Digital Impact on Traditional Book Publishing and Printing

DIGITAL IMPACT ON TRADITIONAL BOOK
PUBLISHING AND PRINTING

PHILIPPINES

Industry Trend

A study conducted by PricewaterhouseCoopers (PWC) – one of the world’s largest business consulting service companies – in 2010 on the latest trends and developments on the e-book market outlined the changing landscape of the publishing industry, given the rapid advancements of technology and the surge in consumer adoption of e-books.

According to PWC, the digital publishing transformation affects the book industry’s established value chain and revenue models. The development of the digital value chain is being driven primarily by the shift towards end-consumer business and direct sales.

While publishers will still continue to search for, aggregate, filter, process, and distribute content, they will now also need to create new formats and seize opportunities for new sources of income within the digital environment – such as apps, e-books enriched with multimedia content such as music and videos, etc.

Publishers also need to gain a greater ability to distribute content themselves, either through their own digital platforms or via shared platforms. Developing new revenue models, such as sales of individual chapters or sections from books, and additional content that provides added value to end-users, becomes a pressing issue that publishers must seriously take into account.

Today, the digital publishing industry is in various stages of growth in different parts of the world. However, there have been early developments in some regions that indicate a growing momentum for digital publishing in general.

Vibal Publishing

In the Philippines, Vibal Publishing is actively positioning itself as the e-book pioneer in the Philippines. Vee Press (under Vibal Foundation) has titles covering art, culture, literature, history and media, & fiction. They are not into mainstream textbooks yet, only local titles of which many are in the public domain.

Vibal’s entry strategy appears to be as follows: start as a non-profit unit, utilize public domain properties for easy initial releases, try to build academic credibility, and then enter into the commercial field.

Vibal has made significant progress so far – launching at the International Book Fair last year, forgoing a tie up with De La Salle University to launch four e-book titles, enabled distribution using Apple’s iBookstore and the Amazon Kindle store. Vibal Foundation’s partnership with De La Salle Academic Publications Office launched the first set of e-books published in the Philippines last June 22, 2010 – in an effort to incorporate e-book technology with the preservation of Philippine culture and heritage.

Vibal has even expanded into apps, which they claim they can develop in 2 week’s time. In addition, they have started to actively market “Booklatan”, their online e-bookstore where publishers may store and sell their digital format books, and where buyers may be able to easily access and buy reading materials on their smart phones, personal computers and mobile devices. “Booklatan” is also the name of a reading app that can be downloaded for free by readers and installed on their computers, Android devices, as well as on iPhones and iPads. These initiatives in terms of building a presence in cyberspace maybe an indication that their digital publishing strategy is broader than initially thought: by exploring several distribution channels and cementing early alliances with educational bodies, they aim to reach both the commercial.

Diwa Learning Systems

Diwa’s initial venture into digital publishing was by way of the electronic versions of its popular Salaguinto and BatoBalani classrooms magazines, alongside its traditional paper versions. Its interactive website, diwalearningtown.com, also features additional downloadable exercises for its paper textbooks. Genyo, its online Learning Management System, claims to be the first and only fully-integrated system for Basic Education in the Philippines – offering students and teachers an exclusive online subscription to a wide array of multimedia, curriculum-based teaching and learning resources.

In addition, the company will be testing digital textbooks or e-textbooks that are planned to be rolled out for school year 2012-2013. The e-textbooks will be first tested in La Salle Greenhills and Hope Christian High School.

These will come in two formats: the first is the e-publication that is a free and open e-book standard by the International Digital Publishing Forum (IPDF), which can be used in most e-book readers. The second format is in Adobe PDF (portable the document format), which is popular for PC-based users. The e-books will have Internet hyperlink that would allow students to look at other sources of information, thus expanding their knowledge. There would also be interactive features in the e-textbooks. Which include learning exercises, videos, and tutorials.

Government-led initiatives

The Department of Education has started works towards an ICT-enabled education system that will completely integrate ICT into the curriculum, including the development of multimedia instructional materials, and ICT enabled assessment.

As a start, they will be distributing Rizal Tablets (e-book reader named after the national hero Jose Rizal) among freshman students of Laguna Science National High School, University of the Philippines Rural High School and one public high school from each of the four congressional districts in Laguna. The tablets will be pre-loaded with “hundreds” of electronic textbook copies and references materials for the high school curriculum. Twenty to thirty teachers will also be trained for the test run.

The DepEd is also reported to undertake a USAID-financed study on how to implement e-textbooks in the Philippine educational system.

