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Grass - Sheep - Wolves

Thoughts on the Future of the Publishing Industry in China and the World

By Cheng Sanguo

In 1995 Cheng Sanguo founded the Chinese trade magazine “China Book Business Report” (CBBR) which he headed as editor-in-chief for ten years. Today he is a publishing consultant and a widely renowned industry expert.

Few countries display such a marked contrast between new and traditional media as China, whose new media is consistently cutting edge, yet whose traditional media is almost entirely stagnant. In recent years, China's traditional media may have led the world in a number of publication categories, but otherwise it rarely distinguishes itself on the international stage.

China's new media, on the other hand, command our attention: in 2008 the number of Chinese Internet users approached 300 million, surpassing the United States to become the world's largest online population. The number of mobile phone users is nearly 600 million, more than the United States and India, in second and third place, combined. Within the Chinese market, domestic Internet companies have overtaken giants like Google, eBay, Amazon and Yahoo. According to research by Morgan Stanley, the profits of these Chinese Internet companies also far exceed those of their global counterparts.

Accelerated decline

The rise of new media is a source of great uncertainty for the future of the world's publishing industry, the oldest and most traditional of media. In China, the future of publishing is even less certain. Put another way, the future decline and marginalisation of some forms of traditional media will occur even more quickly in China than it might in other countries. Due to excessive government controls, the content provided by China's traditional media will never come close to satisfying consumers' demands. This, in addition to the weakness of China's copyright protection system, has resulted in vast quantities of copyrighted material becoming available for free via China's new media. Not only has this created an unprecedented expectation for free content on the part of consumers, it has also bred a sizable new generation of online readers.

Years' worth of surveys have analysed the reading habits of Chinese citizens and reveal that the consumption of traditional media is shrinking every year, from 60.4% in 1999 to 34.7% in 2007. Consumption of online reading materials, however, has grown by leaps and bounds, from 3.7% in 1999 to 36.5% in 2007.

The irreversible trend of free content on the Internet is bad news for traditional publishing, where profits are primarily based on the sale of printed materials, and even worse news for China's traditional publishing industry. China may lead the world every year in number of categories of printed content, but modern China's publishing industry only has one hundred years of history, too short to have established such industry linkages as in developed western nations.

False alarms and deeply ingrained habits

Throughout the rest of the world, this imbalance between old and new media won't be as striking as it is in China, because in many western countries, publishing has a much stronger position in mainstream media than it does in China, as well as an established chain of production. In these countries, the constant creation of content aided by free speech and copyright protection, the ranks of professional editors and publishers with both cultural ideals and commercial savvy, a highly efficient distribution and sales network for publications, and a reading public educated in universities, all tie together to form a complete and mature business sector.

By comparison, the status of China's traditional publishing industry is not at all stable and must compete with other consumption options for readers. What's more, the publishing industry is dominated by government investment, creating institutional inefficiencies and asymmetric incentives, making it inherently slow to react and adapt to new challenges. Because of this, state-owned publishing groups, which currently appear so strong, are in reality facing the fate of dinosaurs, and the traditional publishing houses they control may be in for a very rocky future.

For the foreseeable future, printed reading content will stubbornly persist, despite dire predictions of its demise. As each new media arrives, there will be predictions that it will replace books altogether – this happened most recently last year, when Amazon dealt a decisive blow to the global printing industry with the introduction of Kindle. Apple changed the music industry's entire geography with the iPod and iTunes, and Kindle is clearly an imitation of the iPod. Might this have the same effect on the publishing industry? But it should be quickly obvious that this is one more false alarm. Though reading is not a skill we are born with, like language, nor a part of our genes, printed books still have a history of more than five hundred years, starting with Gutenberg. Not only is this history far longer than that of recorded music or video, the habits and experience of consuming printed content are far more culturally ingrained. Even the transformation of the popular medium of music was not powered by one single factor, as people imagine, but was the result of a certain combination of factors including standards, relationships, connectivity, interfaces, content and services, which all made the iPod so successful.

Ecological balance also a factor for the book trade?

In the future, books are likely to survive in three forms. First, as traditional ink-and-paper books, though large-scale printing and distribution may yield to high-quality custom printing and print-on-demand, and perhaps even lead to a resurgence of Europe's traditional hand-made books – which is fitting, given the rising price of paper. Second, as book-like digital readers, such as Amazon's Kindle or the Sony Reader, which replicate some aspects of the appearance of a book and the experience of reading it, as well as boasting the benefits of digitisation such as mass storage and search capabilities. Third, as digital devices capable of displaying their contents on a screen, including mobile phones and other mobile devices.

Mobile phones may not primarily be reading terminals, but they certainly are very convenient terminals for commercial transactions, for example, for e-commerce and making payments. Likewise, if brick-and-mortar bookstores continue to exist, most will become centres of custom printing, download or experimentation, or they may be absorbed into other outlets of mass consumption.

As a highly relevant saying goes: “Printed media is grass, online media are sheep, mobile media are wolves. The wolves stalk the sheep and the sheep live off the grass, but everyone knows that the end result is not simply a plain full of wolves, but rather an ecological system, balanced between the three.”

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