1 1 © 2009 Outsell, Inc. All rights reserved. E- Book Trends: An Industry Analysts Viewpoint

2 2 © 2009 Outsell, Inc. All rights reserved. Some are born great, some achieve greatness, and some have greatness thrust upon them…

3 3 © 2009 Outsell, Inc. All rights reserved. Reader Devices Breath-of-Life Early days of PDF on screen Now dedicated, networked reading devices Amazon – Oprah – Bookclub The Story of Edgar Sawtelle 20% of its sales via Kindle

4 4 © 2009 Outsell, Inc. All rights reserved. Definition No standard Downloadable units of digital book content that can be read on a variety of devices Discrete units of content, often based on previously print content NOT a website derived from a book

5 5 © 2009 Outsell, Inc. All rights reserved. E-Book Readers Amazon Kindle & Sony Reader dominate E Ink Print-like reading experience Power only used to change page Purchase titles online Networked, Interactive

6 6 © 2009 Outsell, Inc. All rights reserved. Sales of E-Book Readers Taking Off Amazon Kindle 2 ($360; £240) 380,000 – 500,000 units * Sony Reader $350 / £ , ,000 units * iRex iLiad $700 / £470 10,000 – 50,000 units Apple iPhone/iPod Touch + Stanza (free app) 395,000 downloads (5,000 per day) *** Sources: * DIGITIMES, Citigroup estimates, Outsell estimates ** Outsell estimates *** Lexcycle, producer of the Stanza application Typical prices shown for latest models; may vary depending on supplier 2008 Estimates

7 7 © 2009 Outsell, Inc. All rights reserved. Not Yet Mass Market Outsells end user survey % of respondents owning… Sony Reader 1.2% Kindle 0.9% iPhone10.7% Early technology; high prices Source: Outsell Inc.

8 8 © 2009 Outsell, Inc. All rights reserved. And Other Devices Compete Explosive success of multi-purpose handhelds & phones slowing adoption of single-use devices Amazons 240,000 titles now available for iPhone/iPod Touch Mobile version of Googles Books Search Service…1.5 million public domain titles

9 9 © 2009 Outsell, Inc. All rights reserved. E-Book Formats & Standards EPUB preferred by publishers Kindle, Mobi, PDF entrenched Amazon dropping Microsoft & Adobe eBook

10 © 2009 Outsell, Inc. All rights reserved. Revenues derived from the sale of content to e-book devices will grow rapidly CAGR 38.4% vs. Information Industry 4.5%

11 © 2009 Outsell, Inc. All rights reserved. Segmentation by Geography....

12 © 2009 Outsell, Inc. All rights reserved. Segmentation by Genre....

13 © 2009 Outsell, Inc. All rights reserved. Educational User Pros & Cons

14 © 2009 Outsell, Inc. All rights reserved. Students – Small Part of Market… Lack of content availability Faculty unwilling to recommend over print Publishers other online alternatives compete

15 © 2009 Outsell, Inc. All rights reserved. …But Potential Exists JISC National E-Books Observatory 36 Text, 127 HEIs, 20,000 respondents 60% use e-books via Library (46%) Free via Internet (43%) Purchased (5%) 37% consulted 3 or more e-books in prior month

16 © 2009 Outsell, Inc. All rights reserved. Student Usage Habits Problem-centric: Dip in & out Essay deadlines drive uneven usage Unlimited access models preferred 24/7 flexible access on & off campus No cannibalization of print sales!

17 © 2009 Outsell, Inc. All rights reserved. Business Model Experimentation Collections Rental One-off Unlimited access Per-chapter Custom books Blurring between Book (discrete unit) Journal (subscription) Database (search) Springer DRM-free; unlimited access Institutional Subscription Collections only FTE-based discounting on print list Safari Books Online Packages of titles Downloadable chapters Subscriptions Taylor & Francis Rental, One-off, Custom Books Subs, packages, per title

18 © 2009 Outsell, Inc. All rights reserved. The E-Books Time Has Come Capabilities + Technology + Content = Open for business!

19 © 2009 Outsell, Inc. All rights reserved. A final thought…. It is not the strongest of the species that survive, nor the most intelligent, but rather the one most responsive to change Charles Darwin

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