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Kingdom of Saudi Arabia Publishing Industry Analysis: Challenges and Opportunities

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This study, conducted by Tahseen Consulting, was supported the Saudi Publishers Association’s recent successful bid to gain full membership in the International Publishers Association. Saudi Arabia is the fourth country in the Arab World to achieve full membership in this prestigious international organization which represents publishers’ interests globally. The report comes as Saudi publishers are preparing to attend the 34th Sharjah International Book Fair starting on November 4th.

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Kingdom of Saudi Arabia Publishing Industry Analysis: Challenges and Opportunities

  1. 1. www.tahseen.ae CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of Tahseen Consulting is strictly prohibited Kingdom of Saudi Arabia Publishing Industry Analysis
  2. 2. | While the publishing industry faces great challenges, there are significant opportunities to revitalize the sector for socio-economic development (1/3) 1 Key Challenges From Findings Increasing gross value added from the publishing, media, and content industries  Publishing, media, and content industries currently contribute ~ 3.6 billion to the economy.  Evidence from regions like the EU suggest that cultural industries can contribute up to 2-3% of GDP.  If similar gross value added thresholds are achieved in KSA, the publishing media, and content industries could generate from $15-22 billion annually. Potential Opportunities Increasing exports of publishing, media, and content goods from Saudi publishers  KSA currently exports $25 million worth of goods from the publishing, media, and content industries.  As a comparison, Lebanon exported $86 million of books and related products in 2013. Such level of exports may be possible by incentivizing Saudi publishers to broaden their genre focus to align more closely with articulated consumer demands and make a strong push towards digital publishing and online distribution. Import substitution through replacing foreign imports with domestic production  KSA currently imports $125 million worth of books and related goods.  At the same time, there is a strong preference for Arabic content. By ramping up the translation industry to acquire translation rights from countries such as Finland, UK, and US, KSA could promote the development of its domestic translation industry while meeting preferences for Arabic language content. Stimulating private investment in the publishing, media, and content industries  The creative industries have strong export potential. Other global leaders in the creative industries have instituted national programs specifically designed to upgrade industry infrastructure and increase export competitiveness.  Similarly, the KSA could consider implementing a matching grants program focused on publishers to implement business improvement practices focused on export competitiveness. Relevant ministries and stakeholders should also integrate the publishing industry more effectively into national and regional economic planning. Increasing employment opportunities in the publishing, media, and content industries  The majority of firms operating in the creative industries are small and medium enterprises (SMEs). SMEs can be given assistance to scale their operations and increase export competitiveness so that they can become engines for further employment generation. The publishing, media, and content sector have high levels of Saudization which can be increased to further technical vocational education and training that specifically focuses on developing key skills required in the creative industries.
  3. 3. | While the publishing industry faces great challenges, there are significant opportunities to revitalize the sector for socio-economic development(2/3) 2 Key Challenges From Findings Encouraging publishers to embrace digital publishing and online sales  Due to low levels of trust in e-commerce, the market for digital content remains small.  Consumers are looking towards the government to implement e-commerce regulations that improve trust in online transactions. At the same time, the KSA’s SME publishers currently lack the institutional capabilities to introduce e-commerce and embrace digital publishing. A targeted assistance program for SMEs could enhance capabilities in digital publishing and e-commerce.  A big risk is further consolidation in the distribution system that could affect industry competition. Potential Opportunities Improving data collection and analysis which would be helpful to the growth of the publishing industry  No reliable source of publisher output and sales data is available. There is an urgent need to develop partnerships with major book fairs and retailers to collect retail sales information from point of sale systems to provide reliable sales information for booksellers, publishers, and other stakeholders. For example, only sparse data is available on the emerging e-book market despite the potentially strong role online sales of Arabic e-books could play in increasing exports of Saudi publishers.  Evidence also points to a large mismatch between what genres publishers believe are in most demand and what consumers actually demand. This supply-demand gap can be eliminated with better market information. Making major book fairs more appealing to children  One study shows that 65% of adults surveyed visited the Riyadh book fair. However, attendance rates were much lower for children (26%). This points to a need to introduce more family friendly activities that can attract children. Developing more targeted reading promotion programs  One very often repeated assertion is that readership in the Arab World is low. However, limited studies suggest that this conclusion is not the case in KSA. Children and adults read more than an hour a day on average according to a recent study carried out by the King Abdul Aziz Center for World Culture.  Isolating infrequent readers from avid readers will enable more targeted reading promotion interventions. Increasing early positive reading habits  Limited studies suggest that children’s literature is particularly weak. Increased emphasis could be placed on the development of the domestic children’s publishing market to decrease currently high levels of imports of children’s books. At the same time, the development of a national awareness campaign to educate parents about the importance of reading to their children and encouraging early positive reading habits could be beneficial. Specifically, there is a need to involve more fathers in reading to their children.
