“We Believe This is a 25 Year Transformation,” says Kobo’s CEO Michael Serbinis

By Iona Teixeira Stevens and Carlo Carrenho

At the Frankfurt Book Fair, Kobo CEO Michael Serbinis gave an exclusive interview to PublishNews Brazil. He talked about Kobo being a global start-up, the company’s partnership with the Brazilian bookseller Livraria Cultura, Kobo’s devices and the company’s future plans for self-publishing platforms. Kobo, for instance, intends in the future to integrate Writing Life, its self-publishing platform, with POD (print on demand technology), allowing authors to produce printed versions of their work. Serbinis also spoke about the importance of investing in good partnerships when you are not a company with deep pockets.

Kobo's CEO Michael Serbinis

PublishNews Brazil: How’s the process of launching in Brazil going?

Michael Serbinis: It’s definitely a lot easier today than it was three years ago, when we were a brand new company, because now we’ve done this many times. We’ve effectively created a model with WH Smith, FNAC, Mondadori in Italy, reaching from Portugal to Japan. But it’s still a big decision. Stores are in transition and this is a long transformation. When people saw Borders going bankrupt in the US, a lot of people thought: “Digital transformation is going to destroy us.” It’s not the case. We work very hard in how our partnership agreements work and how we’re organized to make sure that this is a win-win between us and the retailers.

PNB: How much do you have to adapt in each country?

MS: What always happens is that we say how we have done things in 15 other countries and the retailers say they want it different. So there is some discussion at the beginning, but in the end we almost always end up with the same pattern as in the other countries. It’s not complicated. It’s just leveraging our strength. See, I believe, as a bookstore customer, that one of the best things a bookstore can do is to create an experience that people want to go to. I don’t go to the bookstore only because I want to buy a book. I go there because I like the experience, and I bring my kids there. So leveraging their strength and our strength is important.

PNB: Why is Brazil a priority for Kobo?

MS: We started this company wanting to be number one in the world. This is a long transformation and if I do nothing else in my life, that would have been enough. So, to be number one worldwide you have to be number one in a few big countries. Right from the start, we had partnership in the US but, unfortunately, Borders, for many other reasons, went bankrupt.

So what are the countries where you can build a critical mass? Japan, the UK, a number of European countries. And we believe that Brazil is in the top ten. Rakuten also believes Brazil is critical — they bought Ikeda. So Brazil is important, and it’s important to start now. Because we also know that being a small company has advantages — we don’t own the biggest bank account, but we are the fastest.

PNB: What is the advantage of being the first international e-book player to arrive in Brazil?

MS: Being first in a market is important if you have content, if you have a full ecosystem. Without it, it’s irrelevant. Being first with the full experience is something we’re trying to do every time. Certainly we’re doing that in Brazil. Payment methods are almost as important as having the right content. This is hard because banks and their payment systems don’t move fast.

PNB: Why did you choose Livraria Cultura to be your partner in Brazil?

MS: This decision comes down to who are the booksellers that we believe that are committed and can create a great experience. What we found is, for the time we wanted to launch, Livraria Cultura absolutely had the commitment, and it can not only create an experienceor Brazil, but can also be an example for other countries. We’re very excited about Cultura.

PNB: How do you see the partnership with Cultura developing ion the future?

MS: You’ve seen how our model works, such as in the UK with WH Smith, but also with the British Booksellers Association. We are in it together to win in the market. That’s how we look at it. In the UK, having 1,100 WH Smith stores is a valuable asset. But having another over thousand bookstores from different booksellers, with the exception of the two hundred Waterstones stores, is valuable not only for us, but also for WH Smith itself. We think we can probably do the same thing in Brazil over time.

PNB: How do you expect Brazilians will react to the Kobo devices, particularly the dedicated readers?

MS: The dedicated reader that has been in the Brazilian market is either very expensive or not so good. I heard that in Japan before. People said: “Well, you know, the Japanese market, with all its technology, it’s going to be Sony and Panasonic, it will be more about the color tablet, the multipurpose device.” But we’re not seeing that at all. We’re seeing, essentially, that among readers around the world there’s a class of heavy readers, and they prefer e-ink. And it’s hard to beat E Ink in terms of its battery life, portability, durability, and how light it feels in your hand when you’re reading in bed.

However, I believe that color is critical in the long term. Bookstores don’t just sell black and white books anymore. For most bookstores, about 20% of book sales are kids books, sometimes as high as 25% or 30%. And what percent are comics, cookbooks, magazines? So, to create a great experience for color content, we felt we needed to have our own color device. So we developed Kobo Arc, which will be hitting stores in November. And, unlike some of our competitors, we haven’t stopped developing apps for other devices. Pick a company and see when was the last time they released something. We update every month, we built an HTML5 experience for tablets, we continue to develop android apps, develop in multiple languages, we support fixed layout content…And as far as devices go, we think there’s room for both.

PNB:Is the whole Kobo family of devices going to be available in Brazil ?

