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 pas- sengers, 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 in;ux 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 of;cial
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 Bouquin. 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 of;cial regulations concerning e-books’ sales tax, even
though they have been on sale in Brazil since 2009. The mar-
ket 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 speci;c 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 re;ects the
spirit of the country’s unof;cial motto: “Everything will be
alright in the end. And if it isn’t alright, it isn’t yet the end.”;
Brazil’s Race to Digital
Hurdles remain, despite an influx of market players
BY CARLO CARRENHO
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.