Turning the Page -The Future of eBooks Expert Seminar Tax on eBooks 8 March 2013

@ PwC 2013 PwC has conducted two pieces of research on eReaders and eBooks (study performed in 2010) Methodology Online interviews in the U.S., Netherlands, U.K. and Germany – recruited via online panel N=1,000 respondents per country Length of interviews: ca. 10 minutes Sample years old Representative demographics regarding gender, age and occupation Fieldwork May 2010 Methodology Two facilitated in-person consumer sessions, N=6 each Online panel, N=15 Sample In-person sessions: years old, male and female, one group of owners, one group of non-owners Online panel: high school and college educators Fieldwork February 2010 PwC eBooks Study – quantitative research (May 2010) PwC Consumer Insight Session – qualitative research (February 2010) Slide 2 8 March 2013 Expert Seminar Tax on eBooks

@ PwC 2013 Fast growth expected in the U.S.; other countries will follow (data 2010) U.S.: most mature market  High consumer interest  Attractive devices U.K.: mirrors the U.S. (with a lag)  Market kick-off in 2010  Growing awareness Germany: sentiment improves  Consumer still cautious  Supply improves, but still limited Netherlands: long way to go  Consumer generally uninterested  Supply still insufficient Market data eBooks (Consumer Books, million $) Slide 3 8 March 2013 Expert Seminar Tax on eBooks

@ PwC 2013 Consumers expect price discounts for eBooks in comparison with paperbacks (data 2010) In general, consumers expect discounts compared to paperback prices. In contrast, eBook owners paid higher prices for eBooks in the past than they said they would pay. If consumers are really interested in an eBook, they may be willing to spend more. If a paperback costs € 10/$14/£8, how much are you willing to pay at most for this book in the digital format? Slide 4 8 March 2013 Expert Seminar Tax on eBooks

@ PwC 2013 Fast growth expected in the U.S.; other countries will follow (data 2010) Market data books & eBooks (Consumer Books, million $) Slide 5 8 March 2013 Expert Seminar Tax on eBooks

@ PwC 2013 Our forecast is based on the following assessments of consumer interest, devices and content in each of the countries surveyed (data 2010) Consumer interestDevicesContent Germany One third of population will not buy eBooks Terms “eBook“ and “eReader” still not well known First readers with WiFi- accessible store and German content available this fall No integrated 3g-reader available Overall sales limited Only eBooks available in ePub (100k in pdf) ½ of bestsellers available as eBook Publishers catching up slowly U.S. Comparably strong interest in buying eReaders and eBooks Market maturity further drives interest Variety of tablets and eReaders available >5 million devices sold Price war and technical innovation Almost all content available as eBook 90% of NY Times bestsellers available as eBook at launch (2007) U.K. Customers are aware of eReaders and eBooks, willing to buy Amazon U.K.-offer generated interest Kindle available since summer 2010 WHSmith reader also available Overall sales limited More than 400k books available in Amazon store Language advantage Netherlands One third of population will not buy eBooks Very few eBook owners General interest seems to be weak WiFi-Readers available but highly priced No integrated 3g-reader available Overall sales limited Only native eBooks available Situation improving slowly (in 2009: almost no eBooks) Slide 6 8 March 2013 Expert Seminar Tax on eBooks

@ PwC 2013 For more information Slide 7 8 March 2013 Expert Seminar Tax on eBooks Download the publication on t-media/pdf/eBooks-Trends-Developments.pdf

@ PwC 2013 Contacts Slide 8 8 March 2013 Expert Seminar Tax on eBooks Werner Ballhaus Industry Leader Technology, Media & Telecommunications, PwC T: Tal Hasson EU Business Development Manager PwC T: Ine Lejeune Global Indirect Taxes Policy Leader PwC T: Sophie Claessens Senior Manager Indirect Taxes PwC T: