The Brazilian Publishing Industry... by Carlo Carrenho

The Brazilian Book Publishing Industry and Its Current Challenges Carlo C a r r e n h o

A Historic Overview Until 1808, Brazil did not have any printing activities, since Portugal prohibited the existence of any press in its South American colony. Only when the Portuguese Crown arrived in Rio de Janeiro, running away from Napoleon's army at the beginning of the 19th century, Brazil opened its first press thanks to the Royal Press machinery brought by D. JoSo VI, the Portuguese king. However, during the imperial era (1822-1889), editorial activity in Brazil was completely secondary, and even the first national publishing houses used to print their books abroad. The first book publishers to be established in Brazil were not nationals, but immigrants. The pioneer, Eduard Laemmert, was from Germany and started his printing and editorial activities during the 1840s. He never became a successful literature publisher, but his catalogue of almanacs and technical manuals were rather lucrative. It is interesting to note that even in its beginnings, the Brazilian book industry was already dependent on the educational activities in order to consume its prod u c t i o n - - s o m e of Laemmert's bestsellers were school books. The most important "Brazilian" publisher of the 19th century, however, was the French editor Baptiste Louis Gamier, whose family was well known in France for its publishing activities. Actually, they were the main competitors to the Larousse's at some point. Garnier founded his company (also called Garnier) in 1852 and invested in textbooks. He published grammar, math and science manuals, as well as dictionaries. "Novels are the bones; textbooks are the meat" is a well-known quote of the French publisher. The first publisher to use school books as the basis of his business was Francisco Alves, who had emigrated from Portugal. His company also carried his name and was founded in 1854. After the republic was proclaimed, in 1889, education was promoted by the government leaders on a large scale. Alves took advantage of that and opened branches of his business in cities where the education system was developing faster. The first decades of the 20th century saw the appearance of a man who would influence the Brazilian editorial life forever. Monteiro Lobato, despite his passionate personality, brought a more professional approach to the Brazilian book market, especially concerning distribution and commercial strategies. In 1918, when Address for correspondence: Carlo Carrenho, Carrenho Editorial, Rua Fradique Coutinho, 1139-subsolo,

05416-011, S~o Paulo-SP, BRAZIL. E-mail: carlo@carrenho.com.br.

Publishing Research Quarterly / Fall 2005

there were no more than 30 bookstores in Brazil, Lobato started sending books to newspaper stands, drugstores and grocery stores. The books were consigned to the new sales points, starting the consignment business practice in Brazil, which lasts until today. In the 1920s, Lobato founded Companhia Editora Nacional, a company that grew and overcame the difficult market conditions of those times by focusing on school textbooks at a time when the educational system was being remodeled and developed by new pedagogics. According to Felipe Lindoso, in his book O Brasil pode ser um pals de leitores?, (Can Brazil Be a Country of Readers?) "the effort to transform the education system had deep consequences for the editors and publishers. The consumption of textbooks had a steady growth and did not depend on government purchases". 1 Publishers would sell books to students' parents through the bookstores. After 1964, when Brazil suffered a coup d'rtat, the scenario changed and the government started its climb to become one of the largest book buyers in the world. In 1969, for instance, 6 million books were bought by the federal government when the National Educational Book Program (Programa Nacional do Livro Did~itico-PNLD) started its activities. In the 1970s, the books bought by the PNLD started to be chosen by government committees. Lindoso points out that this policy "opened up the path for some publishers to specialize in developing projects to be approved by the committees, selling hundreds of thousands copies to the government". 2 Lindoso also presents other criticism for this model of centralized purchase of school books: 1) The PNLD's purchases were very irregular until 1996, causing great instability at the publishers' performances; 2) The centralized system completely ignored the bookstores, which made them diminish. On other hand, Lindoso recognizes PNLD's positive aspects: "The huge and continuous state investment in schoolbooks was essential to the book development in Brazil. ''3 Of course, this is just a simplified and summarized introduction to the Brazilian book history. Our goal was not to present a comprehensive historical analysis, but to show a historical relationship between the education development and the growth of the editorial market in Brazil through the production of school textbooks.

