Last week, St. Petersburg hosted the fourth congress of the Russian Book Union, one of the most influential associations in the book business. The caliber of the guests, who included Audit Chamber chief Sergei Stepashin and St. Petersburg Governor Valentina Matviyenko, reflected the high esteem associated with publishing in Russia. But the mood at the congress was grim, and the figures announced by various speakers only made it worse. Book sales are falling, printing expenses are rising and there is less money to pay everyone in the business -- including authors. Perhaps most shocking is the drop in demand. Whereas the Soviet Union was once touted as "the best-read country in the world," today, 52 percent of Russians never buy a single book.

Publishing houses employ different strategies to deal with this situation. The largest ones, such as Moscow's Eksmo, have relatively little to fear: Even if hundreds of smaller publishers go bankrupt, it will only clear more space for the giants. But even they are adjusting; for instance, they are serializing everything that's fit to print, because serialized books are supposed to sell better. It is rumored that major publishers do not even speak to authors who bring one novel -- two is the minimum requirement.

Another popular strategy is to find a narrow niche. Some publishers specialize in expensive gift books, while others focus on business, medicine or children's literature. However, the success of such enterprises depends on good marketing and finding the right outlets for distribution, which is one of the toughest challenges facing publishers in Russia.

It is excruciatingly hard to establish anything new on the Russian market. A while ago, I toyed with the idea of setting up a small publishing house specializing in high-quality nonfiction. I felt that the relative lack of such books, compared with the West, was more than evident, so the demand should be quite high. But it turned out that the cost of producing good books -- without skimping on expenses for design, proofreading, translation, paper, etc. -- was almost prohibitive, and the investment return rate would be so slow as to scare off any potential Russian investor.

Under these sad conditions, some long-forgotten mechanisms are springing back to life. One web site sells as-yet unpublished books on a subscription basis; once the required sum is collected, the book is printed and sent to subscribers. Alternatively, many younger readers opt for freely available electronic books. Consider the facts: The digital version of the new Harry Potter novel was online just hours after sales started in London. The printed version was virtually unavailable in Moscow until several days later, and when it finally went on sale, it cost over $30.