What I learned in Japan about EPUB 3, Rakuten, Kobo, Kodansha, and Japanese e-publishing in general

Here are some of my notes from the IDPF's first conference in Asia, specifically in Tokyo, Japan. The topic was EPUB 3, and it was co-sponsored by Voyager Japan. It was held as part of the larger 16th Tokyo Ebook Expo, in Tokyo Big Sight, a huge complex at the edge of the harbor.

NB: I don't speak Japanese, so not only are the quotes pretty rough, but they are quotations of how the interpreter translated what the speakers were saying. And it was all going by pretty quickly. Corrections welcome.

The opening presentation featured Hiroshi Mikitani, the head of Rakuten, the Japanese online retailing giant that just bought Kobo; Yoshinobu Noma, from Kodansha, one of Japan's largest publishers, and Bill McCoy, head of IDPF. with Takehiko Ogi, CEO Maruzen Chi Holdings, as the moderator.


Photo courtesy of Hagino-san, president of Voyager Japan

A few points stuck out for me. First and foremost, the Rakuten CEO stated that all their Japanese content would be in EPUB 3. He said they chose the open standard so they can compete not on format but on ease of use of their reade, that EPUB3 allows content to be viewed on all sorts of different devices. He talked about localized service on a globalized platform. Second, he stressed his desire to spread Japanese culture abroad, as well as to encourage reading in kids all over the world. Their initial target is to have 1,000,000 Japanese books in EPUB 3 format, and then add another half million, so you can get "any" book in Japanese as an ebook.

When asked how Rakuten was different from other players, and how the Japanese market was unique, Mikitani answered that they want to take advantage of the existing framework, including bookstores, of which there are 4x as many in Japan than in Europe or US.

The second panelist, Yoshinobu Noma, from Kodansha, said domination from one company was not good, and was encouraged by Rakuten's entry into the market. He mentioned that there are 70 million Rakuten club members with "points", and that the low price of the new Kobo Touch in Japan ($99) would help Rakuten and Kobo device gain foothold. He was concerned that fewer competitors keep books from coming to market. More publishers mean more freedom of expression, freedom to publish.

Then Bill McCoy (Executive Director of IDPF) added that the IDPF and open standards pave the way for the fusion of digital books: like manga is a fusion between comics and books, making a bigger world for all of us.

Mikitani then said "I am nationalist and as Japanese company, I want to make an impact in the global industry, and I want to export that overseas, not just manga, expand Japanese culture. Unless we have a device, [like Kobo], we cannot compete with overseas competitor: so there's a philosophical part plus a business part."

When asked if it was about books, he answered, "Kids are not reading, I'm not criticizing consoles, but this is a crisis because kids are not reading, and that affects the intellectual level. I think back to books I read in the past. In Brazil, there is no consumption tax on books, in EU, there is a lower tax. As a nation, we need to figure out how to expand book business.

The moderator immediately asked about Rakuten's servers, and it turns out they're all in Canada, which has some tax ramifications: Mikitani replied that "we must comply with the law, but we have servers in Canada for logistics… but that means no tax in Canada, 3% in EU and 0 in Japan."

[A quick internet search reveals that there is a 5% consumption tax in Japan, that will rise to 15% by the end of the year. It is not currently levied on electronic products purchased abroad, and thus by selling from Canada, Rakuten would not have to charge the tax.]

Mikitani played down color tablet ereaders because of weight and price [which I think are important points]. He said 70% of users in US have both tablet and e-ink. [Not sure where this number comes from.]

Then Noma-san spoke about government subsidized initiative to convert 60,000 books [to epub3 format??] but stressed idea that paper and digital is not zero-sum, that one can build on and benefit from the other.

He said that Japanese government has said that all textbooks must be electronic by 2020 and that that will be the tipping point for ebooks.

Question: EPUB 3 content is not widespread, how do you position it?

Bill: Japan has chance to leapfrog the splintering of EPUB 2. Mikitani: we have to have one Japanese standard and one global standard. Noma-san (Kodansha) is member of IDPF and also working on EPUB 3.

Noma-san continued on to explain concept of #GAFMA (or Google, Amazon, Facebook, Microsoft, and Apple), and said that they had to find a way to deal with that group. "As partner, we can work with them, but in US, there is competition. How can *we* compete with them? EU companies say Japanese companies exist that can compete, and they asked how we work with them, and we talked about how to compete healthily against each other. From EU perspective, they welcomed Rakuten's acquisition of Kobo. In short, GAFMA can be competitor or partner.

Question: Will Rakuten buy publishers? Bookstores? Mikitani: "I think we should let experts do what they do best, we have no plans to buy publishers or bookstores, but would like to strengthen alliance with bookstores [and indeed I saw Kobo being demo-ed in Bunkyo-do the next day.]

Question: What about writers? Are they thinking of ebooks?

Noma-san: Some are against, but gradually this will change. We are trying to do simultaneous paper, ebook, so get contract from author for both is way to go.

Question: Can Japanese culture be exported with ebooks?

Noma-san: "Already with manga, in Taiwan we have distribution company going to mainland China eventually, Japanese flavor needs to be added to Kobo in order to go global"

Mikitani: "I was amazed at how much manga was in FNAC in Paris, but in suburban stores, there's no shelfspace. So, selling ebooks online, where there is infinite shelfspace enables that possibility. This is great opportunity to export Japanese literature."

Question: Talk about how passionate you are about ebook industry.

Mikitani: This is going to be the initial year for ebooks themselves, this is an opportunity for ebook industry to expand overseas, with Kobo, and Kodansha, we'd like to support your business.

Noma-san: I make many speeches on big trends, but sometimes people misunderstand me. In Japanese market, unless we win in print, we won't win in digital. We have to win in print, now we will see a transformation, this is the chance to go digital. We have to create good content.

Bill: Digital books can be complimentary to print, but we don't yet know what digital books are, and can be. Publishers must become web publishers.

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On the second day, after my and Markus Gylling's talks in the morning, Ren Ando gave another presentation on Kobo and Rakuten which I found interesting.

Here's a brief synopsis of what he said:

Rakuten is an online marketplace, travel, financial, banks, credit services, advertising, entertainment. They do 1 trillion yen of business per year (about 12 billion dollars). Kobo is 3 years old, with 9 million users in 190 countries, 17000 publishers, 2.4 million titles, sales partners in 7 countries. Joined Rakuten in 2012.

Partner model: authors and publishers => Kobo => distribute device through local partners

Kobo touch, to be available at the end of July. Make Japanese reading culture a part of the global culture. "Renaissance and revolution of the reading culture"

EPUB 3 for all Japanese books in the catalog

Why? A: An open ecosystems is better for global interoperability, publishers and authors can trust EPUB, rapid increase of number of titles, a reliable reading platform, fast circulation of EPUB based books, migration pain mitigation, other EPUB based services, authors, publishers

"We are at a tipping point in Japan"

Creators can create and there will be lots of channels for distributing content

Strategy:

1 EPUB migration assistance for publishers
Assistance on converstion process
EPUB 3 authoring guidelines

2 High fidelity to the Japanese publishers typography requirements
co-developed between Access and Kobo
Cross platform reading experience (Android, iOS, Mac OSX, Windows)

3 Rakuten viewer aligns with latest drafts of CSS writing modes and CSS text modules
Rakuten working with W3C and Unicode consortium on these drafts

"We don't want to compete on EPUB capabilities, but rather on ease of use"

4 For "renaissance of reading culture on global scale" Rakuten works with Access to share some part of our outcomes through Readium Initiative.

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Finally, this was my first trip to Japan. You can see my pictures here.