  4. 4. | While the publishing industry faces great challenges, there are significant opportunities to revitalize the sector for socio-economic development (3/3) 3 Key Challenges From Findings Develop a strategy to transform libraries  The government has heavily invested in libraries. However, libraries face a number of challenges from issues with proximity to communities and low quality facilities and services.  Relevant ministries and stakeholders could conduct a national library facility needs and use assessment to develop an updated strategy for improving public, school, and academic libraries. Potential Opportunities Simplify the licensing and regulatory regime for publishers  As in other Arab countries, governance of the publishing sector involves several government entities.  A one-stop shop for publishers to register new businesses, attain and renew circulation licenses, apply for a copyright, and obtain ISBNs could be considered to simplify requirements of operating a publishing business. Develop specific policies for the development of the publishing industry  While a number of institutions, awards, and festivals seek to build literary culture in KSA, there are no specific polices for the development of the publishing industry.  There is an urgent need for a nation-wide publishing agenda that prioritizes needs and challenges, identifies strategies for advancing the industry, assigns responsibilities, defines performance metrics, and establishes an implementation timeline. Address issues of freedom of press and movement  Several international organizations have highlighted the KSA’s policies surrounding the publishing industry as constraints to free speech and freedom of the press. However, many of the laws which are focused on are analogous to laws in other countries.  The SPA can continue to engage with government officials from the Ministry of Culture and Information to clarify its position on freedom of speech and provide policy advice to the Ministry on the matter. Copyright protection and enforcement  While the KSA’s copyright and intellectual property regime is in line with international standards, protection and enforcement are lacking.  The International Intellectual Property Alliance has recommended several measures for improvement that involve increasing the number of inspectors at the Ministry of Culture and Information devoted to enforcement, establishing a cybercrimes division, and ensuring internet service providers more effectively combat mobile and digital piracy.
  5. 5. | Sales forecasts suggest the publishing, media, and content industries will grow slightly to $3.6 billion by 2017 4 Forward-looking forecasts anticipate the publishing, media, and content industries growing to $3.6 billion by 2017 Sources: Candean Reports Duty Free Retailers in Saudi Arabia: Market Snapshot to 2017 and Online Retailers in Saudi Arabia: Market Snapshot to 2017 Note: This data is not as detailed as actual gross value added statistics from the 2010 Comprehensive Economic Census data shown on slide 1 since it is focused on specialist book retailers. Several important publishing sub sectors are not captured by this data including broadcasting activities, information service activities, and creative arts, entertainment, and cultural, activities. Source: Central Department of Statistics and Information Exports by Sections and Chapters for the years 2012 – 2014 Note: To show the extent of the export sectors included in the publishing, media, and content industries, export classifications of arts and toys and games are included. A more conservative estimate might exclude these export classifications. Further official disaggregated statistics which would enable a more precise market sizing are not available. Domestic Retail Sales (in US$ '000s) $123,000 $2,600,000 $230,000 $3,300,000 Online sales of Books, News and Stationery Specialist Retailers Retail sales of Music, Video, Book, Stationery and Entertainment Software Specialists Retailers 2012 Actual Sales 2017 Forecasted Sales 2017 Total: $3,530,000,0002012 Total: $2,723,000,000 2017 Total: $61,060,3082012 Total: $70,124,822 Exports $34,928,984 $7,732,357 $27,463,481 $13,066,022 $20,797,368 $27,196,918 Works of Art, Collectors Pieces, and Antiques Toys, games, and sports requisites Printed Books, Newspapers, Pictures, and related goods 2012 Value of Exports 2014 Value of Exports
