1. Digital Change in Publishing: Lessons Learned in the US Mike Shatzkin To the IfBookThen Conference Milan, Italy 4 February 2011

2. A brief history of ebooks in the US Why America was first: 300 million people, one language, one set of commercial laws It started complicated in the early 1990s: Voyager Expanded Book and CD-Roms Simple straight text in late 90s: Rocket Book, Softbook, then PDAs (Palm and MS) plus PDFs on PCs Sony Reader introduced in 2005 Into 2007, Palm “dominates” device reading in a miniscule market 2

3. But with the arrival of Kindle, everything changed Kindle introduced November 2007: almost instant success Why? Title selection; direct downloads; good reading experience; Amazon audience And pricing But that caused problems for publishers 3

4. Why publishers wanted to restrain Amazon’s growth in 2009 Two segments of growth: online print sales and device-read ebook sales Amazon market share north of 70%, perhaps 80% on both Proven willingness to twist arms for margin Online sales hegemony probably unassailable Kindle alone was locking up heavy readers Amazon’s very aggressive pricing was scary 4

5. Agency was their answer; and maybe it worked Key to agency: price set by publisher, not retailer Five of six top US publishers do it; so most top titles are price-controlled Amazon device ebook share drops 30-40% Other factors: Nook, iPad, Google 5

6. Experience with ebooks so far: some lessons learned Price matters a lot, but high priced branded books can sell (even at $20!) Early device adopters tend to be heavy readers (practical and financial reasons) Effective interoperability was important, but provided within “closed” systems Ebook sales, at least at first, are frontlist- driven Impact on brick-and-mortar: significant 6

7. And now America exports an ebook infrastructure Three big companies might dominate the global ebook market, all American: Amazon, Apple, Google Wild cards (at the moment): Kobo, Sony And longer shots: Copia, Blio, consumer electronics players and mobile phone players And a US player which should go global: B&N 7

8. These players come with capabilities and audiences All sourcing titles in all languages All have multi-device platforms Each has, or is developing, a separate content- focused app market; separate opportunities, separate platform challenges (Apple, Android in flavors, and Kindle – so far) Many have ambitions to control some content exclusively 8

9. How can local ebook resellers compete? Carry titles in all languages Deliver multi-device functionality Keep up with features (lending, notes, dictionaries) Deliver impeccable customer service Provide local propositions for libraries and institutions Deliver local in-store support and promotion (the B&N example) 9

10. And retailers need to play to native strengths Work with local authors, IP owners, and brands to capture and provide unique content Maximize knowledge of local content silos, pricing practices, and rights Market to your own language-based customers globally! 10

11. What publishers should be thinking about Don’t waste resources defending print; you can’t Rethink your capabilities to gain advantage in digital: products and marketing Don’t be fooled by a currently trivial ebook market, pricing protection, or VAT issues: US tells you change comes faster than you think Be conscious of verticals; think about audiences you serve, not just IP you own “Start with XML”: workflows must deliver print and epub 11

12. We’re all global publishers now Know Amazon, Apple, and Google like an American Rethink exploiting your own IP: should you do an English edition? Or a dual-language ebook? Rethink rights acquisition; should you acquire by territory instead of by language? Recognize English-language books as a competitor at home; use price, release dates as weapons when you can Accept this reality: bookstores will decline 12