THE PHILIPPINE BOOK PUBLISHING INDUSTRY ROADMAP

A project of the Book Development Association of the Philippines By Andrea Pasion-Flores

Trade and Industry Updates Novotel, Quezon City, 27 October 2015 BDAP GA, 15 January 2016 NBDB Kapihan, 31 March 2016

Fully Integrated into the Global Economy

ASEAN aims to become a more dynamic and stronger segment of the global supply chain and is determined to look beyond the borders of the ASEAN Economic Community.

Single Market and Production Base

The AEC envisions ASEAN as a single market and production base characterized by free flow of goods, services, and investments, as well as freer flow of capital and skills.

Towards the AEC:Four Objectives of AEC 2015/20

• A single market and production base • A highly competitive region • A region of equitable economic development • A region fully integrated into the global economy

A look at the Book Publishing Industry

• Current status locally and in comparison to the markets in the region and the world

• SWOT • Vision/Mission • Goal setting • Creation of industry logical framework • Consolidated Action Plans (done by participants)

Methodology

Global and Regional Book Markets Review

Philippine Book Industry Review

Industry Analysis

Goal Setting

Logical Framework

(Map)

ASEAN Economic Integration

ASEAN vision 1997: “A stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment and freer flow of capital, equitable economic development and reduced poverty and

economic disparities’ by the year 2020.”

ASEAN Population and MarketPo

pula

tion

in M

illio

ns

0

350

700

1050

1400

ASEAN China India

12401350

626

ASEAN GDP 2013Country/Economy

GDP (US$ billions)

GDP per capita (US$)

Ranking among ASEANSingapore 295.7 55,182 1

Brunei 16.11 38,563 2Malaysia 312.4 10,514 3Thailand 387.2 5,779 4Indonesia 870.3 3,475 5Philippines 272.0 2,790 6Vietnam 170.6 1,911 7Lao PDR 10.0 1,646 8Cambodia 15.7 1,008 9Myanmar 56.4 869 10(Source: World Bank)

Global Competitiveness• Negative Factors: • Corruption • Inadequate supply

of infrastructure • Tax Regulations • Inefficient

Government Bureaucracy

• Inadequately educated workforce

2004 2009 2012 2013 2014

Malaysia 29 21 25 24 20

Thailand 32 34 38 37 31

Philippines 66 71 65 59 52

Indonesia 72 54 50 38 34

Source: GCI 2004, 2009, 2012, 2013, 2014

WEF, GCI 2014-2015Country/Economy

Rank out of 144 Score (1-7)

GCI ranking among ASEANSingapore 2 5.65 1

Malaysia 20 5.16 2Thailand 31 4.66 3Indonesia 34 4.57 4Philippines 52 4.40 5Vietnam 68 4.23 6Lao PDR 81 4.08 7Cambodia 95 3.89 8Myanmar 134 3.24 9Brunei - - -

GLOBAL AND REGIONAL BOOK MARKETS

12

20 largest markets1 account for 84% of the publishing business 6 largest markets account for 60% ((US, China, Germany, Japan, France and the UK)

Source: International Publishers Association

1Top Markets by Rank: USA, China, Germany, Japan, France, UK, Italy Spain, Brazil, Rep. of Korea, India, Canada, Turkey, Australia, Russian Federation, Netherlands, Poland, Belgium, Switzerland, Norway

Total market value of books (World) = €114 billion

Growth of Book Markets reflect Economic Growth – Demand for Books and Educational Materials

The World of Books16%

84%

Top 20 markets-84% Top 6 markets-60%

Rest of the world

Top 20 Book MarketsCountry

Year Net Revenue (in million €)

Market Value (in million €)

New Titles per million inhabitants

GDPpC(PPP) (in US$)

