Reading between the lines of the e-book market

Children read e-books in a bookstore in Suzhou, Jiangsu province. E-reading has become part of people's daily lives. [Wang Jianzhong / For China Daily]

"Alibaba will focus on content production and copyright cooperation to establish an open platform for the growth of all literature-related business, including filming popular phone novels," said Zhou Yun, editor-in-chief of Alibaba's literature unit.

The decision to get into e-books has been a calculated one. Alibaba is expanding its entertainment business and sees online literature as just another key piece in that jigsaw puzzle.

"The appeal of literature to Alibaba is not limited to money," Yao, the analyst, said. "Moving into the mobile reading market is part of the broad plan to build an entertainment empire.

"Apart from direct revenues from mobile reading, books are a major source of intellectual property rights, from which a wealth of entertainment can be produced, such as major movies and games," he added.

Other Internet companies have similar ideas. Alibaba's major rival Tencent Holdings Ltd already has a major presence in the e-book market with book.qq.com, where customers can buy and download their favorite Chinese novels.

Tencent has focused on content-and lots of it. Earlier this year, the Web behemoth bought Shengda Literature, the most popular online literature site in China, from Shanghai Shanda Networking (Group) Co Ltd.

The company was immediately integrated into Tencent's literature unit, which was rebranded as China Reading Ltd.

This year, China Reading plans to invest more than 1 billion yuan into purchasing copyrights for books from traditional publishers.

"Tencent has millions of users ready to be transformed into mobile readers," Yao said. "Publishers also have huge libraries of books, so they will make ideal partners in the mobile world."

Even so, turning these big picture plans into hard cash will not be easy as Alibaba and Tencent will have to muscle out established players.

In the first quarter of this year, Tencent's book.qq.com had just 18 percent of the mobile reading market, which was dominated by e-books.

While it has more than a foothold, the online platform trailed iReader, a mobile app from Beijing Palm Reading Technology Co Ltd.

With 17 million daily users, iReader's market share was 27 percent.

Just behind the big two came tadu.com, which has 10 percent of the market, while XM.91.com, a mobile app rolled out by search engine company Baidu Inc, has 9.6 percent.