The Brazilian Book Market Today There is a serious lack of research and data concerning the publishing industry in Brazil. Therefore, one has to be ingenious and creative sometimes in order to development a good scientific analysis. Since 1990, the Brazilian Book Chamber (C~mara Brasileira do Livro-CBL) and the National Syndicate of Book Publishers (Sindicato Nacional dos Editores de Livros-SNEL) have sponsored an annual research presently called "Sales and Production of the Brazilian Publishing Sector" (SPBPS), and it is the best series of temporal data available. The data collection for the SPBPS depends on the Brazilian publishers good will and availability (since the participation in the research is voluntary) and the final figures are calculated based

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on a sample of Brazilian publishing houses, not on the actual aggregated numbers. Therefore, some discrepancies may occur. Another important observation is that SPBPS numbers always relate to the sales of publishers to its first customers, and do not reflect bookstore sales, for instance. The most recent available SPBPS covers the Brazilian publishing industry's performance in 2003, as it is shown on the following tables. Table 1 gives us a good idea of the Brazilian book production. It reached 35,590 published titles that were printed in 299,400,000 copies. The table also shows that the print runs vary according to the market niche. School textbooks, for instance, have an average print run of 15,833 copies per title, while the academic and professional sector present an average print run of 2.061 copies per title. Although there are no statistical data available, it is likely that the standard deviation of the average print run in the general trade sector is very high, i.e., few titles have very large print runs while most titles have print runs way below the average. It's common sense in Brazil to say that the average print run is somewhere between 2,000 and 3,000 copies for regular non-bestselling trade editions. The fact that 1st ediTable 1 Brazilian B o o k Production in 2003 Industry Sector

Published titles

Printed copies

Average print run

School textbooks Trade Religion Academic and professional Total

11,830 9,650 4,550 9,560 35,590

187,300,000 58,100,000 34,300,000 19,700,000 299,400,000

15,833 6,021 7,538 2,061 8,412

1st editions Reprints Total

13,340 22,250 35,590

107,850,000 191,550,000 299,400,000

8,085 8,609 8,412

Source: CBL / SNEL, Produgao e Vendas do Setor Editorial Brasileiro, 2003.

Table 2 Brazilian Book Sales in 2003

Industry Sector School textbooks Trade Religion Academic and. professional Market Sales Subtotal Government Sales Total

Sales (US$) 287,276,755 170,635,470 66,454,382 136,023,813 660,390,419 157,683,788 818,074,207

Millions of copies 49 50 26 20 145 111 256

US Dollar conversionbased on the BrazilianCentral Bankexchangerate in Dec. 31, 2003:2,8892 R$/US$. Source: CBL / SNEL, Produgao e Vendas do Setor Editorial Brasileiro, 2003.

Publishing Research Quarterly / Fall 2005

tions and reprints have the same average print runs deserves further investigation, which is not in the scope of this article. Table 2 shows the real size of the Brazilian book market from the point of view of the publishers' sales. Considering the size of the country and the Brazilian population (169,800,000 people4), it's not a very cheering number. Just for a comparison exercise, the profit of Petrobras, the Brazilian state oil company, was over US$ 6 billion in 2003. That means that Petrobras' profit is 7 times bigger than the sales of all Brazilian publishers. Nevertheless, the Brazilian book industry is a relevant one when compared to other countries. According to Lindoso, 5 Brazil has the 8th largest book industry in the world when the number of copies produced is considered. F~ibio S~i Earp and George Kornis, have just published a book called The Economics of the Book Market, 6 rank the sales of the Brazilian publishing houses in the 14th place of the world, just behind Australia and Belgium, but ahead of countries like Russia and Argentina. If we divide the number of copies sold by the population, we will get to 1.5 books per capita. Earp and Kornis compare this figure to other countries and place Brazil in a group of nations that present 3 or less books sold per capita. 7 In this group, there are countries like Argentina, Mexico, and Russia. According to Earp and Kornis, on the top end, Japan and the USA sell between 9 and 11 books per capita, while nations such as China, France, and Switzerland show a factor of 6 to 7 books sold per habitant. Therefore, we should pay more attention on the demand side of the equation and try to understand why Brazilians buy so few books. The two main factors that should be considered are the economic restrictions faced by the most part of the population and the illiteracy rate. In the book Mercado Editorial Brasileiro [Brazilian Editorial Market], Sandra Reimao shows that from 1971 to 1979, the production of books in Brazil went from 0.8 to 1.8 books per habitant per year. She points out that, during the first years of the 1970 decade, the Brazilian Gross Domestic Product (GDP) was growing at an 11.3% annual rate. Also, according to Reim~o, the illiteracy rate went down from 39% to 29% in that decade, and the number of college students went up from 100,000 to 1 million during the same period. 8 The decade of the 1970s is a very good example of correlation between the economic growth, the illiteracy rate and the book production and consumption. But it is still necessary to achieve a better u n d e r s t a n d i n g of the Brazilian population's reading and book consumption habits. Another research conducted by SNEL, CBL and other partners in 2001 intends to present an overview of the reading and book purchasing habits of the Brazilian population. Some points in this study, called "Portrait of Reading in Brazil" (PRB) 9 are worthy being noted. According to the research, only 20% of the literate population aged 14 or older (86 million people) had bought at least one book in the year of 2000. That is a universe of only 17.2 million book buyers. PRB shows that although 48% of the highest economic class were book buyers, they respond to only 17% of the total of book buyers. According to the study, the middle classes constitute the largest slice of the market, i.e., 11.9 million book readers or 69% of the total book buyers. The aver-