Intermediaries/Digital Services Providers

The existence of several business process outsourcing entities that act as intermediaries, or end-to-end digital solutions providers, in the Philippines bodes well for the impending digital explosion in the publishing industry. These third-party providers – who can be either a business partner or subcontractor – provide a ready option for publishers who wish to set up their digital business while managing upfront investment and development costs.

A number of these BPO companies have relevant experience and exposure in the field of education and digital textbooks.

• Global Reach – the backend delivery enter for EBSCO, the most used premium online research service in libraries and other institutions worldwide. Global Reach provides the following services : conversion on published content, hosting of the content database, provision of telecom/connecting infrastructure, developing the user interface, and managing the subscription/distribution/access platforms of EBSCO’s library customers and the virtual access experience of these users.
• Infogrid Pacific – formed in 2004, it has its headquarters in Singapore but mainly operates out of its development center in India. Infogrid specializes in digital content management and provides Software-as-a-Service (SaaS) variants to small- and medium-sized companies engaged in publishing, education, and information retrieval. It is the main supplier of Central Books for its e-SCRA service. One of the primary services offered by Infogrid is digital data warehousing: it supplied Central with a Digital Asset Management System (DAMS) and tied it to its online storefront application called IGP:Bookstore and its Subscription Fulfillment Services. Under DAMS, Central was able to digitally convert, index and archieve its catalog of Supreme Court rulings.
• Flipside Digital Content Company – formed in 1999 as a subsidiary of Barnes & Noble in the earliest days of e-books and print-on-demand; was reorganized as Flipside Digital in 2010, and launched its e-publishing business to bring English titles from Asia to worldwide markets via e-books. Flipside offers e-book production and distribution services; they produce industry-standard ePub books with embedding of internal or external audio, video, animation.
• SPi Global Solutions – wholly owned subsidiary of ePLDT, SPi is a leading global BPO provider that offers a full service e-book solution through all stages of production (manuscript checking, copyediting, composition, and author interaction). They claim to have extensive experience and expertise in e-book production.
• Rapid adoption of technology – Although e-book critics, like local bookstores, say that there is still a small market for e-books in the Philippines, e-book technology is slowly (but surely) making its presence felt in the market, given the increasing penetration of Internet access, and the availability of various e-Reader devices (with different models/features and at varying price points) in the local market, particularly the Amazon Kindle and the Apple iPad.

MARKET POTENTIAL

According to 2010 DepEd statistics, there are more than 55,000 schools and 20 million enrolled students in the Philippines. From these figures, 21% (almost 12,000) are private academic institutions, in which close to 2.5 million students are enrolled.

• The 2.5-million private school student population represents an estimated total market volume potential of around 22 million copies nationwide.
• There are around 34 schools classified as “Class A” (with tuition fees of P70,000 and above), which are mostly in Metro Manila. These “A” schools represent a volume potential of approximately 760,000 copies annually across both elementary and high schools levels.
• In addition, there are around 115 schools (covering elementary and high school levels) classified as “Class B” (defined as schools with tuition fees of P30,000-70,000), with approximately 25,000 students enrolled. These schools represent close to 226,000 copies annually in volume terms.
• Estimated market volume potential among Class A and B schools in the National Capital Region (NCR) alone is close to 1 million copies annually.Privately-owned and –run academic institutions, particularly those in the A and B tiers (in NCR) appear to be the primary targets for Basic Education digital textbook offerings, as they are typically more open to invest and embark on new learning technologies. They are also more open to adopt international trends in teaching. Because Basic Education comprises the bulk of Rex sales, establishing a foothold in this sector via e-textbooks is strategically important, as this will help cement Rex’s position as the leading publishers of educational materials and resources.Public schools, at this time, are not ready, equipped, nor well-funded enough to make them immediate targets of e-books in the short-term. Although there are some attempts at the LGU level to explore the rollout of e-textbooks and other ICT applications in local public elementary and high schools, we believe that these are isolated and will be prone to the usual delays and disagreements commonly affecting government projects.

The Legal Education market, where Rex Book Store, Inc. is estimated to have 91% of textbook purchases, can also be considered a secondary target market for e-textbook offerings:

• 108 law schools nationwide, with law school libraries catering to students
• Estimated 18,000 law students (SY 2010-2011), 42% or approximately 8,000 of which are in NCR
• Approximately 6,000 bar examinees per year
• Additionally, there are an estimated 15,000 lawyers who are active members of the Integrated Bar of the Philippines

Despite its small market size and independent nature, this segment presents opportunities for digital offerings, which may not necessarily be limited to e-textbooks alone.

