Once Korean books would invariably fall into one of these categories: historical, political or fairy-tale/folklore. No longer. International readership and recognition is the name of the present game. And what better groundbreaking example than Yellow Umbrella, a 32-page children's book/CD-ROM package by illustrator Jae-soo Liu and composer Dong-Il Sheen? Its nondescript minimalist cover is at odds with the worldwide accolades it received: in September 2002, a Swiss-based children's book advocacy group, International Board of Books for Young People, named it one of the 40 best children's books published in the past half-century. Not to be outdone, the New York Times Book Review touted it as one of the 10 best illustrated children's books for the year.

Korean publications have started to shine in other genres as well. Not surprisingly, titles on Korean Buddhism get substantial attention in a world looking for inspirational and religious guidance during these high-anxiety times. At the other extreme, Korean computer books are also making waves on American shores.

The present-day Korean book publishing and rights community is among the most active in the world, with strong participation at major international book fairs. And positive indicators point to a bubbling book market: in 2000, book exports from the U.S. to the country (ranked eigth on the list and second among Asian countries) jumped 49% from the previous year, to reach $36.8 million. In the first quarter of 2002, book sales grew 27%—the highest figure since the 37% increase during the country's Year of the Book in 1995.

All said, the Korean publishing, bookselling and rights business deserves a close look.

Past Imperfect

There were two peaks in the Korean publishing industry: one in 1995, when the country's per-capita income surged to an all-time high of $12,000, and the other during the 1999 tech boom, when its economy clocked an impressive 10.9% expansion. The first peak saw veteran novelists (John Grisham, Michael Crichton and Danielle Steel) and business/management gurus (Stephen Covey and Peter Drucker) dominating the market and hogging the bestseller lists. The second enjoyed those halcyon days when computer/New Economy books were hotter than kimchi and just as hungrily consumed. A well-crafted computer book was then expected to sell at least 100,000 copies.

But issues big and small dogged the Korean publishing and retail industries, even during those boom times. Problems came to a boil when the 1996—1997 financial crisis exploded. Then, the arrival of the International Monetary Fund (IMF) rescue package coincided with the bankruptcies of 70 wholesalers, which incapacitated the distribution system, leaving the community reeling and thousands of students without proper course books.

From the outset, Korea's book distribution vehicle was flawed, with an oversupply of wholesale stores—mostly independents with neither capital, management nor specialization to move with the times—topping the problem list. The traditional (and highly successful) door-to-door sales further undermined the need for a modern distribution system. Backward practices such as issuing promissory notes or postdated checks to publishers were prevalent, creating cash-flow issues. And with transactions mostly on consignment with commission on sales—alas, a global affliction—the presumption was one of unlimited returns. Wholesalers kept unsold inventory for months, resulting in inaccurate and inflated sales figures.

For the many distributors left in the ashes of the 1997 bankruptcy, it was time to rethink, regroup or consolidate. Those that did not do so soon found themselves out of business. A recent case in point: last June, Chongno Book Center closed its doors after 95 years as Seoul's cultural landmark and a symbol of the Korean publishing industry. Its demise was largely caused by its inability to shift gears into a more customer-driven management and exacerbated by conflicts within the holding family that discouraged outside investments.

Gimm-Young Publishers offers this observation: "The Korean book distribution channel is still nothing short of a maze, with Kyobo, Youngpoong and Libro dominating the market. Although our book trade market is not 'closed' to international franchises, it's difficult for foreign investors to adapt and operate here. And this is a problem plaguing other industries as well: even Wal-Mart failed to find a foothold in Korea."

Book piracy and photocopying continue to be a problem, albeit on a much smaller scale. High-profile raids—complete with jail sentences and hefty fines—by the Association of American Publishers (AAP) together with law-enforcement officials have done much to curtail these activities.

The other side of the industry wasn't in any better shape. There was an oversupply of small publishers in a relatively small market: between 1993 and 1998, the number of registered publishers increased 65%, to 13,822, serving a $1.6-million book market that expanded only 20.4% over the same period. Such a prodigious leap in publishing establishments during the age of video and dwindling reading culture boded ill. Meanwhile, e-book publishers propagated almost overnight to take advantage of the national passion (and, some say, obsession) for the Internet and everything wired or wireless.

Translating Success

The Korean book market is still characterized by polarized demand, with sales and reading habits heavily influenced by bestseller lists—especially those from major chains Kyobo and Youngpoong—and popular culture. This leads to limited genres, as publishers rush to produce titles of like interest and ignore those "untested" ones. The lack of local authors with international clout has also confined publishers to their domestic market, with very few venturing into the export business, further limiting their profits. Translated works are therefore popular, accounting for roughly 20% of the total number of publications (excluding periodicals) in the past three years.

Current translations are mostly for commercial and mainstream genres such as business/management titles, self-help/how-to, fiction and children's books. In fiction, Korean authors are becoming more popular, while veterans like Grisham and Crichton continue to lose their appeal. Of course, Rowling and Tolkien are in a different league altogether. In general, Korean readers—just like readers in other parts of the world—are drawn to prominent names, and this is more apparent in business books, where Drucker, Covey and Kotler reign supreme.

