What the Future Holds: A look at today, tomorrow and what next in econtent Ruth Jones May 2009

Ingram Content Companies Physical storage and access to physical channels Print-on-demand and inventory management Secure digital storage, repurposing, and access to multiple digital channels

Trends for 2009 The economy will continue to be a major factor in 2009 Print sales are likely to remain relatively flat E-book sales will continue to grow at a rapid pace Print-on-Demand projected to grow modestly with sudden ~41% growth in 2011

Trends for 2009 (cont) Publishers are searching for a single digital content solution to help them evolve their traditional business models with limited risk and cost Multiple formats, devices, distribution and sales opportunities Publishers increasingly have a new focus on the ultimate consumer, as opposed to retail or distribution partners Global/international solutions becoming increasingly important Green concerns will continue to grow as a factor in decision making

Changing Marketplace Retailers ramping up e-commerce operations Web 2.0 introduces new ways to drive content discovery – and sales – online Libraries worldwide looking to expand without expanding physical footprint Consumers expecting content to be always available Content globalisation – worldwide opportunities Optimisation of existing content in multiple formats

New Marketplace Dynamics Consumer increasingly in control Audience fragmentation iTunes pricing model becoming the norm Sales no longer concentrated Global opportunity

E-Books are Growing…and Will Continue to Grow E-book sales were up 118% for the month of December and ~50% year over year AAP estimates that in 2009 e-books will represent $100m in revenue for the major publishing houses E-book sales will grow from ~$150 M in 2008 to ~ $550M in 2011 Compound annual growth of 38.4% Over time, growth will increase more rapidly in EMEA, Asia and developing markets: Estimated Market share in 2011 US 50% EMEA 28% AP 15% Other Regions 7% Source: Outsell, Inc. E-books Market size, Share and forecast 2009

Change Requires Disruption Desktop publishing Replaced traditional publishing Digital printing Digital print decision is creeping 1,000 copies/250 copies Downloadable content

e-Readers are Here… Amazon sold ~ 240,000 Kindle readers in 2008* Kindle announced in UK in September 2008, still not released. New larger screen version launched. Sony has sold ~ 300,000 readers since 2006 * source techcrunch

But Other Devices are More Prevalent Professionals who own devices: 1.2% owned Sony reader.9% owned kindle 10.7% owned iPhone or iPod touch 50.4% owned iPod Students who own devices 1.2% owned Sony reader or Kindle 31% owned a Smartphone 71% owned iPod 98.4% of students own a computer 73.7% of those are laptops Apple celebrated 500 million apps downloaded to iPhones in the first six months of the app store More than half a million were eReader – an application powered by Ingram Digital with over 50k titles Over 800 million apps have now been download from App Store Source: Outsell, Inc. E-books Market size, Share and forecast 2009

Its Complicated Many types of material Trade, Reference, Textbook, Journal, Digital Audio Book Numerous formats and DRM types ePDF, pPDF, epub, Lit, Mobi, PDB, MP3, MP4… Many distribution channels Wholesale, physical retail, online retail, publisher websites, library suppliers, library consortia, libraries, friends, thieves… Many economic models Download, perpetual, subscription, loan, pay-per-view, single- user, multi-user, consortium… Many platforms Websites, browser-based platforms, computers, PDAs, e-book readers, phones, MP3-players…

What are we Dealing With? The three Cs Content Repurposed Biz models Formats Customer demand driven Devices Interactivity Costs of playing Not everyone can be Google In-house vs. outsourcing debate Standardisation and formats Leveraging the relationship with the end-user, even if the reader isnt the 1 st -instance buyer

Which Road to Take Why not all of them? Print Digitised files Print-on-demand Downloadable e-book Full book or chapters Multiple formats Mobile devices Online subscriptions Collection Stand alone With print-on-demand option – reach more than 30,000 customers through Ingram Book Group sales channels

Winning Strategies Winners EPUB and PDF Address ALL major formats Historic content Print files Print-on-Demand E-content Conversions Taking advantage of search, discovery and viral marketing Widget Search and Discover Trying new approaches to consolidate p and e distribution Losers Not going digital NOW Dont lock in on a single format or business model Ex. Mobi for Kindle/Amazon Library subscription/own platform only Keeping it traditional Missing the opportunities from digital distribution