MARKET CHARACTERISTICS, BEHAVIOURS & ATTITUDES
The key stakeholders who will determine the success of any e-textbook undertaking are comprised of the target school, specially their administrators, owners, or decision maker; the teachers and the subject coordinators; the parents of students; and the student themselves, as end-users of the digital products. The information in this section was gathered through personal interviewers, consumer research (focus group discussions), and secondary research from published sources covering consumer usage habits and attitudes towards digital publishing products.

What They Are Using (Pre-eTextbooks)

• Printed textbooks (selective sections/portions, not all contents)
• Teacher-made or revised materials (i.e, PowerPoint presentations)
• Audio-visual presentation in school
• School-published materials
• Homework that involves research from online resources
• Use of local publishers’ interactive websites (infrequent)

What Benefits Do They Seek

• Cost efficiencies/savings – paper books are expensive & constantly need to be replaced with new or updated editions
• For the schools/teachers :
  – Innovative/more advanced teaching methods and materials
  – Added prestige/marketability to their own target markets and to their industry
  – Support and assured revenue stream
• For the students :
  – Educational materials and methods that are stimulating and will sustain their interest in their studies
  – Deeper understanding of the subject matter, aided by ‘hands-on’ opportunities and access to multiple sources of information (online, download, mobile)
  – Flexibility and portability of information
  – Doing away with lugging around heavy school bags/books

What Factors Can Affect Their Purchase or Use Decision

• Lack of familiarity with the technology (use of device; use of e-books/e-textbooks)
• Price (both the deviced end e-textbooks)—may not be accessible to everybody; may lead top increase in tuition fees
• Durability of device
• Risk of theft (device)
• Sentimental attachment to books, traditional teaching methods
• Training needed on all sides/levels
• Apprehension about the long-term use and value of digital texts, which can be harder to share or resell than a paper book
• Eyestrain for the kids

What Attitudes Do They Have About Digital Products/e-Textbooks

• For Teachers
  • Skeptical – although they accept that digital textbooks will make inroads in basic education, they feel it might still be 3 to 5 years away
  • Unfamiliar – while they may receive adequate training on basic procedure on the computer, they still need additional training on how integrate (the use of) technology into lessons/teaching methodologies
  • Fearful/intimidated – perception that they will become dispensable because they will have a lesser role in educating the students; due to their lack of mastery of the technology (specially for non-‘’techie’’ teachers), the students may know more than them, therefore lessening their credibility; and, in case technical glitches occur, they might be unable to address/resolve these in front of the students
  • Concern on ability to supervise students effectively if e-textbooks are used in class – can’t see what students are actually reading/doing on their devices, specially if there are other programs loaded into the device
  • Concern that the students may be lulled into a more passive learning mode, since they might become too focused on what is on the screen and will no longer make the effort to interact/collaborate with other students

• For Parents
  • Concern about cost implications (vs. current printed books)
  • Effect on children’s study habits
  • Risk of theft if devices are purchased personally and not provided by the school
  • Passive learning for their children

What Currently Appeals To This Market

• Teachers
  • Ability to ‘mix and match’ content to find the best information for each subject
  • TAC (Technology Across the Curriculum) – integrates technology with curriculum
  • Ability to bring the lesson “to life”, i.e., creating the whole learning experience through graphics, video, audio, etc.

• Schools
  • aPublishers’ support (e.g., financial, training, et al)

• Parents
  • An alternative that is cheaper than printed textbooks
  • Eliminating the need for their children to carry heavy books
  • Tools or materials that they can understand/use to help them teach their children at home

• Students
  • Content identical to the printed version
  • Educational materials/resources that offer ‘bonuses’ in the form of rich media – i.e., embedded video, audio, and hyperlinks—allowing them to see and experience difficult concepts in action

Teachers’ Expectations (from e-Textbooks)

• Convenience – e.g., can help them check exams electronically and release results faster
• Animation/interactive activities—will create interest and motivate children to read
• Be provided with e-Reader devices so they can familiarized themselves on its use/ features
• Pricing : most think e-textbooks will be more expensive that printed books (ie.,P1,000 per subject)