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age number of books bought per year by the book buyers was 5.92. That means that only 1.21 books were sold per literate adult. PRB also investigated the habit of reading. According to its results, 30% of the Brazilian literate adults aged 14 or older are effective readers. That is a population of 26 million people. These figures were based on the number of people in the sample that had read at least one book during the three months prior to the interview. PRB concludes that despite the huge social inequalities (16% of the Brazilian population owns 73% of the books), Brazil has an attractive and potential market of effective readers. According to the study, 26 million people constitute a market 8.5 times bigger than Portugal's and 11% bigger than France's. It must be remembered, however, that the Portuguese and French effective readers individually buy or read more books than the effective readers in Brazil. Estimating the number of bookstores and publishing houses in Brazil has always been a great challenge. There is no available and comprehensive data with such information. On the bookstore side, the situation is worse. According to a study just conducted by the National Association of Bookstores (Associa~ao Nacional de Livrarias-ANL), there are between 1,000 and 1,100 bookstores in Brazil. The number seems appropriate if only "pure" bookstores are considered. In terms of general book selling points--that includes business from newspaper stands and drugstores to stationary and university shops--rough estimates run between 3,000 and 5,000 spots. On the publishing house side, there are better estimates. SPBPS works with a total of 510 active publishing houses in Brazil. In order to check this and to present a better profile of the Brazilian publishing house in this article, a research was c o n d u c t e d at the database o f a Brazilian book distribution c o m p a n y called Superpedido. This distributor has the best book database in Brazil and maintains a specialized team just to keep it updated. In the research, all editorial imprints ~~ that published new titles in 2003 and 2004 were selected along with the number of new titles released per imprint. The selection brought 18,777 new titles released in the biennium. According to the SPBPS, 13,340 new titles hit the market in 2003. Since less 1st editions should be expected in 2004--a tough year for the publishing indust r y - - t h e number of 18,777 new titles for 2003/04 seems to be an extremely comprehensive sample, even though it doesn't comprise all the new releases. According to our research on Superpedido's database, the number total of imprints that published new titles in 2003/04 was 703. Again, that does not differ very much from SPBPS's figures. The distribution of titles per imprint, however, reveals a heavy concentration in the sector and, paradoxically, the presence of several small and micro imprints. There were 424 imprints (60.31%) that published 10 or less new titles in 2003/04 (Group A). One hundred and six imprints (15.08%) were responsible for the publication of 11 to 30 1st editions in the biennium (Group B), while 92 imprints (t3.09%) released from 31 to 60 new books in the period (Group C). Finally, 81 imprints (11.52%) responded for the publication of more than 60 news titles in 2003/04 (Group D). Graphics 1 and 2 allow a better understanding of these numbers.

