Digital Content: Where are Publishers Investing & What Challenges Will They Need to Overcome? Marc Rubner Vice President, Product Marketing

Rapid Digital Adoption 100 million iPads by YE 2012* 300 million tablet by 2015* The iPad is a disruptive technology Content consumption behavior is being altered Revenue models are in disarray Content will be wrapped in software *Gartner

Key Future Trends Content Aggregation –Recent study conducted by LexisNexis reports that while 100% of respondents use search engines for work tasks, only 4% can access all the content they need for work task through free web searching Platform Wars –Tablets over eReaders – Price will matter Growing share of information content viewed on tablets and mobile devices –Portability will drive tablet and mobile consumption Interoperability among different tablets, mobile devices and web browser on a laptop –Common look and feel of the app and content rendering on all devices

Resulting Challenges for Publishers Real time, always on, just for me Small packaging required Rapid time to market Content is no longer stand alone Devices do not exist in isolation Platform and business model disruption Managing increasing volumes of analytical data Delivering similar experiences across platforms

Keeping Up 76% of media executives say launching new products and services will be a key drive of growth over the next 3-5 years* Putting their money where their mouths are*: –73% say they will invest in product development –63% say they will invest in new talent –62% say they will invest in new technologies *Jordan Edmiston Survey of 500 media executives, 2011

Transformations Demanded by Rapid Digital Adoption 1.New Product Development 2.Incorporate Software Technology 3.Organize for Continuous Change 6

Survey Surveyed 366 media executives (online survey) Sample from Digital Book Worlds subscriber list Conducted in April, 2012 Objective: To understand what plans are in place to launch new paid digital products and to identify the challenges along the way 7

Respondent Profile 31% from adult trade, the rest represent a mix of other segments including –Childrens trade –Academic –K-12 Education –STM –Others 54% of respondents are from small(ish) publishing companies (1-49 employees) 17% are from medium size organizations (50-99 employees) 37% are from larger organizations (100+ employees) 29% list their title as President, CEO or other C-level executive 47% list their title as Manager or Director 8

CONTENT: Which of the following do you plan to DEVELOP and/or LAUNCH in the coming year? 9

CONTENT: With which of the following INITIATIVES have you experimented? 10

APPLICATIONS: Which of the following do you plan to DEVELOP and/or LAUNCH in the coming year? 11

SYSTEMS/PLATFORMS: Which of the following do you plan to DEVELOP and/or LAUNCH in the coming year? 12

TABLETS: Which of the following do you plan to DEVELOP and/or LAUNCH in the coming year? 13

INVESTMENT: How much do you plan to invest in developing paid digital content in 2012 compared to 2011? 14

INVESTMENT: How much do you plan to creating applications, systems or platforms to support digital products in 2012 compared to 2011? 15

INVESTMENT: Where are these investments in applications, systems or platforms likely to be made? (Open-ended comments) 16 Mobile Apps XML Content Management Content Management Systems Digital Rights Management

CHALLENGES: How much does each of these factors LIMIT your companys ability to move forward when it comes to DEVELOPING DIGITAL PRODUCTS? (% top 3 box) 17

CHALLENGES: How much does each of these factors LIMIT your companys ability to move forward when it comes to DEVELOPING PLATFORMS, SYSTEMS OR TECHNOLOGY to support digital content? (% top 3 box) 18

CHALLENGES: How many people do you plan to hire or assign to develop digital content or create applications, systems or platforms to support digital products this year? 19

CHALLENGES: Will you be seeking help from a third-party company to develop DIGITAL CONTENT/PRODUCTS and SYSTEMS/PLAFORMS/TECHNOLOGIES? 20

CHALLENGES: Thoughts on the limiting factors to developing systems, platforms, technologies to support digital content? (Open-ended comments) 21 People –It is not our core competency so we will work with outside vendors. –Legacy employees with tenure who show little or no interest in non-print, in any form Systems –Archaic/legacy information systems are significant barrier to speed and flexibility

CHALLENGES: Thoughts on the limiting factors to developing digital products? (Open-ended comments) 22 Wait and see? –We are watching the market and educational consumer very closely and pacing ourselves to their demand. We have pilots going on… demand in K-12 is fragmented and funding unclear for anything beyond web-based applications. –Some of us are extremely aggressive about digital development; others (the companys owners) are still dragging their heels, sticking to the sidelines to see how well other companies fare. Waiting for Standards –Shakeout of industry standards –Too many platforms, OSs and software. Can we standardize? –Shifting markets, technology, changes practically overnight cause ambivalent decision making – lets develop some standards! –Lack of sync with various eReader brands

Transformations Demanded by Rapid Digital Adoption Are Publishers Prepared? 1.New Product Development 1.Yes – New product development is being planned and funded 2.Digital First is gaining momentum 2.Incorporate Software Technology 1.Not enough focus on technology 2.Too few are planning to invest in platforms and systems to support digital content 3.Organize for Continuous Change 1.Most organizations struggle with internal digital content expertise 2.Many organizations will hire at least 1 person to support digital products this year 3.Most will seek help from third-parties 23

Contact Information Marc Rubner, Vice President Innodata Tel:

Q & A 25