VOL.74/2024.09

A Diagnosis of South Korea's E-book Market Amid Subscription Competition

 

2019.06.10

 

On May 9, the Korean Publishers Association held a seminar on current issues that affect the digital publishing industry called 'The Attack of Netflix, Fixed Price System for Books Challenged'. Participants at the seminar debated whether e-book subscription services and the fixed price system for books can co-exist in South Korea. Subscription services refer to online services where members can read an unlimited number of books online after paying low monthly fees, like Netflix. Meanwhile, South Korea's fixed price regulations for book sales prevent bookstores from lowering prices beyond what publishers demand in order to protect small-to-medium sized bookstores and publishers. With the rise of these monthly subscription services, worries have been growing they may shake up the entire fixed price system altogether.
The seminar kicked off with an introduction from Chung Won-ok, a senior researcher at the association's policy research arm. The following presentations were given shortly after: 'Success stories of monthly subscription services in the U.S., etc. and comparisons between countries with fixed prices systems and book subscription services' (Lee Jung-ho, head of Korea Publishing Contents), 'Is it the proliferation of reading culture? Or platform competition?' (Ji Young-gyun, senior manager at Kyobo Book Centre), 'Can monthly subscriptions like Netflix co-exist with fixed book prices?' (Kim Ki-tae, chairman of Korea Electronic Publishing Society), and 'What is the future of publishing in a competitive subscription economy?' (Kang Il-yong, reporter at Aju News).

 

 

*Image of the poster for the Korean Publishers Association's 2019 seminar on e-publication issues

 

 

'Success stories of monthly subscription services in the U.S., etc. and comparisons between countries with fixed prices systems and book subscription services'
Lee Jung-ho, head of Korea Publishing Contents

 

 

Lee Jung-ho, who leads Korea Publishing Contents, began his presentation by explaining the current status of subscription services for e-books outside South Korea, fixed price policies in key foreign countries and examples of fixed prices implemented in e-book subscription services. Comparisons were made between different countries and available services, with Lee detailing the main characteristics and meaning of global e-book subscription services. Lee said offshore e-book subscription services had succeeded in becoming profitable as they produced sales of content that would not have existed without subscription services and that these subscriptions made reading easy for people who had little interest in books to begin with.
In addition, Lee pointed out the biggest difference between the fixed book price systems in South Korea and elsewhere was the fact that in European countries like Germany, France and Spain, publishing companies have the freedom to change listed prices for books anytime they choose. And it is legally required for distributors to sell books at equal rates in those countries. In France where a fixed price system is also in place for books, unlimited reading subscription plans became a problem and authorities were prompted to change the rules for e-book subscription services, Lee said. He went on to advise the audience that related industry workers and authorities could refer to these cases to improve rules, policies and contracts for e-book subscription services in South Korea.

 

'Is it the proliferation of reading culture? Or platform competition?'
Ji Young-gyun, senior manager at Kyobo Book Centre

 

 

Ji Young-gyun, who is a senior manager at Kyobo Book Centre, South Korea's largest book retail chain, explained platforms can't help but adapt to the shifts of time as the digital content market, and consumer environment have all changed. Kyobo also provides a monthly subscription service. Consumers' convenience and price are all important factors for platform providers like Kyobo, Ji said, and as consumers now stress the importance of experiential value, consumption not only means 'to own' but also 'to share'. This change in consumption patterns has given birth to the trend that is e-book subscription services and platforms that provide these services are currently competing fiercely against each other for more content to secure the market's top spot.
Ji added unlimited subscription programs have an effect in bringing in new users and that e-book readers have had a positive effect in boosting e-book content consumption. Hence, advancements in technology, improvements in profit structures, and securing quality content is important when it comes to subscription services expanding the e-book market, Ji explained. His presentation came to a close with a suggestion that a new positive cycle may be needed with bigger profitability and an active vision for platform businesses.

 

Can monthly subscriptions like Netflix co-exist with fixed book prices?'
Kim Ki-tae, chairman of Korea Electronic Publishing Society

 

 

Ahead of his presentation, Kim Ki-tae, the chairman of Korea Electronic Publishing Society, said a discussion is necessary among those who are directly affected by the fixed book price policy and e-book subscription services. He stressed the urgent need for a detailed roadmap and realistic policies. Through his presentation, Kim said if the subscription economy had previously been centered on 'content', now its core is 'digital' as technology has developed. Kim went on to point out that subscription services had manifested in a blind spot within the existing fixed price policy, creating a problem.
He asked if it was necessary to assess whether e-books should be subject to fixed prices. Kim said he believes electronic publications should abide by the fixed price rule as they follow a certain format as published content and enjoy certain tax breaks. Also, this discussion regarding the fixed price policy and subscription economy should not be held from the publisher's point of view, but that of the content producer as well, Kim said. He went on to forecast if existing issues like earnings structures are resolved, a good environment could be created for the co-existence of e-books and physical books.

 

'What is the future of publishing in a competitive subscription economy?'
Kang Il-yong, reporter at Aju News

 

 

A reporter for Aju News in South Korea, Kang Il-yong projected the subscription economy would continue expanding going forward in his presentation. In his introduction, Kang said the meaning of 'subscribing' had to be clearly defined ahead of anything. 'Gudok' in Korean, which means subscription, is easily confused between subscription and curation. Subscription means paying a price for recurring services, whereas curation refers to receiving recommendation services. Kang said subscription services are more suitable for today's online and digital environments.
Among music, movies, e-books and games for which subscription business models exist, music and movies have short consumption cycles but in the case of e-books, their volatility is comparatively low, and they have longer consumption cycles, which could present hurdles in creating subscription services for them. However, the age of the subscription economy is currently upon us and cannot be avoided, said Kang, and for e-books to have competitiveness in the subscription economy, high-quality content should be provided to coax consumers to open their wallets.

 

 

This year's electronic publishing issue seminar was an opportunity for all participants to mull over how the publishing industry should react to today's subscription economy. The presentations were all different, but the presenters were in agreement in that in the end, readers should be the focus of all efforts and that it is important to provide good quality content and services. Meanwhile, a more in-depth seminar on the fixed price policy and subscription services is planned for June at the Seoul International Book Fair. Not only will there be writers and other industry executives at the seminar, but also other participants from different career backgrounds, raising expectations for the discussions to be held.

 

Click to access the Seoul International Book Fair's website: http://sibf.or.kr/

 

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Written by Choi Ha-Yeong