Discussion keeps the world turning.
This is Roundtable. In the lead up to an online shopping festival, leading publishing houses in this country are staging a protest because they say the shopping platforms that they depend so much upon for their sales in recent years have laid very extreme demand limiting the amount of prices that they are able to come up with on these platforms that would severely impact their income in fact some of them are complaining they can't make ends meet.
Hello, I'm Laming and this is Roundtable.
Today with NewHoling and Braden Yees, we find out why is it so hard to strike a balance between the interests of consumers, platforms and suppliers?
What factors affect the calculation?
So 60 publishing houses including Qinghua University Press, Commercial Press, People's Literature Publishing House, and Zhonghua Book Company jointly announced that they would boycott in their promotional plan of e-commerce platforms including JD.com for the upcoming June 18th shopping festival.
And these are very influential and leading players in the industry.
Publishing houses are very influential.
I would go shopping for the books and they are very trustworthy.
And to think that they are staging protests, I think it goes to show how much pressure this industry is going through.
Oh definitely. For those of you who have no idea what a June 18th shopping festival is.
I've never heard of a shopping festival.
Actually there are quite a lot of shopping festivals here in China nowadays.
They are not real festivals because you don't really get a day off.
Yeah, they are definitely online celebrations providing you with the opportunity of getting the goods that you have your eye on for quite a long time, a better deal.
Good discount. What am I getting this year?
Oh, we can talk about it after the show.
And the idea is on these days different types of promotional activities would be wrote out.
For example, when it comes to books this year, it's been said that all books are going to be sold at 20% to 30%.
Not 20% or 30% off, 20% of the original price, or not more than 30% of the original price.
So you can get a book with a time with the price tag of 10%.
Of 20% of the original price.
Exactly. That is a really good deal.
Yeah. Well, consume this.
For consumers for sure.
Yet for these publishing houses, they believe because previously the kind of promotional activities they participate in would suggest certain categories of books and would have certain articles.
For example, if the book is newly released and just got onto the market within for example, three months, they would not participate in any promotional activities or any kind of promotional deals deducting the price.
Sure. Yet for this one, there's no such articles specified for this promotional activity and these publishing houses decided to say that we can no longer bear the kind of loss that we might encounter during the activity.
Previously, the publishing houses were able to select a certain percentage of or from the catalog to decide whether they would be part of the promotional campaign, whether they'd be sold at about 30% of the original price, that kind of thing.
But now, this year apparently, they're experiencing a lot of pressure from the shopping platforms who demand that their all-box in their categories must sell at around a $22, $30% of the original price, which is really pushing on the profit margin.
Yes. And you get to see that this is not actually the first time that different publishing houses are striking or starting to try to say that we cannot bear the situation.
Over the past decade, publishing institutions have repeatedly complained E-commerce platforms for engaging in low-price wars.
And this boycott has had a greater impact and can be considered relatively significant in the publishing industry because it involves, like Lyming has said, 60 very renowned and trustworthy publishing houses.
But if we look back in time, if we take a look at the relationship between the publishing houses and the...
Doesn't sound good. And the online E-commerce platforms.
Actually, they've got their honeymoon period in the...
War's over. Apparently.
Well, it sounds like it because 20% of the original price, I think, is pretty intense.
And it doesn't sound like any of these online platforms as things stand are offering to bear any of that price cut responsibility.
Maybe that's what has resulted in this boycott.
Well, consumers expect some kind of discount when they're shopping online because you're not going to a brick-and-mortar store and...
And particularly during the public period.
During these shopping festivals, right?
Particularly during these shopping festivals.
Even without the element of the shopping festival, consumers expect to pay less for when they are shopping online.
I think that applies to any consumer in any country.
For sure. Because you're not counting for the rent.
You don't occupy a physical space.
Even though there is also the element of the commission fee, technical support fee that publishers have publishing houses are supposed to pay these platforms.
But it's significantly lower than when you operate a brick-and-mortar bookstore out there.
And a bookstore is another story that are experiencing challenges as well because people are not going there.
So maybe that's the argument from the online platform side.
Is that they're saying we are providing you with this platform where you don't have to have a store.
We're saving you all of these costs.
And in return, we want you to offer these products on our platform at a greatly reduced price.
And it sounds like the publishers are saying this price that you are making us offer is insane.
Yes, they believe 70% of us is just too much of us.
Yes, and I didn't know this before preparing for the show.
But apparently for a book production cost, there are two parts.
