Smangele Mathebula is a Masters student at Oxford Brookes University studying trade publishing in South Africa. She’s looking for better business models that will allow trade publishers to cater to market segments they’ve traditionally not reached, particularly in Soweto. She asked for my opinion on these issues in a series of thought-provoking questions. Here’s our Q&A, which she and I hope will encourage further discussion on important issues.

SM: The authors of New Business Models for the Knowledge Economy argue that “Organisations that manage to incorporate elements of the ‘softer’ values such as sense of community, knowledge sharing and idealism into their business model, will perform better in the network economy than organisations with business models that are based solely on economic rationalism.” With this in mind, as a publishing practitioner, what is your assessment of trade publishing in South Africa today?

AA: It’s a small industry of dedicated individuals producing beautiful, high-quality work that for production values and very often writing quality is among the best in the world. Unfortunately, it is beholden for its income to a limited segment of the market: wealthy people who have access to suburban malls, online shopping (Amazon, Kalahari, Loot), or subscription-based book purchases (e.g. Leisure Books). Since their businesses are so dependent on this market, they are unable to spend resources (time, energy and money) exploring new markets. It is a classic case of the innovator’s dilemma. (If everyone in publishing would read Clayton Christensen’s fantastic book The Innovator’s Dilemma, they’d recognise themselves, and potentially find a way out of this situation.)

SM: How can the government get involved?

AA: The government should not legislate or even create policy related to reading, those won’t help create new markets of readers. Rather, an increasing emphasis on and support for existing work setting up new libraries and funding reading programmes (run by excellent non-profits like Room to Read, Help2read, Shine, and others) may encourage young readers.

Just as important, however, is legislation or policy regarding banking and ecommerce: the worldwide boom in bookselling that fuelled giants like Amazon happened because it became cheaper to buy books. Note, this doesn’t mean books were cheaper at first (that happened later), but that the total cost of buying a book – travelling to the store, tracking down copies, waiting for the paperback – became much less. This was exponentially accelerated by the arrival of ebooks, led by Amazon Kindle.

In South Africa, however, banking regulations make it near impossible to offer a truly affordable way to buy online without a credit card. In Kenya, M-Pesa has made ecommerce truly affordable by enabling mobile payments without a bank account at very low transaction costs. In South Africa, M-Pesa’s rollout has been hampered by banking regulations, which required that network operators offering M-Pesa work within an existing bank (Nedbank), which in turn pushed the transaction costs so high that the system is not truly useful to the poor.

Until truly affordable mobile banking is available, the total cost of buying books will remain out of reach for most people, no matter what publishers do.

That said, two initiatives actively tackling these problems are Mxit and Paperight. (I talked about these recently at the IPA Congress.)

SM: There are opinions that South Africa lacks a reading/book culture. What is your assessment of this statement?

AA: Anecdotal evidence suggests this is true. However, we may be victims of a dangerous myth: that South Africans don’t buy books because the culture of reading is poor. It’s rubbish that South Africans don’t love stories and learning. Therefore, it seems more likely that South Africans’ reading culture is poor because they can’t buy books. It’s ridiculous to blame South Africans for not reading when the cost of getting books is so high. Remember that the ‘cost’ I’m talking about is not only the retail price of a book, but all the related costs of finding a book you want to read, such as travel, the time you need to consider alternatives, a history of reading to find what you like, postage, and the opportunity cost of looking for books: while you’re shopping for books, you’re not earning a living.

SM: Does the current trade publishing business model work for the South African context? And why?

AA: It works fine for those who can afford books as they are. It’s almost non-existent for most South Africans. While there are many factors, which I’ve alluded to above, perhaps the biggest problem is distribution. When you can’t buy or borrow a book easily within walking distance of your home, you are not going to be a reader.

SM: Illiteracy hinders the creation of new markets. Do you think trade publishers have a role in tackling issues around literacy?

AA: As businesses, they don’t have a moral obligation, in that no business has a moral obligation to do anything but sell its products. For those whose businesses depend on growing new markets, they have a financial obligation to shareholders to promote literacy. There is nothing surprising about this.

As private individuals working in publishing, almost everyone I know feels the obligation to promote literacy, but very few people have the time, money and energy to invest in personally contributing to a literacy campaign.

SM: Do you think issues around price sensitivity and the affordability of books are carefully considered? What are the challenges?

AA: Price sensitivity and affordability are considered very carefully, but always within the constraints of a given business. If a company’s values (not moral values, but their ingrown assessments of what is worth doing and what isn’t, given their structures and overheads) don’t allow them to price below a certain point, then there is little they can do.

SM: Do think publishers pay attention to business innovation and product development that is inclusive of vulnerable markets?

AA: I believe (without anything more than anecdotal evidence and personal experience) that on the whole they do pay attention, but they are constrained by their business structures and values. True innovation will not come from established publishers, but from new entrants to the market who do things completely differently. Their products may not even look like books, but these new entrants will find ways to offer reading that most people can afford. (Again, I recommend Christensen’s The Innovator’s Dilemma for detail on why this is so.)

SM: Does your company market its product/services directly to readers in townships?

AA: Yes. I have two companies in the publishing industry, Paperight and Electric Book Works, so I’ll answer separately for each one.

Paperight is not a publisher. It is a distribution system. Paperight’s website is an online library of books that any business with a printer can legally download, print, and sell. So it turns any copy shop, school, NGO, church and more into a print-on-demand bookstore. We actively promote in townships, working directly with businesses and schools. That way, we create bookstores where none exist.

EBW publishes healthcare coursebooks for nurses and midwives. We promote directly to healthcare providers and healthcare workers, many of whom live or work in townships.

SM: Retail is an important element in publishing. There have been some key bookstore closures. Why do you think Exclusive Books in Maponya Mall Soweto didn’t work?

AA: I don’t know enough about this specific case to offer an informed opinion. I do think it’s interesting that (if I understand correctly) when that store was converted into a Van Schaik store, it was still owned by the same company (Avusa), and the change could therefore be considered a rebranding exercise: from trade store to educational supplier. I would guess that when your nearby market is not as affluent as those around other malls where Exclusive Books works, you’re selling to people who buy educational books because they have to. In other works, Exclusive Books is for people who can afford to buy in that environment for leisure reading.

SM: How do you think Paperight and other innovations could help create a sustainable market in Soweto and other townships?

AA: Paperight helps by bringing down the total cost of books (travel in particular, but also in delays and opportunity costs), by turning copy-printers into bookstores on every street. Importantly, Paperight enables entrepreneurs to build their own businesses around printing books with very low startup costs. This is critical: in low-resourced economies, the last mile to the consumer is best covered by small-scale entrepreneurs who know their communities best. Initiatives that enable entrepreneurs to enter the content market at low cost (like MTN does in Nigeria, for instance) are the most likely to succeed.