USA 2013 19,563 27,400 959 53.143China 2013 9173 15,342 325 11.904

Germany 2013 - 9,536 1,156 43.332

Japan 2013 - 5,409 613 36.315

France 2013 2,639 4,401 1,008 36.907

UK 2013 4,662 3,875 2,875 36.209

Italy 2012 - 3,110 1,002 34.303

South Korea 2012 - 2,974 795 33.140

Spain 2013 - 2,708 1,626 32.103

Brazil 2013 1,645 2,239 104 15.034

Canada 2013 (est.) 1,496 2100 - -

Turkey 2012 1,198 1,752 561 18.975

India 2013 (est.) - 1,680 - -

Russian Federation 2013 - 1,582 699 24.120

Netherlands 2012 - 1,431 - -

Australia 2013 (est.) - 1,373 1,176 43.550

Poland 2013 646 1,025 353 23.275

Taiwan 2013 - 855 1,831 41.581

Switzerland 2012 (est.) - 828 - -

Sweden 2012 214 783 - -

Top Markets for the English Language

Country Rank Year Publishers Total Net Revenue (in million €)

New Titles and re-editions per 1 million inhabitants

USA 1 2013 27,400 959UK 6 2013 4,662 2,875India 13 2013 1,680 n/a

Booksellers Oct 15, 2015 Headline : India market supersedes UK

16

Nielsen’s India Book Market Report tries to quantify a complex market, valuing Indian publishing at $3.9 billion and pegging growth at 20% annually.

ASEAN New Titles per Million InhabitantsCountry New Titles

PublishedPopulation Year New titles

published per million people

Rank

Singapore 9952 5,312,400 2012 1873 1

Malaysia 19171 28,758,968 2011 667 2

Vietnam 24589 86,025,000 2009 286 3

Brunei Darussalam

91 394,400 2009 231 4

Thailand 14000 66,277,335 2009 211 5

Indonesia 30000 249,865,631 2013 120 6

Myanmar 4000 48,453,000 2000 83 7

Philippines 7850** 100,096,496* 2014 78.5 8

Lao PDR 88 4,871,472 1995 18 9

Cambodia NA

*As of July 2014; Source: http://www.worldometers.info/world-population/philippines-population/ **NLP, through NBDB

Title production: Selected countries, by number of titles per 1 million inhabitants, and GDP per capita, PPP From IPA 2014 Report

SG Fast Facts on Reading and Writing

19

PHILIPPINE PUBLISHING INDUSTRY TODAY

Press and Literature, a Core CBIPress and Literature includes the following economic activities: • Authors, writers, and translators • Newspapers • News and feature agencies • Magazines and periodicals • Book publishing • Cards, maps, directories, and other printed materials • Pre-press, printing, post press of books, magazines,

newspapers, advertising materials • Wholesale and retail of press and literature (book stores, news

stands, etc.) • Libraries

Value Added and GDP Contribution of Core Copyright IndustriesIndustry 1999 VA

(Thousand Pesos)

% of GDP 2010 VA (Thousand Pesos)

% GDP % Change per Year

Press and literature

63407733 2.13 88316156 0.98 2.76

Music, theater, opera

11726015 0.39 71733219 0.80 15.09

Motion picture and video

2233413 0.08 9289765 0.10 11.88

Radio and television

13629900 0.46 240471317 2.67 23.92

Photography 122461 0.00 2025666 0.02 23.38

Software and databases

11444727 0.38 42596043 0.47 10.95

Visual and graphic arts

3837 0.00 1558685 0.02 50.06

Advertising 2882825 0.10 4349356 0.05 3.43

TOTAL CORE 105450912 3.54 460340207 5.11 12.28

Employment Contribution of Core Copyright IndustriesIndustry 1999 Employment

(Number)% of Total 2010 VA

(Number)% of Total % Change

per Year

Press and literature

177376 6.22 109654 2.76 -4.01

Music, theater, opera

23099 0.81 72489 1.83 9.53

Motion picture and video

3022 0.11 13464 0.34 12.45

Radio and television

12777 0.45 62146 1.57 13.18

Photography 1002 0.04 6740 0.17 15.88

Software and databases

27607 0.97 70969 1.79 7.87

Visual and graphic arts

85 0.00 7972 0.20 37.84

Advertising 6502 0.23 6848 0.17 0.43

TOTAL CORE 251469 8.81 350282 8.83 2.76

Value Added to GDP

Pre-press, Printing, and Post-press of Books, Magazines, Newspapers, Advertising Materials 6%

Cards, Maps, Directories, and Other Published Material 4%

Book Publishing 4%

Magazines/Periodicals 4%

Newspapers 4%

Authors, Writers, Translators 2%

Wholesale and Retail of Press and Literature (bookstores, newstands, etc.) 76%

Source: WIPO

Employment Distribution within Press and Literature

Pre-press, Printing, and Post-press of Books, Magazines, Newspapers, Advertising Materials 13%