One part is the fixed cost including the prepaid copyright fees to the author, taxes, and the cost for translation, book number purchase, proofreading, types setting, cover design, etc.
Regardless of how many copies are printed, these expenses are fixed.
And the second is the variable cost of paper printing, distribution, and sales warehousing, like we mentioned, and other processes, which increase or decrease with the size of printing volume.
So for publishing houses, when they decided to design and to develop basically a book, they have already taken on a tremendous risk.
Exactly. They have to. It's kind of like a gamble.
Your consumers, you have to know the market, do you have to do a feasibility research?
And you might be wrong about the research, which is why at the very beginning, around 1999, when the establishment of you.com and at joeu.com and downdown.com was there.
People, bicing people, I mean the publishing houses, actually embraced the idea of selling books online.
Because if you're selling books in brick and mortar bookstores, the process.
Processation, range, even more tremendous.
And for online stores, this shift, while actually transformed consumer book buying habits, providing transparency in sales, shorter payment cycles, and exponentially increased exposure.
And it benefited the publishing industry, e-commerce platforms, readers, and it feels like there's a bright future for everyone.
But like Brendan said, the honeymoon stage cannot stay there forever with the fierce competition among different e-commerce platforms.
Actually, different e-commerce platforms would hope that the books are sold on their platforms.
So they started to decrease the price and increase the discount and giving the pressure to the publishing houses.
You're also competing and also probably want to offer the lowest prices.
Exactly. And that is why there have been several rounds of negotiating, even quote unquote, boycotts, whether or not to participate in certain promotional activities.
It sounds like right now it's at a process where either side is going to see who's going to blink first.
Can you look at that? Yeah, because obviously these online platforms are saying, look, these are terms.
And then the book, the publishers are saying, well, we are not going to agree to those terms.
And there is still some time until June the 18th.
So it'll be interesting to see who does blink first and who's going to be willing to make some sort of concession because I would be surprised if this boycott does last until June the 18th.
I'm sure some sort of resolution will come out of this.
And one of the reasons that this time more or actually 60 publishing houses are joining the...
It's a big number. It's a big number because these years the market has not expanded, but even shrunk a little bit over the year.
And we see relatively fewer people reading, especially physical books.
We're turning to e-books.
Yes. And that leads to the further shrinking of the share market share, making publishing houses find it even more difficult to gain a profit.
So it sounds like the boycotts also a risk for the publishing houses.
Definitely. It is. Because the online book sales revenue really accounted for 88% of the total book sales revenue in 2023.
So they're grown to be very dependent on online sales channels.
And now they seem a bit powerless when these shopping platforms are making very, very difficult demands on their behalf.
And really, I think we are talking about, again, like the first topic.
We're talking about a situation with so many moving pieces and so many changes.
I think there was, there must have been a time when publishing houses felt very comfortable cooperating with the shopping platforms, because it really expands their reach.
Whereas operating regional or city level outlets could be very costly, operating over the internet and appealing to consumers across the country.
It really is expanding significantly, expanding their reach.
But in comparison that now, if with platforms, shopping platforms existing and traditional shopping platforms, seeing competition from platforms that previously didn't working e-commerce, like video streaming platforms, including TikTok, and they did, they originally were a video streaming platform.
But they since many years ago have started operating their own online shopping business, and they are new players in the game.
And as such, they are pushing the market share of original and traditional online shopping platforms, like JD.com and Tau Bao, not to mention these specific platforms like DungDunk, which specializes in selling books.
It does sound like the publishing houses have made a bit of a desperate move here, because I think that with the increase in power of online platforms, selling a variety of products, as well as the increase in popularity of e-books and reading on tablets, and that sort of thing.
And the demand for actual books decreasing, it sounds like online platforms can make these crazy demands of the publishing houses, because they don't really have much room for negotiation.
But on behalf of the publishing houses, if the profit margin got squeezed even more, there's no point in doing the business anymore.
So that's why they're done this.
And that is the... But isn't it a desperate move though?
Don't you think they don't really have any other choice?
The thing is, we do not want to see that happening either.
We do need the publishing house to continue doing what they're doing currently to find the good stories, to find the good authors, to continue to develop in this area and give us more good books that we would actually love to read.
And Limeing mentioned a very interesting player that is the short video platforms.
And actually recently I have been encountered several bloggers on these short video platforms, and they're quite different.
You see one type of short video bloggers providing or actually recommending the books that they enjoy quite so much, these books might be seen as really niche, really not that...
Let's say popular in a certain way, yet these are hidden treasure.
