29 Feb 2012
The New Publishers
Keith Li, co-founder and CEO, Innopage
The past 18 months have been an eye-opener for Keith Li, co-founder and CEO of Hong Kong’s Innopage, a small, online application development firm. Mr Li’s background in mobile software certainly helped. But with no prior publishing experience, Innopage leapt into the online version of the trade, publishing the Chinese romantic novel, Love Carnival, using proprietary mobile formatting.
That was in February 2010. By August this year, Innopage had more than 100 e-published titles under its belt, with plans to add up to 40 more titles by year’s end.
Starting with an angel investor and three partners, Innopage broke even in about eight months, said Mr Li. The company, operating from the Hong Kong Science Park, has become profitable, generating “millions of Hong Kong dollars” in revenue, he said.
It’s perhaps unremarkable to many that technology’s latest step is increasingly drawing together the world of print with online, particularly mobile, multimedia applications. What is noteworthy is that a firm like Innopage, with fewer than a dozen employees, is moving swiftly beyond the domestic market to compete for the business of established publishing clients in Brazil, the United States and the United Kingdom, at a time when the developed markets themselves are falling back.
The Frankfurt Book Fair attracted Hong Kong firms
“In 2008, we were publishing 40-plus books per year; now, we are delivering between 60 and 70 and have a staff capacity for further growth,” Mr Duckworth added. This is at a time when there’s been a retreat of bookselling in the international marketplace, as seen by bankruptcies last year of such retailers as Borders, the second-largest US bookshop chain. By contrast, Hong Kong University Press is in a purple patch, albeit on a different scale.
“Revenue has risen to HK$7 million annually from HK$5 million, and this year we may reach HK$8 million,” Mr Duckworth said. That’s because of the choice of books to publish and lower publishing overhead, such as printing costs. His strategy is to publish more professionally focused books in 2012, including those on business, finance, law and medicine. He also has a renewed focus on educational textbooks for the Hong Kong University market and for secondary school teachers.
Hong Kong High Technology’s Alice Yeung says the company is focusing on high-quality, one-stop solutions for design and printing
Hong Kong High Technology, established in 1993, has shifted its focus to high-quality, one-stop solutions for design and printing. “The number of print runs and returns for work completed in 2011 has increased compared to two years ago,” said company spokesperson Alice Yeung.
For example, High Technology has invested in 40 Power iMacs G5 and environmentally friendly printing machines for its Chinese mainland factory. But the requirement to cut costs is not the only factor, Ms Yeung added. The firm must also anticipate a print job’s design and artistic appeal, crucial if it’s to compete in the US and Europe, its main markets.
Smartphone becomes a game changer (photo: iStockPhoto.com)
Mr Duckworth was offering a new title, IPO: A Global Guide, by investment banker Philippe Espinasse. The book is a practical account of how to launch as a listed company, with a backdrop of Hong Kong’s leadership in initial public offerings.
E-book sales take off
“The iPhone changed the business,” said Mr Li. That’s because the iconic Apple device brought greater standardisation to the mobile sector. And this is where Mr Li believes much of the new online publishing business will generate the greatest profits.
Innopage primarily uses the Apple platform for iPhones and iPads to sell its publishing apps to end users, although it also provides proprietary services to such mobile firms as Nokia.
After Mr Li published his first e-book, he thought he would have to “hard sell” the online format to publishers or bypass them. To his amazement, publishers started calling him instead. “I thought that would be completely unlikely, because I would be seen to be entering their market, but I was wrong.”
Tech Books on the Rise
This year’s Frankfurt Book Fair featured a new face: a stronger focus on film, games and technology, more legal and financial services on publishing topics and a new concept show.
Some 7,400 exhibitors from 106 countries showcased their print and digital products and services, many from Hong Kong. “We are experiencing the hour of start-ups,” said Juergen Boos, Director of the Frankfurt Book Fair. “That not only means digital books, but all kinds of storytelling and multimedia formats.” The concept seemed to be attractive: the event saw a slight rise of visitors compared to 2010.
“The more global business, the bigger the necessity to meet personally at least once a year here in Frankfurt,” said Gottfried Honnefelder, President of Borsenverein des Deutschen Buchhandels, the German association for publishers and booksellers.
“We came to Frankfurt to meet our partners,” said Michael Duckworth from Hong Kong University Press. “The fair still is the most important place to make deals with European partners.”
To make deals easier, a contract was closed between SRP European Legal & Tax Advisors GmbH and the Chinese Copyright Protection Center.
“German industry is beginning to understand the Chinese market better,” said SRP’s Manfred Rüdisühli at a press conference announcing the new service.
Dealing with publishing rights is of growing significance at the fair. Some six per cent more visitors said that sorting out publishing rights was the reason they attended. There were 11 per cent more visitors to the Literary Agents and Scouts Centre this year.
Philippe Stern from French digital book company Jouve gave a presentation about the future of e-books. Last year, e-books had a revenue share of 12 per cent of the European book market, and Mr Stern said prices will pose a strong argument for e-books in the future, with paper becoming a premium product.
Now, he plans to invest a great deal more time and money in research and development to bring print literature “to life” through sound, visual effects and animation. This will be particularly relevant to novels, children’s books and e-learning. Indeed, in the e-learning area, there is constant demand for upgraded material.
Mr Li showed his company’s e-book app with a demonstration of the 17th century French fairy tale Puss in Boots, by Charles Perrault. With music and interactive manipulation, the classic story is presented as a witty, updated tale in the manner of a computer game, complete with an option to “chase” the cat.
Innopage’s approach is to offer this type of entertainment inexpensively. The online application costs US$0.99, US$1.99 and US$2.99 to download at the time of writing, depending on the e-book. Many of the apps produced by Innopage are less about entertainment and more about education, ensuring compulsive buying, even in a depressed market. To a large extent, Mr Li believes that the e-book market is recession-proof.
Mr Duckworth said that such formats as Kindle, EPub and Mobipocket are displacing areas of traditional publishing, especially in fiction, leading to an erosion of traditional revenue and some dislocation of the publishing industry.
But he said that Hong Kong University Press was less affected in its staple, higher end of the educational market. On the other hand, change was certainly coming. “We work to make all our content as flexibly digital as possible, and we hope to see e-revenue grow to between 10 per cent and 20 per cent of our annual sales, from the current level of below five per cent,” he said.
Mr Li believes that the mobile e-book market is “fragmenting,” with different technology and requirements from publishers. The cost of testing products will increase, particularly when it comes to innovative solutions, with testing required on a “one-platform, one-device” basis.
Ms Yeung is upbeat about the Hong Kong printing sector over the next two years, because of continuing technology improvements. She believes that the demand for higher standard print results will carry the market forward despite difficult economic conditions.
Mr Duckworth is also “quite positive – if inflation remains under control.” He said Hong Kong retains its place as a centre for high quality and competitively priced printing, with its strong links to printing factories in southern China. With the industry becoming less reliant on labour-intensive production and intensifying its drive for better technology, there’s reason to believe it has yet to hit its sweetest spot.
For more on international trends, please see the December issue of the HKTDC Trade Quarterly, which can be ordered at: http://bookshop.hktdc.com/.