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Barnes & Noble Inc
The Japanese are avid readers; the country’s publishing industry generated $22.5 billion in revenue last year, according to the Japan Book Publishers Association. A decade ago, long before the Kindle revolutionized the publishing world in the U.S., Japanese authors were writing novels using text messaging and readers were catching up on their favorite novels and manga comics on their mobile phones.
But when it comes to e-readers, the industry has gone nowhere. Although Sony (SNE), Panasonic, and Toshiba offer e-readers for local consumers, sales have been disappointing. Foreign companies have stayed away, in part because their software had difficulty handling Japanese characters, as well as text reading vertically rather than horizontally. Estimates for the total number of nonmanga e-books in the market vary, but attorney Yoshiyuki Miyashita, a partner at Tokyo law firm Nishimura & Asahi who advises clients on publishing issues, says there are only about 100,000 titles. For the world’s third-largest economy, that figure is tiny: Amazon.com (AMZN) alone has more than 1.4 million Kindle eBooks available on its U.S. website.
“People don’t want to buy the machines because there’s not very much content, and publishers aren’t keen to invest in the content because there aren’t many e-readers,” says Hamish Macaskill, managing director of English Agency Japan, a Tokyo literary agency. The Japanese market for e-books has also suffered because publishers have had difficulty obtaining digital rights to authors’ works, Masahiro Kitagawa, executive vice president of eBusiness development at Impress Holdings, a Tokyo-based publisher, said in an e-mail. Usually, Japanese publishers only have the right to print paper books while authors retain other rights. “Getting rights from the author is not an easy job,” Kitagawa wrote. “Editors are too busy to both publish new print books and manage rights for their old books. Usually publishing new books is a higher priority.”
Finally, though, Japan’s e-reader dark ages may be ending. EPUB 3.0, the latest open-standard software for digital readers developed by the International Digital Publishing Forum, an electronic publishing trade group, can display Japanese text vertically. That’s unlocked the door for some newcomers to the e-reader market, allowing them to use the same standards they use elsewhere rather than technology exclusive to Japan.
In July local e-commerce powerhouse Rakuten, which last year bought Kobo, a Toronto-based maker of e-readers, introduced a Japanese version of its gadget. In September, Google (GOOG) unveiled a Japanese-language version of its online bookstore, Google Play Books, aimed at buyers of its new Nexus 7 tablet. Apple announced in October a new version of its iBooks application that will support Japanese-language e-books. And on Oct. 24, Amazon announced it would start selling its Kindle Paperwhite e-reader in Japan with a starting price of 8,480 yen ($106). Amazon is also opening a Kindle store on its Japanese website and will have more than 50,000 Japanese-language Kindle books.
That’s putting pressure on established players. Sony, an early leader in the market, recently released a new version of its Reader device at half the price of its predecessor (9,980 yen); on Oct. 11 the company announced it was opening its Reader bookstore to users of non-Sony Android mobile devices. Gamers who use Sony’s PlayStation Vita will also be able to download digital books from the Reader store.
Sony’s moves may have come too late for it to dominate the market, says Robin Birtle, chief executive officer of Tokyo-based digital publisher Sakkam Press. “They should have owned this, and they didn’t,” he says. “They had a very good reader and didn’t do anything with it.” Birtle says Amazon’s Kindle will be the product to “make digital devices go from being a sideshow to being mainstream.”
Many obstacles still remain. Publishers are lobbying Japanese lawmakers to change the copyright law so digital publishing is easier, says Miya-shita, but that will take time. For now they have to try to reach more deals with authors. And some players in e-books don’t have any plans for Japan. Barnes & Noble (BKS), for example, is only now making its first move internationally to the U.K.
Other companies may eventually join the field, but Rakuten Chairman and CEO Hiroshi Mikitani says, “We welcome all these new services. I don’t want to compete against each other, kill each other, in this small pond. It is still too early.” He does appear to have at least one rival in his sights. In July, Mikitani sat down at the Tokyo International Book Fair with the president of local publisher Kodansha and presented him with a gift: a T-shirt saying “Destroy Amazon.”
The bottom line: With improved software and new e-readers, the tiny market for digital books in Japan is poised to grow dramatically.