These are hidden gems that once you got introduced to it, you would want to pay for the money that's actually on the price tag.
You do not really care about the discount.
And at least for me, that's the situation.
And in the same time you get to see some other bloggers selling books basically based on the weight of books.
So really, really cheap.
Yeah. Yeah, so there are different situations.
And personally, I think for me, I would like to pay for good books, even the full price.
Sure, I think the demand for books and good books is still there.
I think at the bottom of the...
Physical books, like for actual books.
Yeah, physical books. Well, it sounds like it.
From the figures that we've read, it sounds like people are really shifting away from...
So people still want good quality literature, but it does seem like they're moving away from the traditional form of reading.
It doesn't have to be hard-carpey books.
I mean, the bottom of all the moving pieces is the changes in consumer behavior and user behavior.
And most people are turning their attention to online video streaming platforms.
Everything has to evolve correspondingly.
And I think I mentioned on the show before that is you can watch an online novel in video formats because the people doing that, they're taking the words out of it and they are narrating it.
Like the short dramas that people love to watch.
And they're combining video into it and then you can stream it over whatever time you're willing to spend on these platforms.
So correspondingly, I think publishing houses and shopping platforms will have to react as well.
Shopping platforms, they are working very hard to stay off the pressure coming from short video platforms who are also trying to venture into e-commerce.
Whereas I think for publishing houses it's very important for them to adapt to the changes in users because people are not no longer going for physical books.
People are going to spending time on their smartphones.
They are looking for e-readers.
They are looking for good novels or video streaming platforms.
When they don't follow the users, where they go, they seem to have a lot of a challenge.
So when we talk about this 20 and 30% of the original price of books, are we talking about all forms of books or just physical books?
Well, here in this promotion activity is all forms of books.
In that case, then I think the publishing houses actually do have a bit more power because like we've mentioned, the online version of these books are also becoming increasingly popular.
So I think that the boycott is quite extreme, but I also have to take back what I said earlier because I was thinking it was just physical books where they wouldn't really have much room for negotiation.
But if this is relating to all forms of literature that would be offered on these online platforms and I think the publishing houses do have more power than maybe some of these online selling platforms realize.
Well, e-books is an entirely different story.
I think we could find time to talk about it somewhere in the future.
But I think these shopping platforms, they publishes, in fact, they do gain advantage in cooperating with certain platforms offering digital copies of their books.
But this is a growing trend, but I don't think that growth is enough to offset what they're losing in the physical part.
Yeah. Definitely. And one thing is that for little kids, they still need to read hard copies and for the elderly, they do not want to stare at the screen so much.
So there's that. So publishing houses, we still need physical books and also I prefer physical books as well.
So yes, try to develop in the industry catering to different needs of different groups.
Well, one last word before we move on that is I think for publishing houses, it's important for them to identify what kind of users they'd like to appeal to.
Sometimes they have to work very fast and move very fast to...
To stay really fast. To publish one very popular novel just to make ends meet.
And then perhaps while they're at it, they could spare some time to work on premium literature so that people are willing to spend more money on.
So it's important to diversify that you're portfolio in order to adapt to the changing market.
And keep up with the times, right?
Right. Right. You're listening to Roundtable coming up, sales figures suggest China's movie market is experiencing a post-c all-vit rebound yet some irregularities remain.
Why? Looking for passion?
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Where these need to rest and understand it is the goal.
Welcome back to being a few instances, perhaps more than a few instances of filmmakers and distributors changing the schedule of their film release.
And this is not new, I mean, for the past few years since I've been following the movie industry, this is new, sometimes a domestic movie world reschedule in the face of a very popular blockbuster that is threatening to dominate the movie market.
That is rather common practice.
But then what we are talking about now is these practices becoming more frequent and we wonder whether there is something going on behind it.
Yes, actually two months ago the topic 11 films to compete in the Mayday holiday period was once a how heatedly discussed the topic online and people were looking forward to all these different movies in this relatively short holiday period of time and trying to see which one to watch.
Yet, actually there were only seven films remaining their release.
Four films have been pulled from the theater, well, the radical calendar.
And on April 17th, for example, Hollywood action comedy The Four Guy was announced to delay its release on April the 30th.
And it was rescheduled to May 17th.
Chinese film Ocean Rescue was also announced to withdraw from the theoretical calendar after the ticket-release sale for the holiday period due to unsatisfied sales.
So there are different types or different examples we're looking at here.
Some of the examples suggest that certain movies decided that the competition is basically two fears and they do not want to join the competition in this not very, let's say, preferential period of time.
