On May 22 of last year, after a Boeing 737 landed at Rio de Janeiro’s Santos Dumont airport—famous for a short runway that forces pilots to slam on their brakes—a flight attendant announced: “Dear passengers, a Kindle device glided to the front of the plane during landing. Please check if it is yours.” That’s surely one sign that digital reading is coming to Brazil.
Digital reading kick-started in Brazil on Dec. 5, 2012, with Google, Kobo, and Amazon all launching e-bookstores on the same day. Apple had started to sell Brazilian Portuguese books two months prior, and Livraria Saraiva, the largest bookstore chain in the country, had been experimenting with digital since 2010. But it took a mass influx of players to motivate readers. By the end of 2013, e-books had grown 400% over 2012, though total sales represented just 2.5% of trade book units sold. As a result, expectations for 2014 were high. However, e-books simply didn’t samba in Brazil last year, with Brazilian publishers’ estimates showing that only 3.5% of trade books were sold in digital format.
Despite the limited growth, digital is poised to take off in Brazil. And, not surprisingly, Amazon has emerged as the e-book market leader over the last two years. Although official numbers are not available, publisher and retailer estimates put Amazon’s share around 30% of the digital market, followed by Apple (25%), Saraiva (20%), Google (15%), Kobo (5%), with smaller players picking up the remaining share.
In August 2014, Livraria Saraiva launched its own device—the LEV—produced by French company Bookeen. But the real news may be in the roughly 9.5 million tablets sold in Brazil in 2014, and the 47 million smartphones. These numbers alone portend a relatively strong position for Google and Apple as e-book retailers. In Google’s favor, Android has a 90% share of the market for both tablets and smartphones; Apple iOS users, however, have much more purchasing power.
But the question remains: What is holding digital back growth in Brazil? I see three major hurdles.
First, Brazil lacks state-of-the-art aggregators. Until now, companies such as Ingram and OverDrive have ignored Portuguese content and have not made any serious attempts to distribute Brazilian titles. The strongest digital distributor in Brazil is a consortium created by seven top Brazilian publishers called Distribuidora de Livros Digitais (DLD). Remarkably, DLD was able to include limitation clauses in its contract with Amazon which restrict discounting: Amazon can offer a maximum 5% discount applicable to no more than 10% of each publisher’s catalogue. Unfortunately, DLD has not yet expanded its distribution network to include other publishers.
This scenario hasn’t gone unnoticed by German aggregator Bookwire, which opened operations in Brazil at the end of 2014 and is now fully engaged in acquiring content from Brazilian publishers to distribute locally and worldwide.
Another hurdle is the lack of a clear regulatory policy for e-books. Print books are sold tax-free in Brazil, but there are no official regulations concerning e-books’ sales tax, even though they have been on sale in Brazil since 2009. The market has simply decided to apply the tax-free laws that apply to print books and is not collecting taxes on digital sales.
Most publishers, however, have foregone exporting their e-books to avoid facing even more complicated tax issues, since rules for export are more rigid. The result is that many Brazilian e-books are not available for purchase in the U.S. or Europe. The legality of agency pricing also remains a very controversial issue in Brazil.
Finally, a third hurdle facing the digital development of Brazil involves the educational market. In 2012, the Brazilian government started to demand digital content from publishers. However, there have been no specific regulations pertaining to how e-books are to be made available—in what formats, on what platforms, or at what price. The result is that Brazilian educational publishers are slow to invest further in digital, waiting for the government—which is responsible for an average of 25% of publishers’ annual revenues, mostly due to its acquisition of educational books—to show what path it is going to take.
None of these hurdles are insurmountable, of course. And once they have been cleared, we will likely see more e-readers gliding down the aisles of landing airplanes in Brazil—or even better, on the beaches of Rio de Janeiro. And though progress has been slow, the transition to digital in Brazil reflects the spirit of the country’s unofficial motto: “Everything will be alright in the end. And if it isn’t alright, it isn’t yet the end.”
Carlo Carrenho is a Brazilian trade journalist and publishing consultant. He founded PublishNews in 2001 and helped to launch Thomas Nelson in Brazil in 2006.