At the O’Reilly Tools of Change conference last week in New York, Paperight’s Arthur Attwell and Worldreader’s Michael Smith outlined several companies’ efforts to bring new ways of reading to developing countries. Here’s a brief introduction to each of those companies.

Paperight

Arthur Attwell worked in educational and scholarly publishing in South Africa for several years while cofounding and running a digital publishing company called Electric Book Works. But, he said, “The more I worked in ebooks, I found that I was essentially making ebooks for rich people. I didn’t think that was a very interesting challenge.” South Africa’s digital publishing market, he said, is supported by just one or two million wealthy people; the country’s remaining 48 million residents can’t afford it.

Digital wasn’t the solution for Attwell: The most recent South African census found that 65 percent of the country’s residents have no internet access at all. But, Attwell said, every South African village, town and city has at least one “photocopy shop” with copy machines and those buildings usually have internet access. His company Paperight, launched in May 2012, takes advantage of those shops to distribute books. A store registers on Paperight.com, opens a prepaid account of credits and instantly gets the legal right to download and print books for their customers. Over 200 South African shops, as well as a few in other African countries, are now using Paperight.

Worldreader

Worldreader, an NGO I’ve covered in the past, gives Kindles to students in sub-Saharan Africa and has become increasingly well-known in part because of its partnership with Amazon. (CEO David Risher was previously an Amazon executive.) The company has distributed 428,000 ebooks to 3,000 kids as of January 2013.

Worldreader is now pushing forward with reading on basic mobile phones. An app called biNu lets users download Worldreader books (and other content — including Facebook) over a basic feature phone’s data signal. biNu is now enabled on 5 million subscriber phones, primarily in Nigeria. (The top five book searches, Worldreader’s Smith said, were “sex,” “romance,” “the Bible,” “Harry Potter” and “physics.”) Worldreader is also working with students to self-publish their own writing on Amazon’s KDP platform.

Right now, Worldreader is tied to Kindle. Smith said the company is “definitely looking to get beyond” it, but right now Kindle is the only e-reader that supports 3G. And in many countries where Worldreader operates, internet access isn’t easily available. Smith said Worldreader also needs Amazon’s Whispercast technology to push books onto devices, and other e-reading companies don’t yet have that system in place.

Mxit and Siyavula

Mxit is a social network for mobile phones, with about 50 million users across the African continent. The network relies primarily on instant messaging but also allows access to other kinds of content — including books. One of the first books distributed on Mxit’s platform in 2009 was a novella called “Kontax.” Aimed at teens and available in both English and Xhosa (one of South Africa’s official languages), the book was distributed in parts, allowing readers to discuss it as unfolded. “Kontax” was read 34,000 times, and Yoza, the initiative behind it, has expanded to offer more cell phone novels (which it calls m-novels).

Now, the South African open-source creative commons textbook publisher Siyavula is distributing free math and science textbooks on Mxit. (Attwell’s Shuttleworth Foundation is a backer of Siyavula.) In 2010, following teacher strikes, the South African government arranged to print copies of Siyavula’s textbooks and distribute them to high school students. As a result, over 200,000 South African students have read Siyavula’s content. Now corporations are sponsoring books in new subjects and for younger students.

Self-publishing on a larger stage

Not surprisingly, bestselling erotic trilogy Fifty Shades of Grey by E.L. James, which started out as Twilight fan fiction, got a lot of attention at Frankfurt as a self-publishing success that became even more successful once it was picked up by Random House. The trilogy is rumored to have sold over 50 million copies, but James couldn’t have done that on her own, writes Publishing Perspectives editor-in-chief Ed Nawotka: “It took Random House and Bertelsmann’s global network–and editorial, production, distribution and sales expertise–to make that happen.” He cites 50 Shades as a prime example of how self-pubbed authors and traditional publishers can work together: “Amid the continuing economic recession, the publishing industry needed 50 Shades of Grey. James didn’t need a publisher as such, but once she turned to the pros, her relatively modest success was turned into a maelstrom of money.”

At Frankfurt, publishers were on the lookout for more self-published titles to snap up. Penguin bought the UK rights to crime novel Natural Causes by James Oswald, which sold hundreds of thousands of copies as a self-published book, in a six-figure deal; German publisher Goldman Verlag also made a six-figure deal for the title, and offers were in from Brazil and Italy.