Cards, Maps, Directories, and Other Published Material 7%

Book Publishing 7%

Magazines/Periodicals 7%

Newspapers 7%

Authors, Writers, Translators 5% Libraries

1%

Wholesale and Retail of Press and Literature (bookstores, newstands, etc.) 53%

Source: WIPO

Labor Productivity Index for Copyright Industries

Imports and Exports of Printed Materials

0

17500000

35000000

52500000

70000000

2011 2012 2013

33896982881569

50430199

61493017

53364637

Imports ExportsSource: NSO

Revealed Comparative AdvantageRCA measures how much a country is exporting relative to its total trade in comparison with the share of the product in world trade.

Source: Usui 2012 (ADB)

IPP Mandatory Industries

1997 2005 2010 1997 2005 2010 1997 2005 2010

334

292928

191919

111

RCA<1RCA>1

Book Publishing Iron and Steel Mineral Resources

Volume and Value of Production Indices

Year Value of Production Index (VaPI)

Volume of Production Index

(VoPI)

Value of Net Sales Index (VaNSI)

Volume of Net Sales Index (VoNSI)

Index Year-on Year growth rate

Index Year-on Year growth rate

Index Year-on Year growth rate

Index Year-on Year growth rate2011 136.3 -0.9 49.8 -0.9 125.7 -0.4 45.9 -0.4

2012 146.9 7.7 51.7 3.7 142.6 13.4 50 8.8

2013 151.6 3.2 47.9 -7.3 143.1 0.1 45.2 -10.8

Source: NSO

Volume and Value of Production Indices

Demand and Readership• Readership declined across

the board • Drop cannot be attributed to

digital publishing • Minimal rise of reading for

leisure (9%, 13% to 16%) • PhP 200 as the average

amount readers are willing to spend

• Readers more inclined to buy if books are on sale 70%

78%

85%

93%

100%

TotalReading Books

80%

88%

83%

92%

90%

94%

2003 2007 2012

Source: NBDB Readership Surveys 2003, 2007, 2012

DRIVERS OF GROWTH

Education• 2015 DepEd allotment for the purchase of various

learning materials estimated to reach PhP 3.4 billion • LGUs allot 1% of real estate taxes for its Special

Education Fund; industry has a stake in real estate development

• Implementation of Mother Tongue Based Multilingual Educational System

• Implementation of the K-12 Basic Education System • RA 8047 (Support from the NBDB through various

programs)

Technology• Lack of or expensive

internet access • Large number of mobile

subscribers (growth driver) • Some publishers venturing

into digital • Digital titles increased from

89 in 2012 to 817 in 2013 due mostly to Precious Pages (one of few who gave data)

• Digital sales did not significantly increase revenue

9th Pillar of Competitiveness: Technological Readiness

Grade/Data

Rank (out of 144)

Overall Technological Readiness

3.78 69

Availability of latest technologies

5.1 41

FDI and technology transfer

5.0 31

Individual using Internet, % 37% 91

Fixed broadband Internet subscriptions/100 pop.

2.6 46

Int’l Internet bandwidth, kb/s per user

57.6 46

Mobile broadband subscriptions/100 pop.

20.3 79

Source: GCI 2014

Approximate number of bookstores in the Philippines (NBS now has 200, which brings number to about 423)

Accessibility:Lack of bookstores• Uneven distribution of

major bookstores in the Philippines (high volume in Metro Manila)

• Smaller bookstores strategically placed in urban centers

• Need to look for distribution systems

Accessibility:Libraries• Public libraries are meant to

serve the public “from cradle to grave”

• Most people are unaware of the nearest public library (NBDB Readership Survey 2007)

• 57,807:1 ratio of inhabitants to libraries

• Untapped Market for Books • Most public libraries do not

purchase and rely on donations • Recommended turnover of

books is 5 years • Move to change libraries from

book to information centers

Libraries Number

Public Library System Provincial – 51* Congressional – 4* City – 100* Municipal – 535* Barangay – 427*

1396* *(from NL, but not disaggregated)

Academic Libraries 363

Specialty Libraries 26

Total 1785

Source: National Library and PAARL

SWOT ANALYSIS

STRENGTHS

Trade

• No lack of local talent • Readers and writers abound

• Can be seen through Wattpad and other platforms

• emerging business model of the self-published author Bestsellers are welcome in bookstores, enjoy support

• Enjoys government support through RA8047

• VAT exempt • Importation of raw materials Tax-

and duty-free exempt

Textbooks

• Deep knowledge of consumer and their buying habits: most have close personal relationships with customer base.