MS: That’s our intent. We work with every partner to create the right roll-out strategy that’s suitable for him. For example, we just launched in Italy with Mondadori, and they are going with everything right away. We launched in Japan only with Touch, while we are working on our plan to introduce our other devices there.

It’s really expensive to be global as a young start up, but we’ve figured a way to make it work…Because of that, when we announce our new devices, generally in the first four weeks we are ready to ship those devices everywhere we do business. We’re ready, so it’s a matter of when our partner and us will decide it’s the right time to introduce it in the market.

PNB: The Brazilian government just bought 600 thousand tablets. How do you factor in government purchase of devices, especially for kids and students?

MS: Honestly, we think that’s very important. One thing that’s really been a shift is that, so far, the majority of the market has been consumer sales through retailers. That’s changing. One thing we’re very excited about is enabling kids and schools, and that’s a different animal. For example the Turkish government is looking to source about 18 million tablets. Wow! Any one company that would be able to get a relationship like that, it would completely change the company, or break it.

Part of our new launch of devices includes the Kobo Mini, for a number of reasons. One of them is the price point, which is important to the consumer, to the people who are more cost conscience, and for people who are more on the go, because they need it to fit in their pocket. But the other reason is kids: I’ve got three young daughters; they are now reading chapter books. They actually have access to iPads in our house, but they don’t read them, they only watch movies and YouTube. The Kobo Mini then fits in my daughter’s hands, she can easily hold it. And when you watch the experience of a young girl holding this Kobo Mini and turning the pages, reading a couple of chapters before going to bed, it looks like she’s been doing it her whole life.

PNB: So if E-readers go tax free in Brazil, it is a great thing for Kobo?

MS: One of the things we face everywhere in the world is different types of customs, duty and tax systems. We believe treating an eReader like a 500-dollar tablet doesn’t make sense, whereas giving it a treatment more like a book, we believe, it’s good sense.

PNB: What about the Writing Life, Kobo’s self-publishing platform? Are there plans to bring it to Brazil?

MS: We have just announced Writing Life in languages other than English. As it is now, authors from 80 countries, from 20 or 30 different languages, put their books on Kobo. So we’ll make the platform available in new languages like French, Spanish, German, Portuguese and Dutch, and we’re going to continue to build this out. But thinking of the evolution of a partnership in a country, it only starts at the launch. Launching is hard, but it’s actually the easy part. What takes the priority then is learning together how to work in a particular market. So as we get through the first year, we will start talking more about self-publishing. Right now, all of our European partners are waiting for Writing Life and to see what their role will be like in our partnership with self-publishing. For example, they might feature print versions of those self-published books, whether the author has a printed publisher or whether we will use some print-on-demand partners.

PNB: So you are considering going into print?

MS: Absolutely. We just announced the acquisition of French company Aquafadas, which has a digital publishing platform for magazine comics, academic papers, kids books etc. So they have the tools to put up an EPUB file, a special file format or an app. The publisher can then take it to distribution, to Kobo or somewhere else.  It’s still going to be available to publishers, but we’re also going to take the Aquafadas tools and connect them to Writing Life. So, the tools that that will be available to you via Writing Life will be “supercharged”. We’re also looking at POD and other kinds of publishing services.

I think what is exciting is how it’s going to work with, let’s say Cultura, featuring those independent or self-published authors, in a special part of part of the store, hosting events with those authors etc. And it’s not only a purely digital thing, it ties in with the retailer’s experience.

PNB: But is there a launch date for Writing Life in Brazil?

MS: I know Livraria Cultura is excited about it, but for now the focus is the launch, so it’ll be a 2013 time frame at the earliest.

PNB: You mentioned your work with conversion, are you going to offer conversion to Brazilian publishers too?

MS: Yes. In general, we like to go into a market and see that ePub files are already coming out of publishers, but that’s not always the case. And some markets are very complicated — Japan would be the example of the most complicated. We lead the market conversion to ePub there, since nobody else in the market was moving to ePub. So we fund, or cofund with publishers, the conversion of content. It’s costly — it’s become cheaper for sure, but it’s costly if you care about quality. Many companies will tell you about their low-cost conversion services — mostly from emerging markets—but we’re the ones who get the phone call from customers saying “I got this book from you and everything is backwards.” Publishers don’t get the phone call. We care about quality, and because of that, this is not a cheap process.

PNB: But will you charge for that conversion? If so, how much?

MS: Yes, and the price will depend. We will work with publishers and booksellers to figure it out. Again, we’re not a company with unlimited budgets, and we look at every country with the point of view of “how do we win in this country?” It’s not a one-size-fits-all.

PNB: Is this what makes Kobo different?

MS: What a lot people don’t know about us is that we have been perfecting this localization model for three years now. The partnership is not a contract, it is 500 people at Kobo that know how to work with these partners.They know how we merchandize, price, how we train them, how we sell devices etc. Some people talk about “adding a new country” when they are actually only adding a new language. If that was it, we’d be in a hundred countries now. We believe this is a 25-year transformation, and that the prize is big enough to be worth the investment.

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