Amazon continued its promotion of its self-publishing platform KDP. The company held daily sessions about the benefits of using self-publishing through KDP, and also announced that it is expanding the Kindle Owners’ Lending Library — which lets Amazon Prime members who own Kindle devices borrow one ebook a month from a library of over 200,000 titles, most of them self-published — to the UK, Germany and France.

In order to offer their books in the KOLL, self-published authors must make them available exclusively through the Kindle store.This is “dangerous…for the ebook rivals who have yet to open their doors to self-published content,” Eoin Purcell writes. “In reality, only Kobo has a fully functional platform for self-publishing authors beyond the USA (Apple does too, but only to the extent that those who have a nice Mac can access their iBookstore, but not everyone has a Mac). Nook’s [self-publishing platform PubIt!] is US only, though the talk is that this will change soon. The longer B&N and Microsoft exclude non-U.S. citizens from the service, the longer Amazon has to lock in exclusive content for three months at a time.”

Speaking of Kobo, the company announced a few more initiatives to compete on the self-publishing front through its self-publishing platform Writing Life. It acquired French digital software company Aquafadas and will make iBooks Author-like tools available to users. Writing Life is available in new languages — German, French, Italian, Portuguese and Dutch — and the company said authors from 82 countries are now using it.

Three bookselling startups to watch

Three of the most-talked-about startups at the Frankfurt Book Fair focus at least in part on new ways of selling books. Ganxy lets authors and publishers create “showcases” to sell books and control marketing and promotions. They can ssell books directly through the showcase or simply provide links to retailers. The entire showcase can then be tweeted, embedded in a blog, website or Facebook page, or can stand alone as a website.”

BookShout! lets users import ebooks they’ve purchased from Barnes & Noble and Amazon into its app. Once BookShout! has verified the purchases, users can access a DRM-protected version of the file uploaded by the publisher.

BookShout! is already working with Random House, HarperCollins, Macmillan and Wiley, but the practice of providing a third-party site with your Amazon user name and password is causing controversy: As Baldar Bjarnason writes at FutureBook, “We don’t know nearly enough for us to decide whether we can trust Bookshout. If they use their own servers as a proxy for the process, then those machines become a prime target for hackers. Compromising them would give them instant access to a host of Amazon accounts and their associated credit cards.”

BookShout! founder Jacob Illian addressed some of the concerns in a comment on paidContent’s story, writing, “At BookShout, we do not store your Amazon or B&N password when you import your books. In fact, if you import your books, buy another book from Amazon and then want to import the new one, you have to enter it all over again.”

ZolaBooks, founded by former literary agent Joe Regal, will begin selling ebooks by the end of this month, Regal said at the Tools of Change Frankfurt conference. “We intend to have every book from every publisher,” Regal said. Most books sold on Zola are protected with the company’s “proprietary” DRM — that was a requirement of the big-six publishers Zola is working with — which Regal claims is “unbreakable.” And, he said, “our answer to competing with Amazon is not to compete with Amazon…Our value system is so completely different from theirs.” He claimed “they’re not fundamentally editorially driven. [Amazon, which is publishing its own print and ebooks, might disagree.] They are pure commerce…Their value is price.”

Going global, thinking mobile

As digital reading expands globally, it won’t look the way it has in the West. In particular, mobile phones could be key in less wealthy countries, but many of those opportunities are so far untapped. ”I’ve been perplexed by the relative lack of interest for books on mobile,” Andrew Bud of the Mobile Entertainment Forum told Publishing Perspectives. “Yes, it’s a harder sale, but as the traditional products that do well on mobile–ringtones, for example–are fading, there is an opportunity for publishers to become a stronger part of this morphing market.”

Ebooks are already selling well on mobile phones in China. At the International Rights Directors Meeting on Tuesday, Gary Tan, owner of the Grayhawk Agency in Taipei, offered a brief overview of China’s mobile ebook market. China has over one billion cell phone users and 300 million smartphone users as of March 2012 and China Mobile, one of two major telecom providers in China, is the country’s largest ebook platform. Publishers may be reluctant to sell foreign rights to China Mobile, as it takes a huge cut of sales — at least 50 percent and sometimes as much as 70 percent — and sells the ebooks at a 90 percent discount from the print price. “These terms sound really bad,” Tan said, but China Mobile has such a large user base that if a book becomes a bestseller on the platform, “we might be talking about six-figure U.S. revenue.”

