.7) for three months, or less than half a cent per download.
The incredibly low price is dismaying both authors and publishers, who fear cheap ebooks will threaten their livelihood, as well as Jingdong Mall’s competition. And that includes the ereader makers.
Hanvon, the leading Chinese ereader manufacturer, is finding itself in much the same position that Sony encountered in 2007. Hanvon had launched their ereaders with the goal of making a profit by selling content, but due to a general failure to stock enough titles they’re finding themselves swept aside in the content market. This company had planned to follow Amazon’s ebook model, but unfortunately could not match Amazon’s wide catalog of ebooks and relationships with major publishers.
Hanvon is now dependent on device sales for most of their income and only offer a lackluster ebookstore to support them. In the long run that could hurt them because it now appears that the Chinese ereader market is jumping over the ereader-focused phase which the US ebook market outgrew in 2011 directly to the next phase of the market: apps.
As the quarterly statements from E-ink have shown, people are buying fewer ereaders today than they used to. And in fact the Chinese ereader market never was all that large, with some estimates putting it at around 300 thousand units sold in Q2 2011. That detail is confirmed by market surveys, including one survey conducted in China which showed that in 2011, far more people read ebooks on line or on a smartphone than on ereaders. Just under 12% of respondents read books on the web and 9.4% on smartphones, while only 2.5% favored ereaders
This is going to put Amazon in a curious position if and when they launch in China. And based on some leaked Kindle help pages discovered on Amazon.cn in April of this year, I think they will. Amazon will likely find themselves having to face stiff competition from experienced local retailers.
image by Arian Zwegers