23 April 2018
Surge in Audiobook Sales Sees Russians Emerge as Well-Read Army
Clear opportunities for Hong Kong electronic suppliers with audiobook sector on course for 40% growth this year.
Russia is emerging as a nation of audiobook aficionados. Last year, sales of pre-recorded reads grew by some 30% across the country, creating a market now valued at US$10 million. The success of the sector is in stark contrast to the continued decline of printed-book sales and the somewhat becalmed e-book industry.
Unlike consumers in a number of other developed markets, Russians have retained a love of literature. This has seen many home-grown authors enjoy considerable popularity, with their works frequently sought out well beyond the country's borders, especially in the Mongolian, Israeli and German markets, which are all home to a substantial number of Russian emigres.
Until very recently, the domestic audiobook market was dominated by two local players – Patefon and LitRes, with the latter a joint venture between Eskmo, Russia's largest book publisher, and Ozon.ru, the e-commerce operator seen as Russia's answer to Amazon. Of late, however, this cosy duopoly has been disrupted by the arrival of a Nordic interloper – Storytel.
The Stockholm-headquartered audiobook distributor managed to secure a 15% share of the Russian market within 12 months of its initial entry. Its success very much mirrors that of Avito, Russia's version of Craigslist and the country's largest online classified marketplace, which was launched by two Swedish businessmen in 2007.
In the case of Storytel, though, it was clearly the Russian market's untapped potential that lured the business into opening a Moscow office. While Russia's audiobook sector currently lags behind that of the majority of EU countries in terms of both per-capita revenue and overall sales, it's expected to grow by 40% in 2018 alone.
One thing all the market players have in common, regardless of their geographic origins, is cut-price deals on audiobook accessories, which are open to all subscribers. For a monthly fee, typically between US$8-10, audiobook-club members not only get access to a range of regularly updated titles, but can also choose to upgrade (or replace) their earphones, powerpacks or MP3 players. While the latter are largely out of favour in Russia – as in most other developed markets – they remain popular with many of the country's long-distance commuters, who frequently prefer to save their smartphone batteries for more urgent use.
Frequently, an e-book version of an audiobook purchase is included as part of the standard price. This tactic has given something of spur to what was, otherwise, a somewhat moribund sector and is sure to remain a popular add-on as long as the Moscow Metro maintains its free wi-fi service.
In terms of preferred content, fiction – whether by Russian authors or by overseas writers in a translated form – remains the clear favourite, followed by historical studies, biographies and other non-fiction content. Lagging somewhat behind these are foreign-language study audiobooks and other books with non-Russian language content, with English being the second language of choice by a considerable margin.
With CDs and DVDs now viewed as archaic technology, pretty much all content is sourced online, with the borderless nature of this virtual marketplace providing easy access for interested Hong Kong businesses. Indeed, many of them will be able to piggyback products and accessory sales via the relevant download and aggregator sites.
In another plus, the duty-free threshold remains relatively high for e-commerce purchases made by consumers resident within the Eurasian Economic Union (which includes Russia), with individuals allowed to make cross-border purchases of up to $620 per month without incurring any tax liability. Inevitably, as the market develops, the line between content distributors and accessory suppliers will continue to blur, with Hong Kong companies well-placed to forge tactical alliances at this relatively early stage.
This will prove a huge advantage as cross-marketing is clearly the key to success in this sector. It is already commonplace for earphone purchases to come with an offer of discounted deals on future audiobook titles. As these titles are purchased and the end of the offer period looms, this inevitably sees the content distributor offering cut-price accessories via allied third parties, with this commercial cycle only destined to run and run.
Leonid Orlov, Moscow Consultant