A panel on potential for ebooks in sub-Saharan Africa also focused on mobile. Ben Williams, a South African bookseller and founder of Avusa Digital Books, a platform for African ebooks, mentioned mobile payments company M-PESA as “one of the most sophisticated banking services you can have in Africa” and said digital bookstores could be built on top of it. He also cited initiatives like Paperight, which rely on photocopying machines in “the copy shops that are all over Africa” to print out copies of ebooks. (There’s advertising on the paper’s margins.” “The copy shop is now like a library or bookstore,” Williams said. Nevertheless, Togo’s Yasmîn Zahra Issaka-Coubageat, publisher of Graines de Pensées, noted that only “thirty percent of the population has a mobile phone in Togo,” and so for many countries even a mobile phone revolution could be a few years away.

Globe, bookshelf photos courtesy of the Frankfurt Book Fair

But just as significant an immediate problem is how some of the biggest online music services in the nation are also breaking copyright law.

The just-published Copyright Review Commission’s 223-page report tells the government that South African content makers have no optimism about digital exploitation because only 14 percent of mobile services have licenses for the music they offer, while their umbrella body refuses to make them pay the local mechanical royalties collector. Only one, Vodacom, pays royalties for using sound recordings:

“Wireless Application Service Providers (WASPs) have been selling ringtones since 2000. An overwhelming majority … have paid no royalties … and have profited 100% from the digital exploitation of authors’ copyright works for almost a decade.

“Their continued use of composers’ works without paying royalties is unauthorised in terms of the Copyright Act. The majority of mobile providers (and, by implication, consumers) are dealing in infringing sound recordings and may be held criminally liable for copyright infringement.”

The mobile operators’ apparent intransigence is despite South African royalty rates being the lowest amongst eight countries benchmarked by the Copyright Review Commission - Brazil, France, India, Norway, Senegal, Switzerland and the UK.

The commission recommends royalty collection societies should sue mobile operators for their money, and it calls for bans on ISPs who do not recompense artists.

Spending on physical music in South Africa is forecast by PwC to dip by 10.4 percent per year up to 2014, with little prospect of a digital revenue replacement in what currently appears a dysfunctional market.

Music performers are not able to make anything from interactive streaming and webcast services because current law does not define such a platform. “It is clear that South African copyright law lags behind in the digital era,” the Copyright Review Commission laments.

But the commission does not lay all of the blame on structural deficiencies. It also cites a study which claims 3.6 million songs are downloaded illegally each month in South Africa, worth R36 million ($4.3 million) monthly and R432 million ($51.6 million) annually. 2011 digital music sales in South Africa were just $6.1 million, six percent of the total.

The commission recommends changing national law and the terms under which ISPs can act “to require ISPs to adopt a graduated response for repeat infringers culminating in the suspension of access services of an individual” who persistently downloads material illegally.

That would see South Africa join the UK, France and New Zealand amongst countries which are implementing or have implemented monitoring, warning and technical sanctions against offenders.

The state of the South African market suggests it is also one ripe for exploitation by services that are willing to play by more of the rules than existing local operators. Germany’s Simfy just launched in the country, and Spotify is also thought to be interested.

Now conjecture suggests it will plug its gap in South Africa, however.

Yoel Kenan, founder and CEO of African music licensing firm Africori, made the declaration at Mobile Entertainment Africa 2012 Conference in Cape Town (via MemeBurn), citing an Apple source (via MyBroadband).

Nearly 12 years after it first launched, iTunes Store finally went live in Brazil and 15 other Latin American countries, often plagued by difficulties in credit card processing, in December.

The expansion has been credited as one of the key reasons global digital music sales have lifted in recent quarters.

South African digital music services include Jamster, MTN Loaded, Music Station, Nokia Music and Vodafone, but just six percent of 2011 industry revenue was from digital.

German streaming service Simfy recently launched there.

The company has made no secret of its ambition to make sure every person on the planet is connected to its service. What might seem like hubris, however, is actually necessity: with Wall Street now breathing down its neck, overseas growth is important — investors want to see that however big it has become, Facebook still has headroom left. (Check out our chart of five countries outside the U.S. that could provide Facebook with a lot more users.)

So how will it manage?

First, use its headstart

To understand Facebook’s approach to international growth, it’s worth looking back at the way the company became so global quickly.

From very early on, Facebook had a strong foreign user base. In fact, unlike most companies, it was not really the company’s home success that drove its foreign expansion — it was foreign expansion that fueled its meteoric rise and underpinned its blockbuster flotation.