• Many incentives, such as ITH, available to acquire raw materials for print and pioneering activities such as content development

• Print books are VAT exempt • Raw materials used for the

publishing are tax- and duty-free exempt

Weaknesses

Trade

• Low print runs for literary/academic titles

• Lack of content processors to bring up level of quality

• Little to no marketing and publicity efforts by publishers

• Not distributed widely locally and rarely distributed abroad

• Lack of local libraries/bookstores to distribute books

• Lack of incentives for creators; slow content creation

Textbooks

• Most do not offer a diversified product line, and have only the public school system as a customer

• Content is generic and universal (no comparative advantage)

• Perceived corrupt practices in the buying and selling of textbooks

• Proliferation of errors, lack of classroom testing

• Lack of libraries • Lack of content processors • Reliance on government

support (can backfire when support withheld)

OpportunitiesTrade

• Can sell tremendously and cross media (become movies because of drawing power)

• A lot written in the vernacular, can encourage reading

• A huge backlist for translation available

• Rights can be sold internationally

• New income streams: FILCOLS

Textbooks

• K-12 curriculum widens the market base to align with many markets

• Direct selling to markets or co-publishing opportunities will open up

• Room for diversification of title offerings to sell to the school system

• Proposed answer for transparency to create a national registry of books will consolidate the industry’s products and create competitive pricing for books

• Translation opportunities for mother tongue-based books. Also opens regional publishing

• Available annual budget allotment General Appropriations Act, as well as funds available from SEF

• New income streams: FILCOLS

Threats

Trade

• Continuing pressure to be more profitable for each title

• Lack of school libraries does not build a library habit nor does it create a reading culture among learners

Textbooks

• DepEd moratorium on the purchase of textbooks

• Lack of school libraries does not build a library habit nor does it create a reading culture among learners

• Private schools are free to purchase from everywhere, not just local.

SUMMARY of most pressing problems of the industry

43

1. Low production of titles/products 2.Undervalued labor 3. Tremendous lack of distribution channels 4.Low spending on education 5.Negative exports, with no revealed comparative

advantage of goods exported 6.A large import/export deficit 7.Lack of openness to create industry data to

better quantify problems 8.Lack of diversified products to cater to a diverse

population and create a diverse clientele 9.Lack of diversified publishers catering to various

needs of a diverse customer base 10. Lack of unity of players

GOALS AND MEASURES

Vision for industry

The Philippines, a country of enormous creative potential and a viable market for books must grow the local market as well as become a major participant in the global book industry.

Vision

The Philippines, a country of enormous creative potential

and a viable market for books,

must become a major participant in the global book

industry.

CREATE

CONSUME

SELL

To become a vibrant industry these relationships between players and consumers must be sustained

CREATE

CONSUMESELL

MissionTo be a major player in the world’s book publishing community, industry players must develop their competitiveness, integrate itself within the regional and global publishing stage, while strengthening gains in the local market and aiming for equitable growth within its ranks.

Four overall goals from the Mission

1. Improve competitiveness 2. Integrate within regional and global markets 3. Strengthen gains in local market 4. Equitable growth within ranks

Mission 1: Improve CompetitivenessGOAL 1 Have a Mindset for Innovation • Constant

Research and Development

• Improve Access to Diverse Markets

• Find New Technologies to Diversify and Create New Content

• Remove silos

GOAL 2 Quality of Products and Processes • New, High Quality,

and Sustainable Raw Materials

• Source both Local and International Content and Talent

• Develop High Quality Workforce

• Creation of Products to be Branded as Unique to the Philippines

GOAL 3 Desire for Excellence and Productivity • Further Skills

Development • Creation of

Specialities

Mission 2: Integrate with the Regional and Global Publishing Community

GOAL 4 Integration with International Community • Create a Philippine Presence in the

