BUSINESS OF LETTERS
By Roland Oliphant

Russia Profile
October 7, 2009

Statistics Show that the Russian Book Market Is Growing while the
Number of Consumers is Shrinking

Although Russians are still ranked as one of the most literate nations
in the world, ever fewer of them actually buy books.

The numbers look good: over the past several years, publishers
have begun releasing more titles and printing more copies of
them. According to the Russian Chamber of Books–Russia’s national
library and also the agency responsible for statistics concerning the
Russian publishing industry–in 2006 Russian publishers put out more
than 100,000 different titles (of all kinds–both books and pamphlets)
for the first time in Russian history. By 2008 that figure had reached
123,336 titles, including 105,093 books. The national print run was
760.44 million, 590.36 million of which were books (a book is defined
as a non-periodical publication of more than 48 pages. A pamphlet is
from five to 48 pages.)

But the picture painted by such statistics is crude at best, warns
Konstantin Sukhorukov, the head of the Book Chamber’s Bibliography
and Scientific Collection and editor of the Bibliography journal. And
if they are used to describe a "profitable and dynamic industry,"
they are misleading.

The Book Chamber’s statistics are based on the size of its collection
as the national book depository, and the printing figures publishers
provide. "These figures only show how many titles are produced and how
many copies are printed; they can show how many of these are produced
by commercial versus non-commercial operations, but they certainly do
not show how many have been sold," he said. "We often get criticized
by representatives of the book industry for producing misleadingly
optimistic figures. But the truth is, we can’t talk about the ‘market’
with any certainty, because there is no one in Russia responsible
for book trade statistics."

One factor blurring the image is the number of commercial ve f Russian
publishing changed unrecognizably with the fall of the Soviet Union,
when the state-owned publishing houses that had monopolized the
industry were broken up in the early 1990s. They were replaced by
a host of smaller firms, and today it is estimated that there are
some 5,000 publishing houses–that is, commercial organizations–in
the country. (A report produced by the Federal Service for Press
and Mass Communications and the Anglo-Russian culture and arts
foundation Academica Rossica said "over 5,000." The Book Chamber,
however, estimates that not more than 4,000 to 5,000 of those who
have publishing licenses actually produce anything).

But add in the universities, scientific institutions, museums,
libraries and various branches of government that maintain their
own publishing units, and the number of organizations publishing
in one form or another is around 25,000 to 35,000, estimated
Sukhorukov. Furthermore, Russian publishers tend to operate across the
former Soviet Union wherever there is a substantial Russian-language
market. Eksmo, for example, has distribution centers in Russia,
Ukraine and Kazakhstan. That makes it difficult to talk about the
industry inside one particular state’s borders.

Yet despite all these caveats, it does look as if the market is
growing. Retail and wholesale prices rose some 15 percent in 2009
compared to 2008. Niche sectors have done particularly well, with
students and other consumers of specialist literature continuing to buy
up-to-date editions rather than rely on hand-me-downs and ill-equipped
libraries. "That’s a tendency we’ve seen for several years, and
despite the crisis it seems to be continuing," said Sokhorukov.

The end of the book hunger

A number of dramatic shifts occurred in Russian publishing in the early
1990s. The break-up of the state publishing houses opened the field
for smaller, independent firms, and a great many appeared. These new
publishers had a huge demand to meet. By the end of the Soviet Union,
what the American scholars " had reached epidemic proportions. The
lifting of censorship restrictions sparked a frenzy in printing,
as the new publishers scrambled to meet the demand of a readership
starved of hitherto forbidden or simply unavailable literature. There
was an especially fierce dash to bring foreign works to market,
securing translations and (sometimes) the rights to them.

Not all followed the trend. Eksmo, today the largest Russian publisher,
tracks its success to its "bet on Russia." "The foreign authors who
then dominated the market were mostly bad translations, and often
did not even have the rights to publication," says Eksmo’s official
history. "The turning point came when the publishing house began
working with Russian writers."

While the number of publishing houses proliferated, the number of
books collapsed. But that was not as paradoxical, or as catastrophic,
as one might think. Practicality no longer required the publication
of reams of party-authorized material. And, once the initial "book
hunger" was quenched, it never quite returned. Gone is the almost
complete reliance on the book for both entertainment, information and
escape. The newspaper and magazine market has exploded; the Internet
is increasingly accessible (though with only around 30 percent of
penetration, it remains out of reach for many); there is a wide choice
of radio and television stations. Reliable supplies and alternative
ways of getting hold of literature (like the Internet) mean that the
phenomenon of the "sensational" book that would fly off the shelves
declined. That not only affected demand, but caused profound cultural
change. "The book itself has quite a different function in our society
in comparison with Soviet times," Sukhorukov said.

