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Update: 360Buy to Begin Downloadable E-Book Sales, 1/09/12

Beijing-based B2C e-commerce platform 360Buy announced plans yesterday to begin offering paid downloads of e-books as early as next month. Overseeing the project will be Shi Tao, VP of 360Buy's books department, who revealed that the initial batch of items featured on the platform will include over 80,000 titles of e-books, digital periodicals and multimedia e-books from more than 200 content suppliers. In addition to mainstream publishers, Shi said, other partners will include online literature sites such as Shanda Interactive's (Nasdaq: SNDA) Content featured on the platform will be available for download to four main types of terminals: mobile phones, computers, e-book readers and iPad devices, with publications available in the international standard EPUB and PDF file formats. Shi added that system software for the platform is now undergoing internal testing and will be ready for a launch soon.

360Buy says that it wants to increase its selection of e-books to 300,000 titles within the first year, on par with Amazon's total title selection in 2011, a challenging target. Shi added that 360Buy will likely sign up 200-300 more publishers within the coming year in addition to its existing roster of more than 200 publishers, nothing that the e-book market is attractive due to its rapid growth and enormous sales potential.

"E-books are definitely much cheaper than their printed counterparts," Shi said, "but publishers will generally only go as low in pricing e-books as one-third to a quarter of the price of the printed version. An RMB 20 book, for example, won't cost less than RMB 4-6 for an e-book version."

Shi added, "There isn't much elasticity in the prices of books such as teaching materials, curriculum guides, dictionaries or technical books, demand for which is guaranteed, so prices for the e-book versions won't be much lower. In setting prices for bestsellers, though, publishers can be pretty flexible."

Shi explained that in the past, the main reason publishers were reluctant to authorize sales of electronic versions of books lay with the concern that payment wouldn't be received, and the fear that e-books would cut into sales of printed copies. 360Buy's response has been to opt for transparency, issuing each publisher a unique password which allows access to 360Buy's platform, where the previous day's sales figures can be checked at any time, and which publishers then use to settle accounts with 360Buy on a quarterly basis. 360Buy's arrangement also allows content suppliers to set retail prices. Revenue sharing is set at either a 40/60 or 30/70 split, in favor of the content supplier.

Prior to this, Chinese B2C e-commerce site Dangdang (NYSE: DANG) quietly launched its own service offering paid downloads of electronic publications.

Editor's Note: For more background on this topic, please see "Rumor: 360Buy to Launch E-Book Business," MD 12/09/11 issue.

Keywords: Shi Tao e-commerce Internet pricing B2C e-book online literature 360buy revenue share


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