International Book Scene • Export/Sell Rights Abroad to Fulfill

Demands of the International Market

Mission 3: Strengthen gains in local market

GOAL 5 Respond to Diverse Domestic Demand

Create New Products Responsive to the Diversity of

the Philippine MarketExpand Availability of Books

Creation of more libraries Encouragement of more bookstores

Creation of new modes of distribution

Exploration of Distribution Systems Within and Outside the

Country

Mission 4: Equitably Distribute Wealth within RanksGOAL 6 Sustain the viability of the Publishing Process at Every Stage of the Value Chain • Create an environment of Respect for Intellectual Property

Rights: compensation of creators • Creation of High Quality Textbooks • Build a Reading Culture • Create Legislative Infrastructure that feeds development of all

players

Vision The Philippines, a country of enormous

creative potential and a viable market for books, must become a major participant in

the global book industry.Mission

To be part of the global book publishing industry, industry players must develop its competitiveness,

integrate itself within the regional and global publishing communities and aim for an equitable

distribution of wealth among its ranks.

Improve Competitiveness

Mindset for Innovation

Constant Research and Development

Improve Access to Diverse Markets

New Technologies to Diversify and

Create New Content

Remove Silo Mentality

Quality of Products and

Processes

New, High Quality, and Sustainable Raw Materials

Source both Local and International

Content and Talent

Develop High Quality Workforce

Creation of Products to be

Branded as Unique to the Philippines

Desire for Excellence and

Productivity

Further Skills Development

Creation of Specialities

Integrate within the Regional and

Global Community

Integration with International Community

Create a Philippine Presence in the

International Book Scene

Export/Sell Rights Abroad to Fulfill Demands of the

International Market

Strengthen Gains made locally

Diverse Domestic Demand

New Products Responsive to the Diversity of the Philippine Market

Expand Availability of Books—Remove Silos within the Industry

Exploration of Distribution Systems Within and Outside the Country

Equitable Growth within its Ranks

Viability of the Publishing

Process at Every Stage of the Value Chain

Environment of Respect for

Intellectual Property Rights

Creation of High-quality Textbooks

Building a Reading Culture

Create Legislative Infrastructure that

feeds development

15-year Plan

Short Term (2015-2020) Stabilization of Local Markets Counter the stagnant growth from the past decades -Establish long-term solutions and mechanisms to address pervasive issues in the industry (ex: textbook quality)

Medium Term (2020-2025) Sustainable Growth for All Industry Players -Maintain positive growth for all -Active participation in the regional and global book markets

Long Term (2025-2030) Competitive Goals a globally competitive publishing industry with an active role in the direction of the global book community

Benchmarks

Indonesia

• Almost double the amount of new titles published per million per year

• First Southeast Asian Country in Focus at the Frankfurt Book Fair 2015

• Average growth trend of 6% per year from 2007-2012

• Similar geographic and economic parameters to the Philippines

• High investment in Education (20% of National Budget)

• Above the Philippines in rank in the Global Competitiveness in ASEAN

Thailand

• Almost double the Philippines’s per capita income at 13,510 PPP dollars in 2013

• 30th IPA Congress set in Bangkok for 2015

• 2013 World Book Capital • Initiated the National Reading

Decade Campaign for 2008-2013 • Annual growth of 5% in 2011 • Above Indonesia in rank in Global

Competitiveness in ASEAN

New Titles per Million Inhabitants

0

15000

30000

45000

60000

2010 2015 2020 2025 2030

Targets and Required Growth Rates

Target Level of New Titles

Published

Yearly Growth Rate

Required

2015 7722 5.69%

2020 10061 5.56%

2025 14427 6.20%

2030 20498 6.47%

Conservative

Target Level of New Titles

Published

Yearly Growth Rate

Required

2015 8679 8.19%

2020 13414 8.64%

2025 19236 8.25%

2030 28184 8.17%

Moderate

Target Level of New Titles

Published

Yearly Growth Rate

Required

2015 11326 14.11%

2020 23475 14.90%

2025 36067 12.89%

2030 57650 12.11%

Aggressive

Value Added

00

225,000,000.00

450,000,000.00

675,000,000.00

900,000,000.00

2010 VA 2015 VA 2020 VA 2025 VA 2030 VA

Exports

00

7,500,000.00

15,000,000.00

22,500,000.00

30,000,000.00

2012 2015 2020 2025 2030

RECOMMENDATIONS AND FINAL THOUGHTS

Establish Data Gathering Initiatives • Create an environment of trust and openness for the initiative

• Publishers must see themselves as allies rather than competition to be able to develop the industry.