  6. 6. | 32,902 people are employed in the publishing, media, and content industries, This is only .3% of the total Saudi labor force 5 Large companies in the recorded media, publishing, and arts and entertainment subsectors employ a significant number of individuals in the broader publishing, media, and content sector Source: 2010 Central Department of Statistics and Information Comprehensive Economic Census Note: Based on the latest available statistics, there are 11,739,303 people in the Saudi labor force including both expatriates and Saudis 13,585 8,864 918 1,038 1,914 5,742 841 9,088 6,629 396 419 943 5,149 448 3,045 1,569 280 201 577 299 213 1,452 666 242 418 394 294 180 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Printing and reproduction of recorded media Publishing activities Motion picture, video and TV program production, sound recording Programming and broadcasting activities Information service activities Creative, arts and entertainment activities Libraries, archives, museums and other cultural activities Total # Employees 20+ Emp. (5-19) Emp. Less than 5 emp Total: 32,902 Total: 23,072 Total: 6,184 Total: 3,646
  7. 7. | Saudization rates in the publishing, media, and content industries exceed Nitiqat thresholds; There is strong potential for further Saudization 6 Source: Saudi and Non-Saudi Employees by Class Size and Economic Activity, Central Department of Statistics and Information Note: The Green Nitiqat threshold for publishing, printing, and media businesses with 10-49 employees is 10%, for businesses with 50-499 employees 20%, and for businesses with 500+ employees 35%; The Saudi labor force is 5,577,489 people 19% 35% 28% 18% 42% 33% 31% 23% 38% 39% 23% 36% 40% 35% 20% 51% 44% 41% 31% 1% 32% 20% 48% 38% 28% 35% 5% 33% Printing and reproduction of recorded media Publishing activities Motion picture, video and TV program production, sound recording and music publishing activities Programming and broadcasting activities Information service activities Creative, arts and entertainment activities Libraries, archives, museums and other cultural activities Less 5 emp (5-19) emp 20+ emp Total Saudization rates at all firm sizes exceed Nitiqat green thresholds; Approximately .2% of the Saudi labor force are employed in the publishing, media, and content industries
  8. 8. | There has been a dramatic consolidation of the publishing and retail industries with the emergence of large, integrated publishers and distributors 7 1990-19951995-2015 Market Structure Characteristics  Prominent role played by small publishing houses  Publishers specialized in books and rarely offered other products  Customers were readers who only came to physical stores to purchase books Market Structure Characteristics Small fragmented publishers & distribution system Emergence of diversified, integrated big companies 1 2 Market Structure Characteristics Further consolidation and embrace of digital publishing and online sales 3 Future  Emergence of integrated companies specialized in production (publishing) and sales (retail)  Shift in publishing from small businesses to large, diversified corporates  A shift from small bookshops to major super-stores with national coverage  Bookshops expand product offerings to technology and office supplies  Customers no longer exclusively focused on purchasing books  Emergence of online retail channels that cater to emerging preferences for e- books and digital content  Consolidation of smaller publishers into media conglomerates, that unite book publishing with the communications, entertainment, and film industries  Further growth of large, integrated companies with publishing and distribution capabilities  Increased trust in e-commerce will drive stronger online sales  Increased mobile device penetration will drive e-book sales  Decline in variety of titles due to consolidation of distribution channels Sources: Exhibitors Guide for Sharjah International Book Fair 2013 and 2014, Staff analysis
  9. 9. | 17.8% 23.6% 31.1% 30.3% 29.5% 26.4%14.5% 13.3%4.6% 4.0%2.5% 2.5% 12 & Under Over 12 None 1 per year 2 - 3 books 4 to 10 books 11 - 25 books More than 25 books Reading culture is evolving; Many Saudis read several books per year and spend an average of 100-300 Riyals on reading materials monthly 8 The majority of Saudis read 1- 3 books per year Source: King Abdulaziz Center for World Culture Study on Reading Habits in Saudi Arabia Number of books read per year 22.4% 20.5% 34.0% 33.7% 28.1% 28.0% 10.9% 11.7% 2.6% 3.5% 2.0% 2.7% 12 & Under Over 12 17.8% 23.6% 31.1% 30.3% 29.5% 26.4% 14.5% 13.3% 4.6% 4.0% 2.5% 2.5% 12 & Under Over 12 Print Electronic Saudis generally spend less than 100 Riyal per month on reading materials for themselves and their children Average monthly spending on reading materials 16.6% 26.9% 51.7% 37.0% 26.1% 24.8% 5.6% 8.0% 0.0% 3.3% Reading Materials for 12 & Under Reading Materials for Over 12 Nothing < 100 SR 100 SR - 300 SR 300 SR - 500 SR > 500 SR
  10. 10. | KSA began publishing an annual National Bibliography in 1997; The most recent edition provides a snapshot of publishing genre coverage (1/2) 9 Source: King Fahd National Library, Saudi National Bibliography 2014 Note: Includes all materials published in the Kingdom of Saudi Arabia as well as publications by Saudi citizens or institutions published abroad. Publications published outside KSA with financial assistance by Saudi citizens or institutions are also included. Only materials that acquired by King Fahd National Library through purchase, gifts, or exchange or received under Legal Deposit Act, are included. Materials published in all forms, as defined by the Legal Deposit Act, including printed, and non-book materials, i.e, audio-visual materials, periodicals (first issues only), reports, textbooks, maps, theses, electronic media, etc. are covered. There were 2,387 books and other publications published in 2014 Arabic publications primarily cover the subjects of religion and social sciences 2312 75 Arabic Non Arabic Total 2,387 35 56 60 78 116 129 196 268 649 725 Arts and recreation General works, computer science, and… Language Philosophy and psychology History & geography Science Technology Literature Religion Social sciences Dewey Decimal Class Number of Arabic Publications
  11. 11. | KSA began publishing an annual National Bibliography in 1997; The most recent edition provides a snapshot of publishing genre coverage (2/2) 10 Source: King Fahd National Library, Saudi National Bibliography 2014 Note: Includes all materials published in the Kingdom of Saudi Arabia as well as publications by Saudi citizens or institutions published abroad. Publications published outside KSA with financial assistance by Saudi citizens or institutions are also included. Only materials that acquired by King Fahd National Library through purchase, gifts, or exchange or received under Legal Deposit Act, are included. Materials published in all forms, as defined by the Legal Deposit Act, including printed, and non-book materials, i.e, audio-visual materials, periodicals (first issues only), reports, textbooks, maps, theses, electronic media, etc. are covered. Non Arabic publications generally cover social sciences, language, science, and technology 0 0 1 2 4 7 12 14 17 18 Arts and recreation Literature Philosophy and psychology History & geography General works, computer science, and information Religion Technology Social sciences Language Science Dewey Decimal Class Number of Non Arabic Publications
  12. 12. | The governance structure of the publishing industry involves several ministries with various policymaking, regulatory, and operational authorities 11 Source: Staff analysis of entity mandates and legal framework for publishing Entity Policymaking Authority Regulatory Authority Operational Authority Ministry of Culture and Information  Issues implementing regulations which elaborate on and provide more specific requirements for implementing the Copyright Law 1424  Issues implementing regulations for several laws that affect the press such as the 2000 Press and Publications Act and 2003 Law of Printing and Publication  Regulatory oversight of all media outlets  Issuing operating licenses for all aspects of media, print, and publishing activities  Issuing licenses for online content providers  Oversight and inspection of media outlets  Oversight and investigation of violations by reporters / journalists  Issuance of press credentials  Copyright protection of literary and art works  Receiving complaints from authors and other owners of copyright laws  Investigation of copyright violations and violations by journalists  Raising awareness of copyright issues  Operates a number of cultural institutions that promote publishing and readership such as – King Fahd Cultural Centre – Administration of Folklore – Saudi Arabian Society for Culture and Arts – Literary Clubs – The General Administration for Public Libraries Ministry of Commerce and Industry  Issues implementing regulations which elaborate on and provide more specific requirements for implementing the Law of Trade Names 2010, the  Law of Patents, Layout Designs of Integrated Circuits, Plant Varieties, and Industrial Designs, and the Law of Trade Marks 2002.  