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The Book Industry in Latin America: 2008-2020

Albert N. Greco
Professor of Marketing
Fordham University Graduate School of Business Administration
New York, NY U.S.A.
August 6, 2008
angreco@aol.com
201-439-1839
Key question: What technologies and developments are likely to be critically important to the development of
the book industry in Latin America in the period 2008-2020?

1. Current Developments and Their Potential for 2008-2020
Title output: In 2006, CERLALC reported that 99,566 new titles (+8% over 2005) were published in Latin America
(57,847 in Spanish; 39,627 in Portuguese; remainder in other languages) with an additional 76,768 produced in Spain
(total: 176,334).No mention was made about the number of backlist titles in print, an important barometer of the health
of publishers in a nation. Only 5% of these books were non-print; and concern was expressed about book piracy in Latin
America.

Book publishers: 16,561 publishing agents (the vast majority were small publishing operations) with university
presses (about 5% of al titles) and various government agencies (8%) playing an important role in this process.

Book distribution in Latin America: mainly retail bookstores and other establishments; the internet was used as a PR
platform by a number of companies.

Book exports and imports: $15.4 million in exports in 2006 (+54%); $1.43 million in imports in 2006 (+64%).
However, my research on books exported to the United States in 2007 (data from the U.S. Department of Commerce,
International Trade Administration) from Latin America indicated a higher total. See item #5 below on page 2 in the
Assumptions and Recommendationsection.

Overview: This is a well established industry offering diverse product lines in a number of different languages. It is still
a print industry with exceptionally few digital-electronic products.

Book readership: the largest group of readers is the 15-25 age cohort.
Book buyers: the largest group of book buyers is the 25-59 age cohort.

Media usage and media expenditure statistics are a concern. Books compete against seductive entertainment
goods and services (music; television; etc.) for consumer discretionary time and revenues.

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Book publishing nations: 3 clusters of nations. My research on these 7 nations follows (n.b.: the most recent
estimates are for 2006 or 2007; GDP is purchasing power parity; GDP % change is the real growth rate):

#1 Argentina: literacy 97%; GDP $523.7 billion; GDP growth rate 8.7 %; cell phone users 31.5 million;
internet users 8.184 million;

#1 Mexico: literacy 91%; GDP $1.346 trillion; GDP growth rate 3.3%; cell phone users 57 million; internet
users 22 million;

#1 Colombia: literacy 92.8%; GDP $319.5 billion; GDP growth rate 7%; cell phone users 29.76 million;
internet users 6.71 million;

#1 Brazil: literacy 88.6%; GDP $1.836 trillion; GDP growth rate 5.4%; cell phone users 99.92 million; internet
users 42.6 million;

#2 Chile: literacy 95.7%; GDP $231.1 billion; GDP growth rate 5%; cell phone users 12.45 million; internet
users 4.16 million;

#2 Venezuela: literacy 93%; GDP $334.6 billion; GDP growth rate 8.4%; cell phone users 18.79 million;
internet users 4.14 million;

#2 Peru: literacy 87.7%; GDP $219 billion; GDP growth rate 9%; cell phone users 8.5 million; internet users
6.1 million.

Book categories: 45% trade (adult; juvenile; mass market); 32% professional and scholarly; 17% educational
(K-12; and higher education/college); and 6% religious; 95% print.

Assumptions and Recommendations:
1. University presses, while maintaining complete control over all peer review-editorial functions, should consider
creating a series of regional cooperative sales, marketing, production, and distribution centers to minimize costs
and maximize their ability to get their books into the various channels of distribution (retail; college adoptions;
libraries; export; etc.) in Latin America and abroad.

2. In order to address slippage in media usage and expenditures, the book industry could forge an alliance
(probably with cultural and educational institutions and NGOs) to increase consumer reading, library usage, and
the availability of books (especially with the anticipated decline in newsstands).

3. By 2020, the current age cohort (15-25) of readers will be 27-37, out of school, and employed. Assuming they
remain heavy book readers, their reading preferences will shift from educational-professional and scholarly
books to trade books (although some of them will continue to rely on professional and scholarly books). The
industry could consider launching a comprehensive consumer research study to identify what these readers (and
buyers) of books want regarding book: (a) genres; (b) prices; and (c) channels of distribution and access to
books. Additional studies regarding the existing cohort of book buyers (25-59 in 2008; and 37-71 by 2020) is
needed, especially as this book buyer group requires different types of books (e.g., genres and type sizes).

