Russian firm is Adamant about e-book prospects

By Kristine Petrosian
August 6, 2001

Copyright 2000 The Russia Journal. This article first appeared in The Russia Journal. Reprinted with permission.

Russian entrepreneur Andrei Volgin aims to help the publishing industry turn over a new leaf after securing U.S. funding for an e-book project that he says will attract thousands of readers around the world.

Adamant Media – Volgin’s U.S.-based company with production in Russia – plans to sell books from its Website in both digital and printed forms. But the service goes further than that already offered by many similar companies. While electronic copies of books will be sent to customers on CD-ROM by regular mail or downloaded as files, they will also be ordered and picked up over the counter at scores of special printing booths.

Volgin said Adamant plans to install small printing shops on campuses, in shopping streets and at airports in the United States and Europe, producing instant copies of books. These will only be printed after an order is received from a customer.

Five minutes after the printing shop machines receive an order, they will print the book from the company’s electronic library, bind it and level the pages. Volgin said the idea is set for success because it involves small, low-cost printing shops and a large library of digitized books.

The company has so far scanned 25,000 books in English, German, French, Russian and other languages and plans 40,000 more by the end of the year. Many of the English-language titles are scanned at the Russian State Library in Moscow – Europe’s largest – which agreed to cooperate with the firm in return for digitized books.

The Russian subsidiary of Adamant Media, Electronnye Knigi (electronic books), employs 500 people at several centers in Moscow for scanning and designing electronic titles. At the moment, the company is concentrating on 20th-century titles on which copyright has lapsed, but it also plans to publish new authors.

Volgin said he founded the company in 1999 using U.S. venture capital, although he declined to reveal the amount. He said the decision to base production in Russia was logical. "A combination of cheap labor and books is unique to this country," he said, adding that labor costs would be far higher in the West.

The books are converted into Adobe pdf files of about two megabytes each, readable with the Adobe Acrobat program. The 128-key code protects books from illegal copying because they can be viewed only on one computer.

Volgin said the print-on-demand sales points would involve printers, a binding machine and cutting device. He said these printing shops cost up to $25,000 and take up only 20 sq. meters of space.

These can be designed for public access and operated by one person "More than half of book sales are impulse buys, when people come across an interesting book by chance," Volgin said. "Either they walk in off the streets, explore the bookstores or surf the Web. They could order a cup of coffee, choose a book from our Website and have it printed before the coffee arrives."

It will be at least a year, the company says, before these shops are installed in public areas. The second part of the operation – which will not deal face-to-face with customers – is scheduled to open in the United States and Europe by the end of the year. Volgin said the service will also be offered in Russia, but demand would be less because books retail at a fraction of Western prices.

Other factors holding back the Russian retail operation were poor payment and delivery services, although he said the first Russian printing shop would open by next year.

The firm will process orders received by Internet and mail the books or discs to the client. "We’ll need more such shops to reduce shipping costs," Volgin said. Adamant Media is currently testing the system at its Boston office, and the company said specialists are concentrating on order tracking.

Titles for sale on the company’s www.elibron.com (electronic library online) Website will retail at up to $29 when sales start. With a system of bonus points to encourage customer loyalty, the cheapest way to purchase a title will be on electronic file, which can be easily downloaded and installed. With CD-ROMs, mailing cost is added to the price, and if a client wants his book printed, this will cost an extra $5-$6.

Volgin said he was excited by his decision to move into publishing and dispense with costly bookstores and warehouses – and the waste that goes along with trashing unsold titles – by overhauling the concept of the business as well as business-to-consumer (B2C) relations.

"Retail markups can reach 50 percent of the price of the book. Still, bookselling is one of the least profitable businesses," Volgin said, adding that authors in turn can get as little as 10 percent of the revenues.

He added that in contrast to other industries that have been through revolutions in cost-reduction and innovation, the printing industry has remained conservative until recently. "Changes here affected the types of paper, fonts and printing methods, but the essence of this business – print and then sell – has not changed at all," Volgin said.