General Directorate for Intellectual Property oversees and coordinates relevant authorities that enforce intellectual property rights through the Standing Committee on Intellectual Property Rights  Implementation of international copyright laws  Registers copyrighted works  Cooperates with World Intellectual Property Organizations and other international organizations Ministry of Education  No direct policymaking authority over publishing industry  No direct regulatory authority over publishing industry  Influences textbook content through national curricula and standards  Centralized procurement of textbooks  Coordinates participation in international book fairs Ministry of Interior  No direct policymaking authority over publishing industry  No direct policymaking authority over publishing industry  Analyzes publications identifies issues of concern to Ministry of Culture and Information King Fahd National Library  No direct policymaking authority over publishing industry  No direct policymaking authority over publishing industry  Issues ISBN Numbers  Depository library for all Saudi publications  Publishes National Bibliography
  13. 13. | While legal frameworks for copyright protection are in place, protection and enforcement have proven challenging (1/2) 12 According to dated statistics, piracy costs $140 million in trade losses per year; losses are amongst the highest in the GCC … Sources: International Intellectual Property Alliance 2014 Special 301 Report on Copyright Protection and Enforcement, International Intellectual Property Alliance 2007 Special 301 Report on Copyright Protection and Enforcement SAUDI ARABIA Estimated Trade Losses Due to Copyright Piracy (in millions of U.S. dollars) Industry 2006 2005 2004 2003 2002 Loss Level Loss Level Loss Level Loss Level Loss Level Records & Music 20.0 50% 20.0 50% 15.0 35% 16.0 40% 16.0 42% Business Software 112.0 51% 105.0 52% 73.0 52% 76.0 54% 13.3 50% Motion Pictures NA NA 95.0 95% 20.0 40% 20.0 40% 20.0 35% Entertainment Software NA NA NA 95% NA 68% 64.0 83% NA NA Books 8.0 NA 10.0 NA 14.0 NA 14.0 NA 14.0 NA Totals 140.0 135.0 122.0 190.0 63.3 … over the last decade, book and other digital content piracy have remained prevalent  Piracy has historically taken place on university campuses in the form of illegally produced textbooks and photocopied books when the books ordered do not arrive on time  Pirated textbooks have traditionally been imported from Lebanon, other Arab countries, and India  High levels of unauthorized use of software in businesses  Proliferation of online and mobile piracy services prevent e-commerce in copyright materials
  14. 14. | While legal frameworks for copyright protection are in place, protection and enforcement have proven challenging (2/2) 13 International Intellectual Property Alliance Recommended Actions For Copyright Enforcement and Legislation Sources: International Intellectual Property Alliance 2014 Special 301 Report on Copyright Protection and Enforcement, International Intellectual Property Alliance 2007 Special 301 Report on Copyright Protection and Enforcement Enforcement  Implement Ministry of Culture and Information plan to add 300 employees, including 150 inspectors, and put in place an appropriate reward and recognition program.  Legalize software usage within KSA Government ministries and grant authority to MOCI to audit and enforce legalization.  Establish a special cybercrime unit within the Police and an Internet piracy unit at MOCI; work closely with the Communication and Information Technology Commission (CITC) to take more actions against Internet piracy.  Ensure that cases involving major seizures or repeat offenders are systematically adjudicated, resulting in deterrent sentencing.  Ensure penalties structure is adequate to deter piracy. Legislation  Amend Copyright Act to fully implement (and join) the WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT)  Ensure that Internet Service Providers cooperate with right holders against online and mobile piracy.
  15. 15. Interested? Have Questions? Everything you read here is only meant to give you a brief overview. You are encouraged to ask questions. Please contact Wes Schwalje, Chief Operating Officer wes.schwalje@tahseen.ae Tahseen Consulting’s Public Sector Practice More information on our work on open data and open government is available at: http://www.tahseen.ae/publicsector.html

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