Amazon’s Huerta: “We are on minute 5 of a 90 minute soccer match”
Pedro Huerta's,presentation was one of the highlights of yesterday's Foro Portada Mexico (#PortadaMexico13), which gathered more than 120 leading marketing, agency and media executives at Mexico City's Hotel Presidente Intercontinental. Huerta leads Amazon Kindle's expansion into Latin America, and his keynote speech "on the future of digital content in Latin America" was widely expected as the audience wanted to get insights on Amazon's recent experience in launching the Kindle and Kindle store in Mexico and Brazil. Below the key points.
Huerta started his presentation by sharing data showing that 42% of "physical" books in the U.S were sold online in 2012. For the United Kingdom that ratio lied at 37%. In Mexico, and most other Latin American countries, that proportion is much lower, but the upward trend is very clear. However, while Amazon sells most of its books in digital format, 70% of books sold overall (both online and off-line) in advanced markets are in physical book format.
Huerta noted that the opportunity for both publishers and authors in Latin America is huge: "Mexican publishers are currently only publishing 10% of the books that Mexican's have ever written." The much cheaper production costs for digital books should substantially increase that ratio." Even in Spain, the largest Spanish-language book market, only 46% of the top 1,000 authors have books that are available in digital format, Huerta said.
We are in the fifth minute of a 90 minute soccer game.
"We are in the fifth minute of the 90 minute soccer game," Huerta noted referring to the market for digital entertainment products and services. One major game changer is the fact that the transparency of the digital medium has made that books now are in heavy competition with other entertainment goods such as "movies, games and apps". In addition, digital content tends to merge the type of content (e.g. audivisual content is integrated with written content and into games etc.)
"Attention is a scarce resource", Huerta noted. Consumers have very little time that is why recommendation engines can work very efficiently." Another interesting feature of the digital medium is that a new author can share the same digital page on a recommendation engine with a Nobel price winning author. For good or for bad, this is what the democratization of content is all about, Huerta claimed.
Pricing: Cheaper than in print, but how much?
"The consumer knows that a digital book should cost less than a physical book. But how much less we really do not know." Huerta said that subscription models (e.g. Netflix) tend to be more profitable to publishers than one off-online sales.
In terms of what works for sales promotions, Huerta said that limited time offers at substantial discount are very effective. Huerta questioned whether all the books, online bookstores sell are ultimately read by the book buyers.
Key Digital Book Players: Google, Amazon, Samsung and Apple...
According to Huerta, the 4 key players in the digital book market are Google, Amazon, Samsung and Apple. He added that local players will also play a role. As an example he cited the Gandhi chain book and Sanborns (America Movil) in Mexico.
...Google and Apple have tailwind in less developed markets.
In terms of book market share, Huerta acknowledged that "Apple and Google have an advantage in less developed markets (those markets, including Latin America, where Amazon's Kindle has not been present yet or was recently introduced in. This is because the relatively wide availability of both Apple and Android based tablets in those markets.