Publishing Research Quarterly / Fall 2005

Graphic 1 Active Brazilian Editorial Inprints in 2003/04

[] 92; 1 3 %

1 106; 15%

[] A - up to 10 newt 9 published [] B - 11 to 30 new titles

published [] C - 31 to 60 newt 9

published [] 424; 60~

181; 12%

[] D - Over 60 new titles published

Source: Distribuidora Superpedido's database

Graphic 2 New Brazilian titles published in 2003/04

9 12006; 64% [ ] A - up to 10 new titles published 9 B - 11 to 30 new titles published 9 C - 31 to 60 new titles published 9 D - Over 60 new titles published

9 2890; 159

9 2466; 13% Source: Distribuidora Superpedido's database

LJ ] ~ l ~ ; 8%

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It is interesting to note that Group D is responsible for 63.94% of all new books published in 2003/04, while the huge number of imprints in Group A responded for only 7.54% of the publishing production of news titles. This distribution is, by the way, similar to the Brazilian income distribution, or even to the distribution of books owned by the population, which was already mentioned in this article. Most recent years have brought some paradoxical trends in the Brazilian market of publishing houses. On one hand, the number of small publishers has grown and developed some political and marketing power, particularly with the appearance of the Brazilian League of Publishing Houses (Liga Brasileira das Editoras-Libre), an important association of small- and medium-size Brazilian publishers founded in 2001. Factors such as low startup costs, increase of layoffs by the larger houses, and the natural attractiveness of the editorial activity contributed to the growth of small publishers. The foundation of Libre itself may be another factor. On the other hand, some concentration has been occurring in recent years, with large publishing houses acquiring smaller ones. Lindoso mentions the expansion of Record, the largest Brazilian publishing group in the general market, which has acquired houses such as Civiliza~o Brasileira and Jos60lympio. H In 2004, Record bought Editora Best Seller, showing its plans to grow through acquisitions. Lindoso also remembers the acquisition of Atual and Formato by Saraiva and Agir by Ediouro, all taking place during the most recent years. Another important trade is the arrival or return of international publishing companies. McGraw-Hill is expanding its activities in Brazil in 2005. Pearson Education has just opened a branch in Recife, at the northwestern region, in order to better distribute its academic books in the area. The Spanish are particularly strong in the textbooks niche. Santillana has bought Moderna and Salamandra, recently, and plans to start an adult fiction imprint in 2005. Grupo SM started its operations in Brazil in 2004, not just releasing books but also launching the largest children and youth literature prize in the country. The Spanish are also present in the trade market through Planeta, whose Brazilian operation started in 2002. On the French arena, Larousse opened its Sao Paulo office in 2003, while the bookstore chain FNAC has been in Brazil since 1998 and has already six megastores in the country. Two large Brazilian textbooks publishing houses, Atica and Scipione, became part of the Vivendi Universal Group in 1999, but went back to national hands in 2004, after the French media empire collapsed.

The Current Challenges of the Brazilian Book Industry 1. The Challenge of Retaking the Growth Path So far we have presented a static view of Brazil's book industry. In order to understand the Brazilian scenario better, however, we must engage on a dynamic analysis. Table 3 brings us the Brazilian book industry's performance for the period from 1998 and 2003, and, therefore, offers some good insights about the sector's recent trends.

Publishing Research Q u a r t e r l y / F a l l 2005 Table 3

Brazilian Book Sales from 1998 to 2003 (RS Millions*) Industry Sector School textbooks Trade Religion Academic and professional Market Sales Subtotal Government Sales Total

1998 1,355 693 254 680 2,982 590 3,572

1999 1,006 555 217 542 2,320 361 2,681

2000 954 551 205 547 2,256 548 2,804

2001 949 583 219 548 2,299 573 2,872

2002 891 532 210 435 2,069 439 2,508

2003 830 493 192 393 1,908 456 2,364

*A deflator index was applied to this table in order to make up for the inflation in the period. Therefore, all the figures are presented in 2003 values, since it was considered the year basis. The deflator index used was the Deflator Implfcito, provided by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatfstica-IBGE). Source: CBL / SNEL, Produgao e Vendas do Setor Editorial Brasileiro, 2003.

The figures are presented in Brazilian currency (reals) in order to avoid any possible distortions caused by variations in the exchange rates, which flow according to domestic macroeconomic policies and global economic issues. The exchange rate on December 31, 2003 was 2,8892 R$/US$, according to the Brazilian Central Bank. This rate could be applied to the whole Table 3 in order to generate approximate figures in US dollars. From 1998 to 2003, Brazilian publishing houses lost 33.82% of their sales, going down from total sales of R$ 3.572 billions to R$ 2.364 billion. Although there are no available data for the year 2004, it is safe to say that the greatest challenge faced by the Brazilian publishing industry on the short run is to find the path to growth and development again. In their study, Earp and Kornis present a nine-year analysis (1995 to 2003) and point out that the sales of Brazilian publishing houses went down by 48% during the period. It is implicit in Earp and Kornis's analysis that the economic crisis faced by the country cannot be blamed for the bad publishing industry results, since "the Brazilian economy's performance was bad, but a lot better than the book publishing sector". 12 The situation doesn't get any better when the number of copies sold is considered. Table 4 shows a 37.66% fall in the number of copies sold per year in the Table 4 Brazilian Book Sales from 1998 to 2003 (Millions of units sold) School Textbooks Trade Religion Academic and Professional SubTotal Government Total

