Internet

Alexander Royfe CEO Litres

Alexander Royfe, CEO of LitRes, is convinced that Russia has what it takes to surpass the USA in all things related to e-books. “Russia has very good technology at its command and does not restrict the user. While the USA is focused only on formats like PDF or EPUB, we offer everything here – and completely free of Digital Rights Management.”  Royfe accepts the inevitable consequences that come along with this. “Pirated versions of our bestsellers are downloadable within three hours at the most – the number of pirates is too great to put up a resistance”. But embracing the concept of making everything as easy as possible for the users has worked well for Royfe thus far. A few weeks ago, he presented himself at the Frankfurt Book Fair as a winner of the Russian distribution debacle with www.litres.ru. “Distribution practically doesn’t exist in Russia and the Internet is the only solution for the book trade”, says Royfe. On top of that, print is expensive. It is simply too expensive for the average reader to buy the new Umberto Eco in hardcover for 500 roubles.

The website, which offers e-books are available in all formats and accepts all imaginable methods of payment, be it via SMS or credit card, now has 250,000 registered users. Readers can pay at special cash points in Moscow.  The content being sold is multimedia in nature and the texts, audio and video files have their own editorial staffs. Just a week ago, games were added the list of offerings. Royfe believes that the recipe for success lies in the combination of 40 employees on his team: book people meet techies – and they even understand each other. Royfe himself is a trained radio engineer who worked for the Moscow magazine “Book Review” for years as a journalist before starting at publicant.ru, the pioneer in the e-book trade, and then moving to LitRes in 2008 as CEO. Today LitRes is Russia’s leading e-content retailer.

He especially uses the non/fiction book fair to communicate with his customers – the big names of the Russian book market like AST, Eksmo or Prosveshenie. LitRes provides them with technology services, like converting from print into e-book, and also with complete marketing services. Royfe also meets his authors here. LitRes’ portfolio boasts around three times as many agreements with authors as with publishers. The business model in this field is a traditional one: contracts, including author advances, are only concluded with the best authors.

Wolfgang Bertrams (left) and Mirza Hayit (right)

“Can the Internet save the Russian book trade?” In light of the debates surrounding the Google Settlement, this question sounds almost heretical. Not so to Russian ears evidently. A panel discussion was organised by the German Book Information Centre (BIZ) Moscow and by the Goethe Institute to provide an international perspective. The event was attended by Wolfgang Bertrams of the Mayersche Buchhandlung, Alexander Ivanov from the Russian publisher “Ad Marginem”, and representatives of Russian bookstores and Internet portals.

"Can the Internet save the Russian book market?": A question of great interest to the public

Mirza Hayit of the Haufe Mediengruppe was invited to provide the German publishing perspective and confirmed what for Russian readers is a part of everyday life:  “The distribution process and the availability of books is appallingly bad and completely centred in Moscow and St. Petersburg.” Internet bookstores like the Russian replica of Amazon, Ozon.ru, are the ones who stand to gain from this. In the first quarter of 2009, Ozon was able to defy the ubiquitous recession, increasing its sales by a third. Yet Mirza Hayit remains sceptical: “The field of e-publishing could be an opportunity, but when I look at the infrastructure for Internet access outside of the urban centres, I realise this will probably still take awhile. Overall confidence in the Internet book trade does not seem to be very pronounced on the part of publishers and it also falls flat, according to Ozon, because publishers are not ready to grant extended payment terms”. Internet use in Russia is concentrated in the urban centres: There are more than 40 million Internet users, around 12 million of whom live in and around Moscow. In June 2009, 9.35 million private households had broadband access.

In Germany, the digital future is already the present. While a specialist publisher / media group like Haufe still made 90 per cent of its sales via print in 1990, that number is just 50 per cent in 2009. The rest is brought in through online activities, software, and also by offering seminars. Mirza Hayit estimates that in 2020, every second euro of profit will come from the online field. “Print will remain, but there will not be any growth here.”

His German colleague Wolfgang Bertrams estimates that Mayersche has a 10 to 15 per cent market share on the Internet. Mayersche has also profited in the business-to-business field, particularly by offering its own e-book distribution. Mayersche is Germany’s third largest bookstore chain (after DBH and Thalia), with 1,000 employees and its own logistics. Nevertheless, Bertrams is sceptical about what the future holds: “The Internet is a problem for the retail book trade in Germany” – and not the thing that will save it…