Made in Moscow

Despite the large number of independent publishers, the market is
increasingly consolidated. Of the 4,000 to 5,000 estimated commercial
operations, the top 25 publishers account for 65,000 or more titles
annually–at least 50 percent of all production. At the very top sits
Eksmo, which claims to account for some 15 percent of the Russian book
market and edged ahead of its nearest rival, AST, in the past couple of
years. The biggest operators tend to have diverse operations. Eksmo
and AST both publish fiction, academic and professional works,
and children’s books, all fields that require different business
models. Others have found success through specialization. Flamingo,
also in the top 25, has maintained its focus on children’s books since
it was founded in 1990. At the other end of the scale are extremely
small outfits, often with only two or three staff who produce only
a couple of titles a year, usually in some specialized scientific or
academic field.

But the biggest imbalances in the industry are geographic. The
publishing industry is heavily concentrated in Moscow, where some
60 percent of all titles are published, and ninety percent of the
national print run is produced. At one time the price of a book could
be almost directly correlated with its distance away from Moscow,
thanks to transport costs and the costs incurred by each wholesaler
and retailer added to the supply chain. Nowadays prices still fluctuate
regionally, but far more erratically.

Unlike in the West, the practice of publishers printing a recommended
retail price on a book’s cover is rare. And the lack of fixed prices
or any other regulation means that regional differences in supply
and demand, and input costs like staff wages and shop rental space,
can freely feed into the retail price of a book. A rule of thumb
would say that it reverses the previous trend–in the capital,
retail space, staff wages, demand and prices in general are much
higher than in the regions. But that rule does not hold fast. "The
same title in Moscow could cost twice or half as much elsewhere,"
said Sukhorukov. "And that variation is not only between regions,
but between bookshops in the same city."

Demography bites

Contemporary publishers’ gravest problem is one that plagues other
industries as well: as Russia’s demographic crisis persists, the
reading population declines – fewer children are born and become
readersBut despite all this, more titles are now published, and more
copies of them printed, than at any time during the Soviet Union. The
quantity continues to grow year by year, and, as far as can be told,
demand is holding up despite the effects of the financial crisis. But
the book trade is now threatened by a more relentless enemy: time.

Publishers (and traditionalists) everywhere lament the decline in
the reading population. It can be attributed to all manner of modern
evils–the rise of the Internet, computer games, light entertainment,
the pressures and demands of mo cy. But the trend is clear. Fewer
people are reading, and fewer children are becoming readers.

Should something be done to address the "problem"? A look at world
literacy rankings suggests that the panic about declining culture may
well be imagined. The United Nations Development Program report for
2007 to 2008 estimated Russia’s literacy rate at 99.4 percent; ahead
of the United States and Britain, and alongside several other former
Soviet republics. Indeed, the upper ranks of the literacy league are
dominated by countries that were once part of the Soviet Union (Russia
shares 11th place with Armenia, Ukraine and Uzbekistan). Books may
have lost the role they had in Soviet society, but the legacy seems
to endure.

Publishers, of course, are more concerned about customers than readers,
and they are not quite the same thing. Russians may be amongst the
most literate people in the world, but only around half of them
actually buy books. That decline is aggravated by Russia’s ongoing
demographic crisis. The country’s population is shrinking at a rate
of some 1 million a year, and not only are older readers being lost at
an alarming speed, but fewer children are being born to replace them.

There’s not much the publishers can do about that, of course,
but the rate of decline is such that if it cannot be reversed,
the publishing houses may find themselves forced to compete for a
shrinking market. That’s a long-term threat, and by no means unique
to publishing, but it is a serious one.

There are other problems; copyright protection, long the scourge of
the film industry, is also difficult to enforce in literature. There
will be no return to the "book famine" of the last years of the Soviet
Union, but in some regions it is still difficult to get access to high
quality, modern works. At the moment, however, these are peripheral.

It is probably sensible to expect the top publishing
houses–particularly Eksmo and AST–to continue to extend their
domination of the market. They are better positioned to sis, and
their long reach allows them to sell all over the country. In the
long term, they will also be more resilient to the pressures of the
population decline.