1998 144.5 71.3 59.1 21.4 296.3 114.0 410.3

1999 98.2 62.7 45.2 19.4 225.5 64.2 289.7

2000 69.6 63.4 46.2 21.6 200.7 133.5 334.2

2001 58.5 66.2 35.7 22.5 182.9 116.5 299.4

Source: CBL / SNEL, Produg(to e Vendas do Setor Editorial Brasileiro, 2003.

2002 53.0 54.5 29.7 21.2 158.4 162.2 320.6

2003 49.0 50.0 26.0 20.0 145.0 110.8 255.8

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Graphic 3 Brazilian Publishing Industry Sales (Revenues)

---.--- Market S a l e s - ~ - Government S a l e s Total S a l e s

4.000 3.500 3.000 =~ 2.500 - - - o - . .

2.000 1.500 1.000 500 0

;

1998

1999

2000

]

2001

2002

2003

period from 1998 to 2003. The graphics below give a better idea of the negative trend faced by the Brazilian book industry: Brazilian publishers must recognize and assimilate the serious crisis they are facing and find solutions to retake the path of growing. That's the most urgent challenge.

2. The Challenge of Developing Libraries There are very few public and school libraries in Brazil, and the existing ones lack funds, good management, and collection renewal. Lindoso points out that the government policy for the development of libraries is one of the key points that prevent the Brazilian editorial market to grow. 13 "According to the Ministry of Culture, there are 3,200 public libraries in Brazil. However this is a myth, since most libraries exist only nominally and are nothing more than little and dusty book depots. The city of Sao Paulo, that displays the best public library system in the country, has only 100 libraries while it should have at least 300. And, what is

Publishing Research Quarterly / Fall 2005

Graphic 4 Brazilian Publishing Industry Sales (Number of books sold)

-.-.--- Market Sales ~ -Govemment Sales TotalSales

450,0

400,0 O

350,0

w 300,0 .2

250,0

"6 200.0

- 0

9 ..

.~ 150,0 m m u E

100,0 50,0

0,0

1998

1999

2000

2001

2002

2003

worse, all have old collections, few allow the circulation of books and their systems are antique and obsolete," says Lindoso. ~4 Another problem is that Brazilians don't have the habit of going to libraries. Therefore, it is not just a matter of opening new libraries and improving the old ones. The challenge is to make libraries attractive to the population and make people use the libraries. The current federal government of President Luiz Inacio Lula da Silva seems to be concerned with the matter and, through the Ministry of Culture, is trying to develop a state policy for the development of libraries and reading habits, as well as for making books more accessible to the general population. One of the programs being currently conducted aims to reduce to zero the number of Brazilian cities with no libraries. The number is estimated at 1,300 towns in a universe of 5,560 cities. The S~o Paulo State has a similar program and projects that by the end of 2005 all its cities will have at least one library. The development of libraries has a double positive effect. First, it helps to develop reading habits among the population. Second, it increases the demand and the market for books, especially if the libraries keep their collections updated and

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buy books regularly. Therefore, one important challenge faced by the Brazilian book industry today is to improve the libraries in the country and increase its number. This goal, however, depends more on the government than on the market. Luckily, the govemment is aware of that.