The need to quickly supply books reviewed by the New York Times, USA Today or the Wall Street Journal is said to produce sloppy translations caused by unrealistic editorial schedules. Low fees also have many translators grumbling. But in recent months, most publishing houses have reorganized to enable better editorial/production management, as well as to keep their translators happy.

But in general, there is now less money for translations, since Korean publishers are aggressively participating in bidding wars. "The average advance has increased threefold since 2000. It used to range between $1,000 and $3,000, but with so many clamoring for bestselling foreign titles, the advance has risen to $5,000 or even higher," says foreign rights manager Jinny Park of IRE Publishing. "With a 3,000-copy first printing and selling at a relatively low price to boost sales volume, profit is marginalized when the advance gets too high."

Stimulus for Change

Last year, Korean publishers and wholesalers took a hard stand against online bookstores, demanding that books must be sold at the recommended retail price and not discounted. Major outlets Kyobo and Youngpoong carried the issue further by boycotting publishers and wholesalers known for supplying online stores fond of heavy discounting, effectively hastening the signing of the Publishing and Printing Promotion Bill.

Effective February 2003, indication of the fixed price on a publication is mandatory. This is a crucial step forward, since deep discounting is widespread and hugely responsible for the fall of the wholesalers back in 1997. With many publishing houses holding online bookstores responsible for their operational losses, this bill allows a 10% discount only for publications that have been available for a full year. Discounting, insist publishers, will have to come from the stores' delivery fees or transaction charges, not the book price.

But the fixed pricing mandate is out of sync with the present state of the economy. As Gimm-Young Publishers says, "It's a bad time to deploy the measure, as Korea is now on the brink of deflation. But we are positive that in the long term, fixed pricing will prove advantageous to the whole industry. It's the right direction to take."

Still, South Korea has brimming coffers—thanks to a budget surplus exceeding 4% of its 2002 GDP and an estimated growth of 3%—4% in 2003. It can afford to be generous with its stimulus package, which allocates $8.08 million (a 32.6% increment from 2002) for promoting the publishing industry, $85o,000 for modernizing the distribution system and $1.6 million for implementing a DOI (Digital Object Identifier) system.

Battling a dwindling reading habit also took a different tack last year. KPA, with cooperation from the government and the transit authority, launched subway libraries (Metro BookMesse) in April 2002, to mark World Book and Copyright Day. Some 3,000 books were displayed to provide passengers with an alternative activity to dozing or talking about the World Cup. At the same time, "reading plazas" were established at selected subway stations with book donations from major bookstores. Last year also saw the establishment of the Korea Literature Translation Institute (KLTI), intended to raise the profile of Korean literature, largely unknown in the international literary/reading community due to a dearth of translated works. In August 2002, it opened a bookstore—selling some 250 titles of Korean literature in 17 languages—at the Incheon International Airport.

All Wired Up

If you want to witness, close up, the magic of Korea's state of "connectedness." just wander down any street in Seoul and watch everybody—from schoolchildren to housewives to executives—sending e-mails, playing games, checking news, getting road directions, buying books or selecting a new ring-tone on the go. The following figures speak volumes: more than 58% of all Korean households have broadband access, compared to 15% of U.S. homes. Some 1.5 million are currently using a high-speed mobile transmission system (and did we mention that it's twice as fast as most U.S. service and about 70% cheaper, too?). Out of its 48 million people, more than 55% in Korea are also logged onto the Internet, giving the country the highest ratio of Web users in the world. As for mobile-phone subscribers, there are over 32 million of them, or 67% of its population.

Since 1999, the government has invested $9 billion in broadband infrastructure and has another $11 billion to deliver 20-Mbps services to 90% of its households by 2005. Right after the financial meltdown in 1997—with the realization that a focus on heavy manufacturing was inadequate for continual growth—the government slashed Internet startup red-tape, deregulated its telecom industry and prioritized foreign investment in IT-related industries. Armed with these incentives, SK Telecom—now Korea's largest cellular operator—developed and launched its 3G (third-generation) mobile-phone networks and, soon after, the mobile Internet service.

In an unprecedented move, the government recently announced a $38.5-million fund for the promotion of digital content. Half of this Contents Korea Vision 21 initiative will be used to develop the necessary platform for e-books, games/animation and DRM (digital rights management). So e-book makers are busy preparing for their debut once more. One figure—an estimated 2003 total revenue of $16.8 million for e-books—fuels the industry dream. With Korean conglomerates like Samsung and LG doing much to provide the effective medium necessary to distribute e-books via PDAs and mobile-phones, there's hope that this much-touted revolutionary format of publishing and distribution is finally ready to soar.