And some movies after doing a press while a pre-release decided that the results are not very satisfied and they wanted to see whether or not some more promotional activities, some more campaigns, would make the situation better.
It's all related to sales.
Every movie will have a different, I mean, look, they all want to make as much revenue as possible and become as popular as possible, but they also will have different scenarios to deal with in terms of what may or may not affect their popularity and their potential sales.
So it does make sense that certain movies might avoid certain holiday periods or certain dates for a variety of reasons.
I think timing is kind of like real estate.
There is only a select number of slots that you can go into.
And most coveted slots will be surrounding national holidays where people have extra time to go to the cinema and enjoy and on weekends as well.
In most cases it's up to each individual manager of each individual film to decide how long they will like a movie to be screened in the cinemas and how many cinema theatre halls they would like to showcase these movies and add what hours.
Or dates, even. I mean, I think the release dates of movies can also be really critical.
Right. And also the decision, I think, in most cases entirely based on the amount of the interest of the individual cinemas.
If they don't think such an arrangement helps them make money, then they will change it, which is why we've seen stories of well, not so influential directors calling on the public and film managers, film cinema managers, to give them more screen time because they believe that they spent a lot of energy and resources into making a movie that they're satisfied of.
Even highly influential directors have complained about this sort of thing.
I know Quentin Tarantino recently was talking about the release of one of his films, Wild Star Wars, was the latest Star Wars was also being released.
And he was also complaining that so many cinemas were refusing to play his films because apparently Disney and Star Wars had booked up a certain amount of theatres and wouldn't allow other films to be played.
So there are, I mean, there are also instances where people, directors that have historically achieved great success are still battling to determine when their films can be released, how many theatres play their films.
So no matter how successful or well known or not well known, you are, the film industry is increasingly competitive in a variety of markets.
And another factor when it comes to timing is the actual time that you want to release regarding with the situation in the society.
For example, if it's the Spring Festival holiday period, people would go to the cinema and watch something lighthearted and comedies and fun to watch and auspicious even.
And if it is a comedy, it is fun to watch, yet it is kind of, you know, tragedy in a way.
It might not gain a good box office results.
And that is why the film Viva La Vida delayed its release during the Spring Festival holiday period.
Actually, it's a really good movie.
I enjoyed it. It's a national film or a local film.
A local film. It's about a, it's a love story of two young people with severe disease.
Right. It's actually very moving and it got, it has got a lot of comedy element in it.
It's fun to watch. And well, you can, you can cry basically from the half of the movie if you want to, if you're easy to move like I am.
And yet it's not the kind of movie that people would go to during Spring Festival holiday.
So that's why it got delayed.
And actually after delaying the release, it has got pretty good results.
It seems to be also a slight China thing where a lot of films base their releases on the time of year.
And if that's much of a factor in the US, for example, even in South Africa, because I think of some of the most popular films around Christmas time and that sort of thing, which is also kind of like a jolly family, you know, all day time.
Yeah, yeah. But it seems like the films that are released are just the most highly anticipated forms of the year.
So you'll have like horror movies, action movies, suspense movies.
A shark month. But literally you'll have like these films that are not associated with the specific celebration being released and still, you know, reaching incredibly high box office figures, whereas in China, there seems to be a lot more sensitivity about the sort of genre of film that's released during a certain type of celebration, which is quite interesting.
I think it's natural for every market.
I mean, in the US, if it's the Halloween, you expect a lot of horror films, whereas in Christmas, you expect the family.
But literally it doesn't seem to be a factor.
Literally, I've noticed that even during the Christmas period, you know, movies that are not family orientated or jolly or comedy type films.
So like action movies, horror movies, all those are also popular regardless of what time of year it is.
So I think that's interesting.
I guess this is depending on the taste of consumers and moviegoers because the movie market here in this China is hearing China is really market oriented.
And like I said earlier, it's really up to each cinema managers to decide how long they will like a movie to run in a cinema.
But I think it's nice that consumers are also wanting to see certain Chinese consumers, I mean, I'm wanting to see certain types of genres of films during certain times of year.
I like that trend where you want to see more lighthearted comedic type films during the spring festival, for example.
I think that's a nice consumer trend.
And the end of the day is all about the quality of the film.
If it's a good story and if it is nor is after delaying the release, you would still get a good box office.
Right. It's in the market economy.
It really matters to have very good commodity to be pushed into whatever consumer you're trying to appeal to.
I'm afraid that's all the time we have for today's discussion on Roundtable.