As early as 2007, the vast international potential was becoming very clear, when London became the single most popular city on Facebook. But then came perhaps its smartest move of all: instead of spending months deciding which markets to target, building local sales teams and internationalizing its product accordingly, Facebook designed a tool that let users translate the service into their own language — effectively crowdsourcing what is usually a slow, labor-intensive job.

And it proved a stunning success: in less than 24 hours, for example, 90 percent of the site had been translated into French. Former Facebooker Andy Johns has called it “the greatest lever” the company had for growth:

It made Facebook a platform capable of supporting everyone on the planet… Growth was not about hiring 10 people per country and putting them in the 20 most important countries and expecting it to grow. Growth was about [engineering] systems of scale and enabling our users to grow the product for us.

It was an inspired, engineering-led approach that allowed Facebook to rapidly scale out into dozens of new territories without ever targeting or investing in them specifically. Take Turkey, a fast-growing internet market with its own language. Without any member of the team ever targeting the country as a business prospect, Facebook became the country’s number 1 social site — and now boasts 92 percent market penetration.

This has all given the company huge reach at relatively little cost, and brought in a ton of revenue too: this year is likely to be the first in which Facebook will make more money outside the United States than in them (U.S. revenue fell from 62 percent in 2010 to 56 percent in 2011).

It’s easy to underestimate the importance of that number. But for some context, compare that with Google, where international revenue only outstripped U.S. revenue for the first time in 2008 — four years after it went public.

Continued international progress is massively important, not least because it’s where new users are coming from.

Pingdom, which found Facebook’s six-month U.S. user growth at just 0.86 percent compared with Brazil’s 54 percent, says: “It seems evident that Facebook needs an expansion plan that involves all corners of the world, but that focuses on certain regions, like Africa and Asia.”

Facebook acknowledges the problem, and the opportunity. Alongside mobile and advertising, it has sold investors on hoped-for international growth. “There are more than two billion global internet users, according to an IDC report dated August 2011,” its S-1 read. “And we aim to connect all of them.”

Now it just has to deliver on that promise.

So where next?

The omens for continued expansion may be good. Thanks to its translation success, Facebook has already unseated eight dominant local-language competitors in the last two years, according to comScore – most recently, Orkut in Brazil and Poland’s Nasa Klasa.pl.

Recent data from Pingdom shows strong gains in other countries, leaving just a handful of nations where Facebook is not the top dog: China, South Korea, Japan, Vietnam and Russia.

“Now there are only five markets where Facebook is not the #1 social networking site,” a comScore spokesperson told us. “What’s interesting here is that Vietnam, Japan and South Korea are amongst the top four fastest growing markets, with year-over-year growth rates of 80 to 270 percent.”

But these remaining countries are also the toughest nuts to crack. And the biggest prize of all, China, may need a sledge hammer — after all Facebook is blocked by the country’s Great Firewall.

If it can piggyback China’s explosive broadband and mobile internet adoption, Facebook’s own growth may surge even further. But this will be anything but a walk in the park.

Investors have been warned. Facebook’s s-1 filing cautioned:

“We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government.

“In the event that access to Facebook is restricted, in whole or in part, in one or more countries or our competitors are able to successfully penetrate geographic markets that we cannot access, our ability to retain or increase our user base and user engagement may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.”

China’s state authorities grant spartan online operating licenses to overseas players, especially powerhouses, leaving the market to indigenous networks, which themselves are allowed to operate only under a strict regime of monitoring and censorship by the government.

That is a controversial and technically difficult task for any social network. But, if it’s good enough for China’s own, it may be a move that Facebook, too, has to consider if it wants to break in.

But it’s not just China that could prove tricky. Google can attest to the difficulties of launching in unfriendly countries. Its $140 million acquisition of the Rambler portal’s Begun contextual ad agency was blocked in 2008 because of what Russian competition authorities said was insufficient paperwork.

And, while trying to make inroads to its five target nations, Facebook must also be on its guard to make sure it protects its leading position in other markets, many of which are small enough that launches or improvements from indigenous competitors could have profound impact.

The revenue question

Even if the company can push growth numbers by securing a dominant position in every single one of the world’s countries, there is another big question: how to keep revenue going up internationally too.

This is a very important problem it faces: during its IPO roadshow, executives explained that while an American user with high disposable income was worth $9.51 in Facebook ad revenue last year, Europe was worth considerably less at $4.86. Asia, meanwhile, came in at $1.79 and the rest of the world made Facebook just $1.42 per user.