• Create a central database for basic information on industry stakeholders to be updated yearly • Book associations and/or NBDB to be considered as the keeper of the

database • Strictly enforce submission of data through incentives and

penalties for lack of compliance • Create annual industry performance reports on the

publishing industry for the benefit of all players • Proactive submission of data to international publishing

associations to create an image of a dynamic and engaged industry willing to be part of the global publishing community

Pursue a Clear Legislative Agenda• Examine international models that implement the Fixed

Book Price Law to prevent problematic practices that distort the market; explore viability in the local industry

• Examine the current legislation (RA 8047) to answer the current needs of a changing industry

• Reconsider the DOJ Opinion that defines Book Publishing as Mass Media, which prevents the influx of foreign direct investment

• Reconsider Section 109 of the National Internal Revenue Code, which exempts books from VAT • Current definition of the book, “a printed non-periodical publication

of at least 48 pages” do not encompass non-print format books and books with less that 48 pages

Create Wider Distribution Channels• Develop the library system of the country

• Create policies that favor the creation of libraries in schools and local communities

• Ensure the purchase of up-to-date books instead of reliance on donations • A library in every school is good to target

• Encourage small, related business, such as independent and niche bookstores and online distribution outfits

• Consider alternative distribution channels that extend the reach of the industry to the remotest corners of the country

• Prioritize the identification of international and regional distribution channels

• Foster closer ties with other market players by regularly attending international book trade fairs

• Consider digital distribution as a viable model by encouraging digital access, especially in the regions, and affordability

• Create public and private grant systems to encourage the development of Philippine titles and their distribution abroad

Increase and Develop Sources of Content• Ensure proper compensation for content creators through fair contract

relations and to attract more and improved talent to the industry • Consider sourcing international content and selling local content abroad • Identify international award-giving bodies for Filipinos to join as a way of

boosting the image of Filipino content creators and the valuation of Philippine titles

• Produce diverse titles to meet the demands of the diversity of cultures in the country as well as internationally

• Translation as a key component given the mother-tongue based policy • Encourage more individuals throughout the country to go into

publishing • Identify key persons from the regions to participate in activities in Manila and

internationally • Create and strengthen writers and editors groups

• Aid in the creation of mechanisms that focus on creators’ welfare to encourage more talent consider careers in the industry

• Create value for created works with fair compensation through equitable contracts and copyright awareness

Develop Concern for Consumer/Reader Well-being• Importance of reading books should be supported by both

public and private sectors • Establish long-term reading campaigns that encourage

reading for enjoyment such as Singapore’s annual Read Singapore! and Thailand’s National Reading Decade

• Develop consumer-oriented leisure reading materials to encourage the idea of reading for enjoyment

• Establish creative reading campaigns that target the vast majority instead of particular segments to establish the idea of reading as an enjoyable activity for all

Mindset Change• Recognize that the Philippine publishing industry is part of

the global publishing scene • Join international associations to interact and learn about the

kind of content Filipinos can create that would appeal to other markets

• Encourage government support for participating in international publishing activities such as book fairs

• Identify as part of the ASEAN community and actively find opportunities for exchange and trade

• Change the “Filipinos for Filipinos” mindset to “Filipinos for the World and the World for Filipinos”

Consolidated Industry Goals

69

“IT IS NOT THE MOST INTELLECTUAL OF THE SPECIES THAT SURVIVES; IT IS NOT THE STRONGEST THAT SURVIVES; BUT THE SPECIES THAT SURVIVES IS THE ONE THAT IS ABLE BEST TO ADAPT AND ADJUST TO THE CHANGING

ENVIRONMENT IN WHICH IT FINDS ITSELF.’.”

-LEON MEGGINSON, paraphrasing Darwin’s Origin of the Species

(Megginson, ‘Lessons from Europe for American Business’, Southwestern Social Science Quarterly (1963) 44(1): 3-13, at p. 4.)