3. The Challenge of Ending Illiteracy and Developing Reading Habits Another challenge faced by the Brazilian publishing industry that is extremely dependent on government action is the illiteracy eradication. According to a study conducted by the Brazilian Ministry of Education, in the year 2000 there were 16.295 million illiterate adults (above the age 15) in the country. That was 13.6% of the population at that moment. 15 This rate is not too bad if compared to other developing or underdevelopment countries. However, what really matters to the book industry is the functional illiteracy rate, i.e., the percentage of people who can't comprehend a text even though are not completely illiterate. Sao Paulo-based Instituto Paulo Montenegro every year publishes a study focused on the Brazilian functional illiteracy. According to the 3rd edition of this study, conducted in 2003, only 25% of adult Brazilians between ages 15 and 64 present full reading and writing capabilities. 16 Therefore, only one-quarter of the Brazilian adult population is able to read long texts, locate different information and compare data obtained in different texts. The conclusion is that the real enemy of the publishing industry is not the absolute illiteracy, but the functional illiteracy. The lack of reading habits of the Brazilian population has already been mentioned in this article. As it was stated before, only 30% of the Brazilian literate adults are current book readers. Therefore, the Brazilian publishing industry must not just face the challenge of eradicating functional illiteracy but also the challenge of developing reading habits in the Brazilian population.

4. The Challenge of Developing a State Policy for the Book Brazil issued its first federal "Book Law" on October 30, 2004. That was probably the first step towards a Brazilian national policy for the book. Although the law has yet to be implemented, it represented a milestone in the short Brazilian book industry history. It was the first time that the book was officially recognized as an "irreplaceable media for the culture diffusion and knowledge transmission." The new Book Law states, for instance, that the government must create and manage projects to develop reading habits and to expand the access to books. Practical matters, such as special postal fees for books, were also considered by the new law. On December 22, 2004, another important federal law was enacted. It eradicated all the taxes that were still applicable to books. This represented a huge saving for the publishing industry. Depending on the size of the company, these old taxes added up to more than 9% of the revenues. Books are now 100% tax free in Brazil. The next step now is to consolidate a national book policy. The government, through its Ministry of Culture, is assuming this responsibility and has been able to

Publishing Research Quarterly / Fall 2005

bring together all the book production chain to discuss and implement a Book and Reading National Plan. The government's goal is to establish a long term plan that would run until 2022, when Brazil commemorates its Independence's bicentenary. The real challenge here is to build a state policy that would last through the years and future governments, and not be abandoned when an opposition party takes the power. In order to install such lasting state policy, it must reflect the desires of all Brazilian book industry's sectors, as well as the aspirations of the whole society.

5. The Challenge of Remodeling the Textbook Sector At this moment, the Brazilian textbook publishers are in a jeopardized position despite the size of their companies. A further look at Tables 3 and 4 reveals that government sales and market textbook sales are essentially different even though the product is the same: school textbooks. By market sales, we mean the books sold in bookstores and schools that are bought by students and their parents. It is important to note that basic education private schools abound in Brazil. It should also be noted that the presented government sales also include some trade books, but school books comprise the majority of government purchases. In 2003, for instance, over 95% of government purchases were school textbooks. The difference between government and market sales is quite obvious when we calculate the average price per book sold. Let's take the year of 2003, for instance. Brazilian publishers sold 49 million school textbooks for R$ 830 million on the market and 110.8 millions textbooks for R$ 456 millions to the government. The average revenue per book sold on the market was R$ 16.94 while the average revenue per book sold to the government was R$ 4.12. The explanation for these paradoxical numbers is quite simple: the government gets extremely lower prices because it purchases huge quantities on a centralized system. In other words, the Brazilian Ministry of Education knows how to take advantage of its size and monopsonic position, and the Brazilian textbooks publishers see huge reductions of their profit margins when selling to the government. In order to make up for the government sales' low profitability, the publishing houses tend to operate with high margins on the market. That is the main explanation to the huge difference in prices adopted by the publishers when selling on the market or to the government. ~7 On an idealistic view, this scenario could be even considered a fair one, since the middle and high economic classes end up subsidizing the lower classes' textbooks. Nevertheless, this idealistic trade-off is endangered by the gradual growth of "educational systems" in Brazil. "Educational systems" are private chains of schools that operate throughout the country and try to concentrate all the activities and industrial production related to the basic education. It didn't take too long for the "educational systems" to find out that they could develop their own didactic materials and books. Today, these "systems" produce a significant part of the Brazilian textbooks. According to Lindoso, the "systems" produced 11.98 million copies of books in 2002, which represented 7% of the textbook production carried by traditional publishing houses. TM The "edu-

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cational systems" tend to grow in Brazil and to enter the publishing industry even further. At the end of 2003, for instance, a huge "educational system" called Positivo acquired the publishing rights of Aur~lio, a bestselling Brazilian Portuguese dictionary. Aur~lio, the "Brazilian Webster," used to be published by Nova Fronteira, an important and traditional publishing house from Rio de Janeiro. The near future will present a huge challenge to the Brazilian textbook publishing houses. How will they survive the growth of educational systems into publishing? How will they make up the low profitability of government sales if a growing number of private schools start to produce their own didactic materials? These are questions that must be answered soon.

