Toronto-based Rakuten Kobo is arguably the only true global competitor to Amazon when it comes to selling e-books on a mass scale to consumers in multiple international markets. The company CEO, Michael Tamblyn, will be interviewed at this year’s Frankfurt Book Fair on Wednesday, October 19, 2–3 p.m. as part of the Global 50 CEO Talk 2022, organized by the Austrian publishing consultant Ruediger Wischenbart. Tamblyn shared his thoughts with PW about how the company is facing new challenges as readers emerge from the pandemic, and shared his outlook for the future.
What has been the arc of e-book sales around the world from the start of the pandemic until now?
The “stay home and read” advice that we shared as the pandemic began in Italy and France continued worldwide, causing a huge upward spike in digital book sales and digital reading. We were among the lucky companies with a product or service that people wanted or needed during the pandemic, where escape and self-directed learning was especially helpful. Throughout Covid, Rakuten Kobo saw unprecedented global growth in both the time our readers devoted to e-books and sharp increases in unit sales. While we don’t report on sales by country, during the pandemic we saw 80% to over 200% increases in reading activity compared to numbers before the pandemic; and depending on the market, the company also saw year-over-year increases in unit sales ranging from 35% to 130%, excluding the 15 million free titles that we provided to readers during the crisis.
Has that spike in sales tapered off now that people are no longer stuck at home?
Since shutdowns have ceased and people are able to travel and see each other more, there’s been a decline from the pandemic highs. Nonetheless, the overall digital market for us is well above prepandemic levels. The pandemic introduced many people to e-books and audiobooks, and a lot of those people have stayed with the format.
Canada had some of the longest lockdowns in the world—how did that impact sales at home?
Canadians read voraciously through the pandemic, with the average time spent reading increasing by 33.7% since 2019. When it comes to the kind of books Canadians are reading, two strong themes emerge: reading to escape, which is understandable in the circumstances, and reading to reflect and educate. And Canadians continue to love reading on Kobo even as lockdowns unlock. Canadians spent on average 21% more time reading in 2021 versus the global average. July and August continue to be prime time for reading, with Canadians spending a total of over 1.8 billion minutes reading in the peak of summer. Plus, more and more Canadians are exploring new formats for reading. According to a BookNet Canada study, approximately 1 in 10 people read every single day with an almost equal likelihood of reading print books, e-books, or audiobooks. The gap between these formats has progressively closed over the past few years as more and more Canadians are adopting digital reading habits.
Are you seeing any new trends in the e-book space?
Yes, with reading and sales both up versus prepandemic times, e-books attracted people who previously were reading print who now appreciate the ease and convenience of digital. So the biggest trend—the steady transformation of reading from print to digital—is macro rather than micro. Now, about 20% of all books purchased for personal reading are delivered digitally. It’s a different pace than music or video—evolutionary rather than disruptive—but inexorable all the same. If you agree with the idea that we probably won’t be pressing ink into dead trees to do most of our reading 50 years from now, then all we have to argue about is the slope of the curve.
The evolution of the e-reader is also changing the type of e-books people are buying, too. For us, e-book sales are still heavily weighted toward fiction, although we are seeing a shift as we add stylus-capable devices that allow easier highlighting, markup, and note-taking. On our regular e-readers, fiction represents 80% of first purchases. On our read-and-write devices, such as the Kobo Elipsa or Kobo Sage, about 60% of first books purchased for those users are nonfiction.
Kobo is now a Japanese-owned company, but is there anything distinctly Canadian about the way you run the business?
Being Canadian matters, not just in terms of the books that we sell but how we approach partnership and our role in the market. The Canadian book market, to me, has always embodied a certain culture of collaborative competition: we face challenges collectively as well as individually. In our case, that has meant approaching the digital evolution of the book industry as equalizers rather than obliterators; collaborators that enable competition.
As we have expanded internationally, being Canadian has been a distinct advantage. We work well in countries where culture is a protected national asset rather than just another industrial output. We get the idea of trying to protect and support local booksellers and publishers, and can work well within those environments. And we come from a country where being international is essential rather than optional—Canada just isn’t big enough a market to stay at home.
Kobo launched in 2009 in partnership with Indigo Books & Music [Canada’s largest bookstore chain]. How has the relationship developed over the years?
I think we have evolved well together. Indigo, more than most book retailers globally, has been fearless in its willingness to experiment with what it means to be a bookstore, and what a retail experience can look like for someone who loves books and reading. Just as Indigo was early to embrace that a bookstore could be both aggressively online and enthusiastically bricks-and-mortar, it has recognized that a reader can move back and forth between print, digital, and audio continuously throughout their reading life. We just renewed our partnership again, and I’m thrilled to continue working with such a great team.
What is next for Rakuten Kobo? Any exciting developments?
Kobo Plus has become an incredible engine of growth for us. The idea of unlimited reading, of paying a single monthly price and being able to read as much as you want, as often as you want, is very compelling to a certain kind of reader. What I find most fascinating about it is that people become more adventurous readers within a subscription. New authors, unknown authors, deep backlist—books that don’t get purchased nearly as often in single copies. It makes sense. Each book purchase is a bet—“Am I going to like this?” If you can only afford to place one bet a week or a month, you bet on the sure thing: the book that is on the bestseller list, or has just been given a great review, or the author you already know. All-you-can-read services like Kobo Plus escape that paradigm. Start a book, see if you like it, and either keep going or try something new. It has cracked open discovery in a way that publishers had always hoped. And the surprising thing is that it doesn’t appear to cannibalize single-copy sales at all. It attracts a customer who would otherwise go to the library or some other source of reading altogether.
The arrival of stylus markup to e-readers with Kobo Sage and Kobo Elipsa has also been fascinating. E-books have always been a fiction-first environment, to the point where publishers almost treat it as a fiction-only market. But it turns out that if we could meet the needs of nonfiction readers—to engage with their books, to highlight and make notes, and mark them up—that we could bring a whole new category of reader to e-books: the person who reads nonfiction for information, personal growth, or education. It’s a huge shift.
Ed Nawotka is bookselling and international editor at Publishers Weekly.
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