VOL.74/2024.09

Topic

 

Korean Publishing Industry Current Trends in 2021 and Projections in 2022

 

2022.01.03

 

Current Trends of the Korean Publishing Industry in 2021

 

The coronavirus pandemic has created unprecedented changes in every aspect of life. It has led to increased dependence on online and digital technology. The publishing industry that accounts for the largest part of the content industry, has also been affected by the changes under COVID-19. To understand better, let us look at what changes the Korean publishing industry went through in 2021.

 

Sympathy/Comfort, Investing/Personal Finance, Rediscovery of Originals

 

Online book sales have increased with social distancing rules in place since the pandemic. As a result, total book sales have increased by 6.6% compared to the same period of last year, according to Trends and Sales of Best-selling Books of 2021 by YES24, an online bookstore. The most sold book in 2021 is Dollagoot Dream Department Store (Sam & Parkers), a heartwarming fantasy story written by Lee Mi-Ye. In 2020, the best-selling book was The Having (Suo Books), a book about ways to attract luck and money written by Lee Seo-Yun and Hong Ju-Yeon. In 2019, it was The Reason Why We Travel (Munhakdongne), a travel journal written by Kim Yeong-Ha.

 

 

When we look at the genres of the top 100 best-selling books in 2021, they can be generally summarized under three trends. First, sales of investing and personal finance books have significantly increased due to growing economic uncertainties. The books that have become popular include The 77 Most Important Questions for Novice Stock Investors (One & One Contents Group Publishing), which introduces what novice stock investors should know before investing, Trend Korea 2022 (Miraebook), which talks about the future of economies and industry trends, 2030: How Today's Biggest Trends Will Collide and Reshape the Future of Everything, and Metaverse (PlanB Design). Second, books that bring readers comfort and hope have gained popularity under COVID-19. Fantasy and heartfelt stories such as Dollagoot Dream Department Store and Dollagoot Dream Department Store 2 (Sam & Parkers) by Lee Mi-Ye and The Midnight Library by Matt Haig have been highly popular. Korean novels such as ALMOND (Changbi Publishers, Inc.) by Sohn Won-Pyung and Perfect Happiness (EunHaengNaMu) by Jung Yu-Jung have been loved by many readers. Third, books that have been made into films or OTT content have gained a lot of attention. These films and OTT content have become popular on social media platforms, TVs, and OTT platforms. SBS drama, Hongcheongi is based on a novel titled Hongcheongi (Paran Media), and tvN drama, Navillera, loved by viewers, is based on a novel titled Navillera (Wisdomhouse). The novel Navillera is an adaptation of a webtoon. These novels have also gained a lot of attention. Dune, a science fiction film by Denis Villeneuve, was released in October and sparked popularity. Along with this, Frank Herbert's sci-fi novel of the same title has sold well in the market. Webtoon DP Dog Day (Cine21books), on which Netflix Original D.P. is based, saw its sales grow by 677.8% after the drama's release in August. Hellbound (Munhakdongnae), on which the Netflix drama Hellbound is based, also witnessed its sales increase by 445.3% after the drama's release in November.

 

 

Growth of Digital Content Market

 

Consumption patterns and ways of using content have significantly changed. We are seeing a growing digital content consumption with the growth of new media such as smartphones and the emergence of a digital native generation accustomed to digital life. The publishing industry is also witnessing growing sales of eBooks, audiobooks, chatbooks, and web fiction.
According to Current Trends of the Publishing Industry 2020 by the Publication Industry Promotion Agency of Korea, the revenues of eBook distribution are estimated to be around KRW 419.8 billion in 2019. However, the figures don't include numbers from telecommunication and portal businesses. Accounting for the missed figures, I expect the number to be around KRW 530 to 580 billion. When we look at the genres, the revenues of genre fiction (Romance, Fantasy, Martial arts) recorded KRW 112.5 billion (26.8%), with general genres at KRW 65.1 billion (15.5%), and web fiction at KRW 242 billion (57.7%). Web fiction recorded the largest growth among all genres.

 

 

More and more people have become interested in audiobooks with the development of digital environments and technology, along with increasing visual fatigue. People can read easily using audiobooks in a busy daily life. While the domestic market size of audiobooks is estimated to be around KRW 30 billion, the figure is expected to grow to KRW 108 billion. Since January, Millie's Library, a book subscription platform, has opened DIY audiobook services where readers can make and sell their own audiobooks. It has created a DIY environment for audiobooks where prosumers become the main participants in the platform. Genie Music, one of the third largest music online stores, acquired 38.6% of the shares in Millie's Library by investing KRW 46.4 billion in September, making it the largest shareholder of Millie's Library. In October, it launched Story G, an AI audiobook service, which provides consumers with various audio content, including audiobooks, audio entertainment shows, and audio soap operas.

 

 

K-content has gained global popularity, with Korean content such as Parasite, D.P., Squid Game, and Hellbound having achieved global success. In the meantime, Naver and Kakao, South Korea's two portal giants, have acquired domestic and global web fiction businesses to increase their influence on intellectual property (IP). Naver has completed its acquisition of Wattpad, an online social reading platform in North America, in a transaction valued at USD $600 million in May. In addition, the company has gained ownership rights over Munpia, a domestic platform, by acquiring 56.26% shares in the company in a transaction valued at KRW 170 billion. Kakao has acquired Radish, an online social reading platform in North America, in a deal valued at KRW 500 billion in May. More investments will be made as well-made IP can generate large revenues via various channels.