6. The Challenge of Protecting Bookstores It was during the 1960s that the government started to buy books directly from the publishers. Until then, the Brazilian publishing houses sold the books to bookstores that resold them to parents and students. In the process of becoming one of the largest book buyers in the world, the Brazilian government excluded the bookstores from the market of textbooks used in public schools. Right now, a similar trend is occurring when several textbook publishing houses are starting to sell directly to schools, cutting off the bookstores from the private schools' market as well. The consequence of such trends is the bankruptcy of some bookstores and tougher economic conditions for the remaining ones. In this case, the trade market is also affected because it is more dependent on the existence of bookstores to distribute its products. Trade publishing houses can't simply go to schools or to the government to sell their books. The closing of bookstores is extremely dangerous to trade publishers, and, in several cases, trade books are not enough to keep a bookstore open--it needs to sell textbooks. The growing of bookstores chains in Brazil such as the French FNAC has brought the fixed price discussion to the publishing agenda. So far, the Brazilian market seems equally divided with the idea of making the cover price mandatory. Those who defend the fixed price strategy say that it would prevent unfair competition by the big bookstore chains that sometimes give huge discounts on releases and bestsellers. Normally, these discounts are only possible because the chains also negotiate better discounts on the publisher's end. The Brazilian Book Law doesn't mention the fixed price and the matter will have to be discussed and managed by the market players. Further studies will be necessary to conclude if channeling textbooks sales to bookstores and installing the fixed price are viable and appropriate solutions to help Brazilian bookstores. However, the challenge of keeping the few existing bookstores and opening new ones is crucial to the Brazilian publishing industry.

7. The Challenge of Distribution and Logistics The practice of consignments is already intrinsic to the Brazilian book market. Therefore, books go and come from publishers to distributors to bookstores more

Publishing Research Quarterly / Fall 2005

than it would be desirable. In a continental country like Brazil, with few and expensive transport options--fluvial and rail transportation are still u n d e r d e v e l o p e d - distribution and logistics are an extremely relevant link in the book production chain. Good book distributors are rare in Brazil, however. There is nothing comparable to the large European and North American distribution companies. Most Brazilian distributors lack capital, technology, and professional labor. This situation presents an obstacle almost impossible to overcome for the small- and medium-size publishers. The distribution is always their main weakness. Unfortunately, there are no studies that state the real costs and weakness of book distribution and logistics in Brazil. This sector, however, deserves way more attention. One of the current challenges of the Brazilian book industry is to maximize its distribution efficiency and minimize its costs.

Conclusion The Brazilian book industry, as do many other industries in this South American country, shows great potential for the future. However, it is facing a serious crisis at the moment that demands immediate action. The loss of 33.82% of sales in five years cannot be neglected. On the long run, in order to make the potential of the market a reality, Brazil has to diminish its functional illiteracy rate and develop the population's reading habits. A state policy for the book sector must also be developed with special attention to the public libraries. The implantation of new libraries and the improvement of the existing ones is a very crucial point to the development of the Brazilian publishing industry for two reasons: (a) libraries are key to develop the reading habits of the population; and (b) the expansion of the public library networks is a fast way to increase the book market, especially for the trade houses that don't have many opportunities to sell to the government. Since its beginnings, the Brazilian book industry has been intrinsically connected to the sector of education. The textbook publishing houses are not just the largest companies in the market but its actions also have deep consequences in the whole market. Therefore, it is crucial to find a way out of the crisis that has been haunting this sub-sector since the recent growth of the "educational systems." Logistics, distribution and the maintenance of bookstores are also challenges that should not be neglected. Of course, there are other challenges faced by the Brazilian book industry that could not be approached here due to space limitations. Brazilian publishers tend to look for solutions on the supply side of the equation and to ignore the demand side. Brazilian publishing houses are very creative in finding a new way to promote or exhibit their books, but have a hard time to understand their market and the demand trends. Associations of publishers and bookstores always focus its actions and discussions on the opening of new bookstores or on production financing, but forget the basics: the consumer, i.e., the readers. Of course, problems such as illiteracy and low reading rates cannot be solved by the

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market alone, but the participation of publishers and booksellers in the discussion of such matters and in finding solutions for the demand problems is crucial. The main challenge of the Brazilian publishing industry is to improve and increase the demand of books in the country, transforming a potential market in a real one. The supply will follow the demand.