FACTORS THAT MAY AFFECT THE MARKET WITH RESPECT TO THE DEVELOPMENT OF DIGITAL PUBLISHING INDUSTRY

• Rapid Evolution Of Technology
  The runaway success of the Apple iPad has legitimized the tablet as an information consumption device. More brands are joining the tablet bandwagon, and tablets are foreseen to replace netbooks, while laptops are replacing desktop, and smartphones are replacing the old simple cell phones. The portability, simplicity and relatively low price of tables will help drive acceptance of tablet use among the younger set. At the same time, these gadgets are raising the bar on the quality of the user experience. As the use market use electronic gadget more and more, they except more multimedia interaction. This highlights the need for e-textbooks to contain enhancements and interactivity to hold students’ attention and keep them engaged.
• Anti Piracy Drive
  In the Philippine context, we should expect a heightened propensity for students (and even parents) to look for pirated sources for their e-textbooks. Local publishers will be understandably cautious in releasing e-textbooks given the prevailing culture of software piracy in the country. A robust digital rights management (DRM) system is mandatory before any publisher decides to fully implement an e-textbook program to the market. Close coordination with government agencies (e.g., the Intellectual Property Office or IPO) and industry-based watchdogs (e.g., the Business Software Alliance or BSA) may aid in stemming or delaying the privacy of digital content before the publisher has had a chance to recover its investment. Furthermore, the idea of purchasing digital content will slowly become a mainstream idea among Filipinos as online purchase platforms like iTunes, iBookstores, Android Market and Amazon become a more widely acceptable source of content for digital devices.
• Government Thrust For ICT Integration In Education
  The DepEd’s ambitious goals to computerize most public schools may eventually influence public attitudes to accept e-textbooks as standard learning media. This has also led some LGUs to pursue their own projects (e.g., the wifi/WiMax “wireless education” projects of the Alaminos local government, the Laguna provincial government’s e-book trials, etc.) that may further acquaint the general public about the use of technology for learning, thereby whittling down resistance.
• Resistance from parents will mainly center on costs, and the learnability of the new technology. However, as the digital publishing industry gets established and adoption rates increase, the resulting benefits of using e-textbooks on students’ ability to learn on their academic performance, if proven positive, should negate these initial oppositions.

EXPECTED DEVELOPMENTS IN THE INDUSTRY:
We can expect to see the following developments in this emerging industry within the short to medium term:

• Local publisher will try to position themselves as first movers, while experimenting mostly with simple flat conversions of current printed titles.
• They may tie up with hardware vendors, specifically tablet PC/e-Reader suppliers, in an attempt to offer a tablet/e-textbook combo as packaged hardware-software solution to the schools.
• They will move for quick wins among the more technologically-inclined early adopter schools (e.g., LSGH) in the hope of establishing market credibility and building an installed base of users.
• The rest of the Class A (and B) schools will wait for the results of the pilot testing among these pioneer schools, and benchmark their respective launches on the initial outcomes, should they prove their promising
• Eventually, the publisher who can offer the most comprehensive support program (training, hardware, software, financial and operational support) to the schools stands to gain the highest chances of success.
• Adoption by other Class A and B schools will not happen overnight. How the business model evolves to support the interest of the school will determined the relative speed of adoption, probably over a period of years. Most of the schools will tend to not rush into decisions regarding e-textbooks adoption; they will most likely adopt e-textbooks through a phased-in introduction spanning a few years.
• Schools will be sensitive to parents and media feedback. There is a possibility that government (i.e., DepEd) may step in with guidelines once the critical mass of schools starts to form.
• Whichever publisher locks in as many of the Class A (and B) schools may determine the direction of the entire local e-textbook industry.

Other Scenario:
If schools will introduce the use of digital textbooks, the Filipino school pupils will no longer carry big backpacks filled with heavy textbooks. Instead, they will only bring their notebooks, their lunchboxes, and their e-reading devices.

“Internet will eventually dwarf the impact made by Gutenberg,” Eric Frank, founder and president of Flat World Knowledge boldly said in his talk during the Future of the Book Conference last September 13 in Quezon City, referring to the inventor of the printing press.

A dismal situation also exist in the Philippines, as private educational institution increase their tuition fees yearly while the public school system suffers from annual budgets cuts. As a results, textbooks in private schools come with high price tags while the ones used in public schools are insufficient in numbers, dilapidated, outdated and worse, may even bear in accurate information. These predicaments have hindered easier access to education, resulting in relatively high dropout rates.

Frank proposed “emerging solutions” as ways to solve these problem primarily government intervention on the pricing of textbooks. For digitized textbooks, Frank also encouraged governments to set specific policies for the use of such, including pricing and the devices to be used.
Another proposed solution is the use of open source textbooks, which must be readily made available via the Internet. Such books must not be copyrighted; instead, they may be placed in the public domain or be licensed under Creative Commons –a “relaxed” copyright scheme.

