Yesterday Ozon Holdings, one of Russia’s most established e-commerce players, announced that it acquired a stake in LitRes, the leader in Russia’s fast growing – though still embryonic – domestic e-book market. Neither the size of the stake nor the amount of the transaction has been disclosed.
Ozon presented the deal as a way “to further develop its digital content offer, to strengthen LitRes’s leading position on its market, and to consolidate efforts to develop a legal e-book market in Russia.”
LitRes offers more than 400,000 e-books in Russian and other languages. The company distributes e-books and audio books through its website, as well as through mobile applications, Smart TV platforms and an extensive network of partners.
This past October, LitRes received a $5 million capital injection from the Russian Internet Technology Fund (RITF).
A $100 million market in 3 years
The Russian e-book market reached approximately $15 million last year, RITF told East-West Digital News. This represents less than 1% of the overall Russian book market, while e-book sales account for 25% of the total book market in the US.
While online sales of printed books continue to grow – despite the stagnation of Russia’s book market – more and more Russians are reading books in electronic formats.
Therefore, the e-book market could reach approximately $100 million, or 5% of the overall book market by 2017, according to RITF. The tightening of the country’s anti-piracy legislation is also likely to favor legitimate industry players like LitRes.
The home page of Litres.ru features a promotion of Stephen King’s popular novel “Dreamcatcher”
Another illustration of the attractiveness of the Russian digital content market comes from Russia’s e-commerce leader, Ulmart.ru. The company, which has so far focused on consumer electronics, is considering the integration of two new offers – the music catalog Zvooq.ru and the digital library Bookmate.com – to its website.
Zvooq and Bookmate are properties of Dream Industries, a Moscow-based developer of digital projects in the field of knowledge and culture – in which Ulmart chairman Dmitry Kotsygin owns a stake.
“Russia needs a multi-platform service, with no less than six formats, that works on different devices,” Kotsygin stated in a recent interview with Russian business daily Vedomosti.
“Piracy has flattened the Russian market, but if consumers were offered an inexpensive, good quality service that allowed them, say, to pay 30 rubles [editor’s note: less than $1] and download the 30 best comedies of the year in excellent quality in just a few seconds, then they might well be willing to pay… We’ve got some useful experience and some decent ideas that should allow us to take the [digital content] industry forward. So you can expect to see books, music and films in Ulmart’s online store within the next year,” Kotsygin promised.
A new step for Ozon
The deal with LitRes marks yet another step in the development of Ozon, which defines its goal as to “offer everything that the user needs with Russia’s widest selection, and to be the best in every category.”
When launched in 1998, Ozon focused on the sale of books, CDs and DVDs. The site enlarged its position in the mid-2000s adding consumer electronics, cameras and mobile phones, and later children’s goods and travel products.
In 2009, Ozon launched Ozon Travel, which quickly asserted itself as a major player in the Russian online travel segment.
Ozon’s first acquisition came in early 2012 with Sapato.ru, a major online retailer of shoes and accessories.
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