Notes 1. 2.

3. 4. 5.

7. 8.

9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Lindoso, Felipe. O Brasil pode serum pals de leitores? [Can Brazil be a country of readers?]. S,~o Paulo: Summus, 2004, p. 76. Lindoso, op. cit., p. 93. Lindoso, op. cit., p. 94-5. According to the census promoted by the Brazilian Institute of Geography and Statistics lnstituto Brasileiro de Geografia e Estatfstica-IBGE) in 2000. Lindoso, op. cit., p. 182. Earp, F~lbio S~f, Kornis, George. A Economia da Cadeia Produtiva do Livro (The Economics of the Book Production Chain). Rio de Janeiro: BNDES, 2005. This study was sponsored by the National Bank of Economic and Social Development (Banco Nacional de DesenvolvimentoEcon6mico e SocialBNDES) and is intended to be published on e-book format before the end of 2005. The data used in this article were publicly presented by the authors on September 16, 2004, during the Primavera dos Livros, a Rio de Janeiro book fair. Earp, Kornis, op. cit, p. 63. REIMAO, Sandra. Mercado Editorial Brasileiro. Sao Paulo: Comarte / Fapesp, 1996, pp. 56-93. Bracelpa, Abrelivros CBL, SNEL. Retrato da Leitura no Brasil [Portrait of Reading in Brazil]. Sao Paulo / Rio de Janeiro, 2001. Imprints from the same publishing houses were considered individually in the sample. Lindoso, op. cit., p. 97. Earp, Kornis, op. cit, p. 30. Lindoso, op. cit., p. 132. Lindoso, op. cit., p. 135. Brazilian Ministry of Education, "Mapa do Analfabetismo no Brasil" [Map of Illiteracy in Brazil]. Brasflia: 2003. Instituto Paulo Montenegro, "3-0Indicador Nacional de Alfabetismo Funcional" [3rd National Indicator of Functional Illiteracy]. S,~o Paulo, 2003. Publishers may also present books of different qualities and, therefore, different prices for the government and for the market, but this is a secondary cause to the presented price difference. Lindoso, op. cit., p. 102.

Bibliography Banco Central do Brasil. Brasflia. <www.bc.gov.br>. Bracelpa, Abrelivros, CBL, SNEL. "Retrato da Leitura no Brasir' [Portrait of Reading in Brazil]. S~o Paulo / Rio de Janeiro, 2001. Brazilian Ministry of Education, "Mapa do Analfabetismo no Brasil" [Map of Illiteracy in Brazil]. Brasflia: 2003. <www.mec.gov.br>. C~mara Brasileira do Livro. Sao Paulo. <www.cbl.org.br>. Earp, Ftibio Sti, Kornis, George. A Economia da Cadeia Produtiva do Livro (The Economics of the Book Production Chain). Rio de Janeiro: BNDES, 2005. This study was sponsored by the National Bank of Economic and Social Development (Banco Nacional de DesenvolvimentoEcon6mico e SociaI-BNDES) and is intended to be published on e-book format before the end of 2005. The data used in this article were publicly presented by the authors on September 16, 2004, during the Primavera dos Livros, a Rio de Janeiro book fair. Instituto Brasileiro de Geografia e Estaflstica (IBGE), <www.ibge.gov.br>. Instituto Paulo Montenegro, "3 -0Indicador Nacional de Alfabetismo Funcional" [3rd National Indicator of Functional Illiteracy]. S~o Paulo, 2003. <www.ipm.org.br>.

Publishing Research Quarterly / Fall 2005

Lindoso, Felipe. O Brasil pode serum pa/s de leitores? [Can Brazil be a country of readers?]. $5o Paulo: Summus, 2004, p. 76. Reim,~o, Sandra. Mercado Editorial Brasileiro [Brazilian Editorial Market]. S~o Paulo: Comarte / Fapesp, 1996, pp. 56-93.