4. The 7 nations listed above have impressive statistics regarding literacy rates; GDP, annual percentage increases
in GDP, and cell phones and internet users. However, the number of internet users must increase if the digital
transformation of the book industry can occur in a timely fashion. The book industry might want to work with a
coalition of telecommunication companies to make sure that the technological infrastructure is in place for the
sharp growth in interest usage that is anticipated by 2020.

5. The 7 nations listed above could increase book exports (probably to North America and possibly to Europe).
Increases in exports would provide new revenues for its printing and publishing infrastructure, which will
contribute to the overall health and development of these industries. In 2007, these nations generated export
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revenues to the U.S. (U.S. Department of Commerce, International Trade Administration). Data on book
exports to Canada were not available.
Mexico: $32.38 million;
Colombia: $36.27 million;
Peru: $6.97 million;
Brazil: $5.88 million.

The major export book categories in 2007 to the United States were:
Textbooks: Colombia $6.5 million;
Religious books: Colombia $20.69 million; Mexico $4 million;
Professional and scholarly books: Mexico $5.8 million;
Mass market paperbacks: Mexico $2.35 million;
Encyclopedias and special installments: Mexico $623,000; Chile $74,000;
Dictionaries and thesauruses: Colombia $258,000.

2. Current Technologies and Their Potential for 2008-2020
In 2006, 95% of all book titles were printed, probably using lithography (although some letter press could be used by
small companies). Books in Latin America will go through a 4 phase process:
1. 95%-100% print.
2. Mainly print with some digital product lines.
3. Digital with some print products.
4. 95%-100% digital.

The book industry in Latin America is a business well entrenched in phase #1. It will take time and substantial financial
resources to move this industry into phase #3. At that point access to content increases significantly for consumers, and
publishers will experience a substantive change in their business models (especially as they develop web sites/web pages
allowing content to be sold via the internet) and P & Ls (margins should increase).

Assumptions and Recommendations:
1. Information technology will be cheaper, more sophisticated, and have a wider consumer installed base by 2020.

2. By 2020, it is likely that hand held e-book readers (e.g., the Sony Reader; Kindle) will profit from the
learning curve. Prices should decline (to perhaps $50.00); and significant increases in features will make
e-book readers appealing to a wider range of consumers (and not just early adopters). This should increase
the sale of both trade and religious books. However, if e-book reader prices do not decline and features
increase by 2020, trade and religious books will remain print sector product lines well past 2020. As of August
2008, I am not sure if e-book readers will become the platform for textbook content by 2020; I assume the
laptop will retain its position of importance in the textbook sector, even by 2020.

3. Publishers must allocate annually a larger amount of CAPEX (possibly 8%-10%) to support the development
and/or expansion of electronic publishing operations, web sites, and internet based products.

4. Educational institutions (both K-12; and college/higher education) will expand their existing technological base
(hardware and software; internet access) by 2020.

5. Students in K-12 will have access to more computers in the classroom (laptops and/or desk models; with
internet access); a larger number of students will have access to computer technology (and possibly internet
access) at home. In addition, certain students (mainly pre-K to grade 2) will have wider access to hand-held
educational devices (e.g., the Leap Pad electronic learning devices; the FLY Fusion Pentop Computer).

6. A significant number of college/higher education students will have personal computers (probably laptops; e.g.,
the new student Lenovo Idea Pad S10), increased access to the internet, and cell phones (probably capable of
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storing vast amounts of 4-color textbook content). Again, laptop prices have to decline to allow, by 2020, the
digital transformation of college/higher education textbook content.

7. As of August 6, 2008, approximately 90% of all professional and scholarly journals are available via internet
based aggregators. Based on my research, I believe the professional and scholarly book industry and the
educational textbook industry must establish realistic goals to transform the industry into a 90% digital based
industry by 2020. The following goals should be analyzed and possibly form the template for expansion plans:
(a) professional and professional books (not textbooks) can and must reach the 90% threshold by 2017; (b)
college/higher education textbooks should reach that threshold by 2018-2020; and (c) K-12 textbooks,
supplementals, and standardized tests should reach that threshold by 2020.

8. Based on the data for countries listed above (in the Current Developments section on pages 1-2) in categories
#1 and #2, Latin American governments (on the national and local levels), and perhaps with the support of
international organizations, must continue to invest significantly in the pivotal technological infrastructures,
including communication systems. Failure to do this places in jeopardy the possibility of a viable and vibrant
digital publishing industry in 2020.