Frank then specified the 4 Rs of Openness”;

• Reuse- The right to copy and use verbatim copies in both printed and digital forms
• Redistribute- The right to share copies
• Revise- The right to adapt, rework, and improve textbooks
• Remix- The right to combine new open-education sources

Other Views:
The Filipino textbook publisher have to embrace the technology and view it not only as a business innovation but more importantly, as a tool to help solve problems in Philippine education

With the continuous expansion of digital publishing, Umberto Eco once said: “printed books are still the best companions for a shipwreck and the day after.”

“Change, however, is coming…and change will be technologically-driven,” said Neni Sta. Romana Cruz, the newly-installed chair of the National Book Development Authority (NBDB), during her welcome address.

As the market turns towards e-books, the future of paper books remain uncertain. E-book readers, which were the focal point of last year’s Future of the Book seminar, promise to revolutionize the book industry but remain difficult to grasp for some consumer.

Book Development Association of the Philippines (BDAP) President Lirio Sandoval pointed out that “Books are only being reinvented in a different format. The country’s goal is to be the major publishing country in the world and thus market internationally. The creation of e-books has to help us achieve that goal.”

Jose Marie ‘Toots’ Policarpio, Executive Director of the Corporate Communication Department of Diwa Learning System, Inc., said that “what is needed is an online learning management system consisting of the 4 Cs: content, connectivity, change management and the community. For him, an ICT-enabled curriculum is one way for the country to improve its educational system.”

Rodolfo “Jun” Lozada, now a technology consultant for De La Sallle Greenhills, who oversaw the installment of tablets as the main educational tool for some of the students in LSGH this year said: “With the changing trends in education, the K to 12, a decreasing budget and an increasing demand, we need an adapting mindset. We need to introduce the digital word as the new medium – one that drives learning system design and not the other way around. It is imperative to identify the fears of potential users, and determine the rules in using these new technological advancements. It is a new industry. The expensive prices of the tablets and the books cover for the cost of the unknown,”
Neil Nocon, a board member of second district of Laguna, discussed the introduction of the province’s own educational tool: the eRizal tablet, an e-reader which comes pre-programmed with books for students in Laguna.
The local government of Laguna ordered 3000 tablets to be distributed to first year high school students in Laguna to pilot the project with hopes of expanding it afterwards.
He says the project is part of the sesquicentennial celebration of the birth of national hero Jose Rizal. The eRizal project is backed up and monitored by the Department of Education along with the APEC office in Laguna.

WHERE ARE WE IN DIGITAL PUBLISHING?
To quote Butch Dalisay in his column PENMAN at the December 12,2011 issue of the Philippine Star”

“Digital publishing has change the face of literature in the Asia-Pacific region. There is a steady and sure encroachment of digital media on the terrain of traditional publishing.

Here in the Philippines, digital publishing has definitely arrived – but it will take time to settle in, to become a popular, and to actually turn a profit, which is important if it is to become a social game-changer rather than just a format option for affluent readers.

Many of our major literary and academic publishers in the Philippines – Anvil, UP Press, Diwa and Vibal Publishing – have gone into digital publishing. A company called Flipside, to which Barnes & Noble used to outsource the digitization of its books, has now opened its doors to local material, and has put up an online e-bookstore at Flipreads.com. Some Filipino authors can also now be found an Amazon.

Compared to the rest of the region, these are still baby steps – our bestseller remain in the dozens of copies rather than even the hundreds. The obstacles are clear, though not insurmountable: the skepticism, resistance, and ignorance of both authors and publishers; the historically small market for books of any kind; the expense of e-book readers; and the finetuning and operationalization of the business model for digital publishing.

Based on the literature entitled the “Future of Book Publishing and Printing” which was published by Vibal, it is stated that “Technology giant HP contends that “the future of printing is digital – flexible, customized, on-demand.” As e-books and cost optimization issues drive publishers to digital publishing, printers are also investing in digital printing equipment and applications to address the market impact of short-run and quick turnaround needs. Once again, the worlds of printing and publishing are converging, but on a scale never before experienced or envisioned.

A new roadmap of digital publishing and printing will emerge with sharper contours and clearer distinctions. But it will never kill off the traditional book. Indeed, as the convergence between digital printing and digital publishing demonstrates, the two sorts of books may not turn out to be rivals, but symbolic species sharing the same territory and living in amicable coexistence.”