But e-publishing is an industry still in infancy and mired in uncertainties. Editorial director Jung-youn You of TheNan says, "I believe the e-book market is premature, with improper infrastructure to deliver the format still. There's also much to be done about the payment part. At TheNan, we're developing the content and waiting for the time when e-books can be launched successfully, effectively and profitably." It's a sentiment PW hears repeatedly during our visit: everyone is conservative in his/her online effort; nobody is making big sales predictions; all are realistically optimistic.

But a worrisome trend clouds Korea's wired and wireless success: the fast-growing computer gaming industry has effectively turned many children and young adults into addicts, indirectly decreasing consumption of online contents or books.

In summation, one can get dizzy envisioning the advantages of going wireless and peddling contents online but so far, few are able to make the venture profitable. It's fair to say, therefore, that despite Korea's wild wired success, out of the three 'e's—e-commerce, e-distribution and e-publishing—only the first one is making some headway; the other two remain problem children.

Tube Tactics

It's a paradox: the medium much maligned for eroding reading habits has now proven instrumental in helping to restore it. In Korea, several TV programs are now openly promoting and stressing the importance of reading.

One of the programs is the lifestyle/self-improvement show !, which has a Let's Read Books weekly segment featuring two comedians in suits and bowties prowling the streets, asking passersby if they have read books recommended by the program. Whoever has read the most is crowned winner for the week and given free books—as many as he/she can pull from a pile provided by the TV station within a given time-frame.

Another program by a competing network, TV Talks about Books, uses a more sophisticated and rather highbrow approach to promote reading, with its panel of academics discussing books they consider important or influential. It's drier than the first-mentioned show—and no prize for guessing which has a larger audience.

What's Hot and Not

"There is definitely a decline in overall book sales," says Kyung-hye Kang of Sejong Books, a major publisher. "The trend is even more pronounced in serious business books—which, by the way, isn't good for us at Sejong. In bookstores all over Korea, 'self-help' books are being categorized as 'business' books."

Currently, self-help books account for two-thirds of the bestseller list in Korea and will continue to be a nonfiction mainstay. The #1 business book on Kyobo's list during the week of June 9 was by a local author revealing the money-making secrets of Korea's rich.

In recent months, debt defaults by credit card—dependent teens and young adults in Korea has reached a critical point. It's a problem so widespread that the Federation of Korean Industries has included youth business education on its 2003 business priorities list. The federation also set up a branch of U.S.-based Junior Achievement at the end of last year, in an effort to address the economic illiteracy of young Koreans, whose education is biased toward scholastic performance.

Meanwhile, Korean parents—educated, tech-savvy and affluent—are demanding books that are intellectually and emotionally stimulating for their kids. The emphasis is now on instilling the reading habit at a young age, hence an increased demand for edutainment materials, in which learning is conceptualized as fun. The figures couldn't be more startling: while Korea's population in the under-14 range plunged from 42.5% in 1970 to 20.6% in 2002, children's book publications surged 50%, from 4,062 titles in 2000 to 6,094 in 2002. "The children's market in Korea is changing. Five years ago, the focus was on 7—11-year-olds. Now, it's the 2—3-year-olds or even infants. With parents usually having only one child, the investment in education starts early and is increasingly heavy. It's good news for children's book publishers like us," says Sean Choi of Kyowon. Single-copy sales of children's books through retail outlets are also on the rise, as informed parents prefer to browse the shelves and make their selection.

Of late, Korea's most popular genre—comics —has gained a different stature, shifting from mere light reading to one forming the backbone of the country's animation industry. Major Korean universities now have dedicated departments for comics drawing and animation. On the average, some 7,000 new comics titles in more than 25 million copies are published every year. The 8,000-odd comics rental stores and 7,500 comics arcades throughout the country have also done much to ensure the popularity and longevity of this genre. Growth of PC rooms across the nation has also resulted in the proliferation of online editions of comics series. The competition with printed editions is fierce, but at the same time, it's providing fuel for further growth. While the Korean comics and animation industry is no rival to Japan's manga/anime, that one-third of the Contents Korea Vision 21 initiative is going to make sure the gap soon narrows.

New Dynamics at Work

"Now, with people having higher disposable income and more time for lifestyle and cultural pursuits, the search for content and information will increase," says marketing and sales director Joong-hyun Kim of Book21 Publishing. "And because readers are now more discerning, the publishing model is forced to become customer-driven."

According to Eric Yang of the rights agency of the same name, the present Korean publishing and bookselling industry is populated by the so-called "386" generation, the age group in its late 30s to mid 40s that is the core force for change. This group is typically highly educated, computer-savvy, more entrepreneurial and more willing to absorb Western ideas on management and improvement. "They challenge conventional wisdom and are therefore crucial to innovating in the industry and pushing it forward."

But reforming the Korean book publishing and bookselling industry is not going to be a cakewalk, nor will it happen overnight. However, PW is confident it is up to the challenge. This is, after all, the country that turned its economy around in the fastest time in history to emerge as the 11th largest in the world. And now its single-minded aggressiveness is being supported by the government's deep pockets and a community determined to overhaul the industry.