 

The decline of Retail Stores

 

More publishers are in the market than bookstores in South Korea. Therefore, publishers have to distribute new books to as many bookstores as possible. However, it is difficult for publishers to use direct distribution to many bookstores across the country. So, they use direct distribution mainly with online bookstores, with a small amount going to retail stores. Interpark Song-in Books, the second-largest retailer, went bankrupt in May. Song-in Books filed for corporate rehabilitation in 2017 after failing to repay KRW 10 billion bill due to financial difficulties. After that, they were acquired by Interpark. Four years later, Interpark Song-in Books suffered financial difficulties again due to COVID-19 and a shrinking number of readers. It filed a corporate rehabilitation in June 2020 and went bankrupt after the rehabilitation failed in May 2021.

 

 

 

Bookstores where readers discover new books also suffered financial difficulties. Shrinking demand for books and COVID-19 have caused offline bookstores to close their businesses. Seoul Bookstore, the third-largest bookstore in South Korea, went bankrupt in June (Kyobo Book Centre being the largest, followed by Youngpoong Bookstore). Founded in 1988, Seoul Bookstore ran Bandinlunis but failed to repay promissory notes nearing maturity after years of financial difficulties. This made it go bankrupt. Bulkwang Bookstore, a gathering place for neighborhoods, also closed its business after having operated for 25 years in Eunpyeong-gu, Seoul. This can be attributable to an increasing number of large bookstores' branches and more online book sales. Independent bookstores are also faced with difficulties. Books & Day and Night in Mapo, Seoul sells coffee and alcoholic beverages allowing visitors to read books while drinking. Korean actor Park Jung-Min opened the bookstore in 2019, gaining a lot of popularity. In the bookstore, recommended books are listed on a menu, and customers can keep books they read in the bar. All these made the customer have fun. However, it closed its businesses after having experienced financial difficulties.
People working in the publishing industry have gone through hard times after middle-and-small sized bookstores, as well as independent bookstores and large bookstores, closed their businesses, which negatively affected middle-and-small sized publishers.

 

Several types of legislation are being revised

 

The Ministry of Culture, Sports and Tourism made an official announcement of revisions in some standard contracts in 2018 after having revised standard contracts in seven different culture/art fields from 2013 to 2017. However, some publishing organizations opposed the revisions as they were using their own standard forms under the principle of freedom of publishing contract. As a result, the Ministry drafted six different contracts that reflected changing environments for the publishing industry and four different standard contracts for the creation and transaction of audiobooks in 2020. As a result, the Ministry made an official announcement of the finalized 10 types of standard contracts in February 2021.

 

 

Google's Play Store fees have been a heated debate topic. The mobile app market is continuously growing with more use of smartphones. Under this circumstance, app store providers have enforced fees from in-app purchases. An in-app purchase is something you buy when using an app on your computer or mobile device. This purchase is made by providers' own payment systems. In the global app market, Google and Apple have become rule setters leading the digital economy. However, even after having lowered fees, they are faced with antitrust lawsuits brought by global companies.
Google, unlike Apple, has enforced in-app purchase fees only from game apps. However, Google announced a policy to take 30% of in-app purchases for some providers in July 2020, which led to a controversy. If in-app purchases become mandatory, the publishing industry has no choice but to increase prices for electronic publications. Therefore, many publishers strongly opposed the policy and submitted a petition to the Korea Communications Commission. As a result, the Fair Trade Commission started an investigation into unfair trade practices in app markets and mobile operating system markets. In addition to this, the assembly proposed a Partial amendment to the Telecommunications Business Act to prevent app market providers from undermining unfair competition. This has led to the world's first legislation that prevents Google from making in-app purchases mandatory after the bill has passed the National Assembly on August 31st, 2021. This has contributed to more antitrust laws globally for app markets.

 

Projections for the Korean Publishing Industry in 2022

 

While we have experienced unexpected change during COVID-19 with the rapid growth of online and digital technology, we will have more freedom of choice and see accelerated expansion. I believe that the publishing industry should be prepared for digital thinking and digital-centered transformation away from the conventional way of thinking. That way, the industry can broaden its customer base and have the opportunity for further growth under changing environments. The industry needs more diversity for it to cope with diverse external environments. It can help minimize barriers that prevent the industry from accepting new changes.
The 5th Promotional Plan for the Publishing and Culture Industry (2022~2026) starts from 2022. I hope the year 2022 will provide the industry with an opportunity to increase its market presence. In line with this, I would like to look into a few projections for the industry. First, content publishing platforms will become more sophisticated and popular. We're seeing an increasing number of platforms where people freely express and post their ideas. However, what we need are safety measures that help avoid copyright infringement and a community for an interested party as the quality of content is not that high. This will be a stepping stone for the creation of different content. Second, digital marketing based on new media will become more popular as it is a good tool to attract young customers. We should be cautious in using social media based on video content as it is highly effective in viral marketing. With the emergence of a Virtual Native generation, more participation is expected in utilizing virtual spaces such as the metaverse. Third, people will read books using various tools such as smart media with the growth of digital content. E-books will become more popular, especially for educational purposes. We will see a growing market for audiobooks next year. This will lead to more reading using smart media for various generations. In particular, this tool can be used effectively for older adults having problems with reading. Fourth, the amount of original content will increase with a growth of hybrid curation as more people start to use subscription services. While demand for content is rising, people prefer subscriptions to lower costs. With fierce competition between subscription providers, it is important for a provider to create original content to keep ahead of the competition. We might face a filter bubble if we depend too much on AI technology in providing personalized curation as we enter a so-called nano society beyond hyper-personalization. Therefore, human curation will be added to the existing curation services. Fifth, horizontal expansion will be accelerated to adjacent businesses. While it is important to go beyond the traditional boundaries of publishers, distributors, and libraries in the publishing industry, what's more important is the accelerated expansion to adjacent industries. This will help businesses attract more readers.

 

 

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Written by Lee Eun-Ho (Kyobo Book Centre's eBook division, Doctor of Science)