So while international growth may be large, the granular detail on income is less impressive. These are not figures that will please Facebook’s investors if they do not rise — and, as Thomas Crampton of Social@Ogilvy & Mather’s Asia-Pacific unit has pointed out, users in lower-income countries like India are going to be hard to monetize more effectively.

Getting average revenues up could mean international users seeing more ads; working more partnerships outside the U.S.; using its scale to push revenue strategies that go way beyond advertising (such as a Facebook credit card). It could even require the company ditching a reliance on engineering solutions in favor of pushing harder at the drearier but tried-and-trusted approach of building large local sales teams.

Whatever the case, you can be sure Facebook will be trying everything it can to increase its international audience — and make it as valuable as possible.

USAID funded the Worldreader Ghana study and independent firm ILC Africa did the research. iREAD “involved the wireless distribution of over 32,000 local and international digital books using Kindle e-readers to 350 students and teachers at six pilot schools in Ghana’s Eastern Region between November 2010 and September 2011.”

The full results are here (PDF). Some findings:

• Kids learned to use e-readers quickly even though 43 percent of them had never used a computer before. Also, not surprisingly, they were quick to discover “the multimedia aspects of the e-reader, such as music and Internet features.” (Kindle has an experimental web browser and can play MP3s.) Worldreader is “exploring ways to limit functions on the e-reader such as music” so that kids don’t get distracted during class, but points out that e-readers can also be a useful “bridge” device for students who’d never used a computer before.
• Near-zero theft. Only two e-readers (out of 600) were lost in the whole study, partly because “community involvement was encouraged through e-reader pledges, community outreach programs, and support from community leaders.”
• Kids got access to way more books. Before the study, primary-school students (whose average age was 11) had access to an average of 3.6 books at home. Junior-high students (average age 13.5 years) had access to an average of 8.6 books at home and high-school students (average age 16.6 years) access to an average of 11 books (mostly textbooks they had to buy for school.) With the e-reader program, kids had access to an average of 107 books, including books Worldreader “pushed” onto the Kindles as well as free e-books that kids downloaded themselves.
• Primary school students’ test scores improved, but effects on older kids were less clear. The reading scores of primary-school students who received e-readers increased from 12.9 percent to 15.7 percent, depending on whether they got additional reading support. That was an improvement of 4.8 percent to 7.6 percent above the scores of kids in control classrooms without e-readers. But results for older kids were mixed: “Student reading was affected almost exclusively at the primary level, and not at the junior and senior levels. This conclusion supports external data that students are most affected by reading interventions at the primary school stages between the ages of 4 and 10.”
• Students sought out access to international news. “Amazon data revealed that students were downloading The New York Times, USA Today, and El País etc., demonstrating that students want to access a wide range of reading materials that were previously inaccessible.”
• Some teachers worried kids became too dependent on the e-readers.  ”For example, one teacher stated that students thought that everything on the e-reader was the ‘absolute truth.’ He had to correct them by  explaining that the e-books may contain mistakes just as paper books do. Teachers also observed that some students have started to favor classes that use the e-reader and neglect classes that do not.”
• Kids shared their e-readers with their families and friends. Students, even primary schoolers, got to take their e-readers home at night and many reported sharing the devices. Kids in the study had an average of five siblings, so “the e-reader’s reach potentially extended to many people beyond the device’s owner.” Some kids whose parents were illiterate read to their parents from their e-readers.
• Kindles break too easily. Worldreader had not predicted how many Kindles would break: 243 out of 600, or 40.5 percent. Each time an e-reader broke, Worldreader sent it back to Amazon to conduct “a post-mortem analysis.” Turns out “fragile screens are the main weakness” and Amazon is working on Kindles with reinforced screens (at the same cost), which started shipping to Ghana in October 2011. Plus Worldreader is providing more rugged cases for the Kindles and providing more instruction on how to use them (don’t sit on it, for instance).
• The program appears cost-effective. Worldreader estimates that “for the years 2014-2018, using a calculation focused strictly on the provisioning of textbooks, the e-reader system would cost only $8.93-$11.40 more per student over a 4 year period [$0.19 to $0.24 per month] than the traditional paper book system.” That calculation is made with the assumptions that e-reader prices will fall and e-readers will become more rugged (so they break less). And of course, e-readers give students access to many books, not just textbooks.

Some more details on Naspers’ revenues here.