Presentation given at Congresso internacional do livro digital 2011 in Brazil, July 2011. The consumer and textbook data at the front of the presentation is from BISG and

1. The Book in Transformation Dominique Raccah Sourcebooks, Inc. CongressoInternacional de Livro Digital July 2011

2. today… book publishing in the United Statesis an industry in transformation

3. advantages of hindsight

4. The Book in Transformation Consumer data — BISG & PubTrack Practical implications What’s beyond ebooks

5. [consumer data]

7. Survey pool of ~78K book consumers at the time of last fielding

8. 95% probability threshold© 2011, the Book Industry Study Group, Inc.

10. All institution types – all grade levels balanced to statistics from American Council on Education

11. 1,500 students per fielding

12. 95% probability threshold© 2011, the Book Industry Study Group, Inc.

13. Benefits of e-reading devices…

14. Why consumers purchase e-books instead of print books © 2010, the Book Industry Study Group, Inc.

15. Trade E-Book Market Growth Rate

16. [Trade Consumer]

17. Who is Today’s Core Trade E-Book Buyer? Woman (66%) ~44 years old HH Income ~$77K Yr Predominantly Fiction (58% of all ‘e’ sold)

18. Core buyer of trade E-Books is growing and has tremendous buying power! Frequency of Purchase 18% of buyers = 61% $$$ for ‘e’

19. Dedicated e-readers Now Dominate the Trade Market…

20. Dedicated e-readers are the dominant choice for all book genres now. 15 © 2011, the Book Industry Study Group, Inc.

21. …And Kindle still dominates the trade device market…

22. Kindle is the dominant source for Trade E-Book downloads…

23. …Not So in the Higher Ed Market Spring Semester 2011

24. [Textbook Consumer Data]

25. Who is Today’s Core E-Textbook Buyer? Male ~23 Graduate Student or Distance Learner More likely ‘pirate’ print or digital texts then under-classmen Still only buys a small portion of his texts 17% as ‘e’

26. E-Texts do not have a clear source for download

27. Feature requirements from students are demanding on E-Books

28. When given a choice, students choose print over ‘e’ 3 out of 4 times…

29. …And find ‘other’ forms of digital content more useful than E-Books

30. While still lacking functionality, students perceive similar value points to trade

31. For now…ebooks having significantly larger impact on trade books than textbooks

32. Wish list of trade E-Book buyers offer clues for the future

33. The rise in e-book units is not offsetting the cannibalism of print. 28 © 2011, the Book Industry Study Group, Inc.

34. E-book buyers still look to ‘free’ as a major component to digital transition. © 2011, the Book Industry Study Group, Inc.

35. Downloading of FREE e-books is central to the digital content experience. 30 30 © 2011, the Book Industry Study Group, Inc.

36. [practical implications]

37. Sourcebooks results at a glance 10 years of consecutive sales growth. Of those, 5 years of double digit growth YTD 2011 BookscanPOS (through the register sales) up 8%(industry down 8%) YTD p-book market share is up 23.5% Net sales up over 20% at the end of 1st half 2011

38. aninteresting aspect… When add ebooks into both 2010 and 2011, “total POS” has grown by 60% so far in 2011

39. [ebooks]

40. Licensing & Administration Trademark/ Copyright protection Accounting; Royalties Positioning Cultural Filter Content Development Copyedit and Proofread Physical & Digital Warehousing what book publishers do Content Design Physical Distribution Creation of content portable files Digital Distribution Printing/ Manufacturing Author branding & career development Trade Shows Niche community building PR, Marketing and Advertising Creative Partner Retail Marketing and Sales eCommerce Administration

41. law of diffusion of innovation -Simon Sinek, Ted Talk

44. Ebooks. How far? How fast?

45. for Sourcebooks, January 2011 eBook dollars = 35% of $ sold

46. 2 major trends driving this growth

47. 1. anytime, anywhere…buying

48. Trade E-Book Consumers are buying more titles…

49. …Majority of trade consumers now report spending more money overall

50. 2. anytime, anywhere…reading

51. 80% of ebook readers reported reading somewhat or a lot more

52. What categories of books are most impacted by ebooks today?

53. What’s Transforming (2010)?

54. What’s Transforming (2010)?

55. It’s about stories…

56. Slower ebook transformation for categories such as reference and children’s books

57. Continuing downward pressure on pricing of ebooks

58. How much infrastructure is enough?

59. [what’s involved in making ebooks]

60. ebooks require additional workflow

61. with printed books, we ship exactly the same product to different retailers

62. ebook distributors timeline Amazon Apple Barnes & Noble Blio Copia Google Kobo Overdrive Sony + 2-3 more Amazon Apple Barnes & Noble Overdrive Sony Amazon (85%) Overdrive Sony 2008 2010 2012

63. ebook retailers use different file formats

64. Two kinds of changes:1. Changes to workflow process2. Additional workflow

65. ebooks were a by-product of the file out

66. creating a new workflow; from bookmaking to content delivery

67. What conversion costs (will vary by kind of publisher/list): Simple Titles: $54.93 Moderate Titles: $96.70 Complex Titles: $180.95Average price per title: $111.00**

68. What do ebook sales look like(average unit sales per month): Top 10 Titles: 479.6 Units Top 50 Titles: 235.3 Units Average for all ISBNs: 13.3 (October 2010)

70. epub 3

71. bundling

72. still no good reporting mechanisms

74. 3 different kinds of digital opportunity e-books apps web-based 1. 2. 3. enhanced e-books communities book publisher content sites developer interactive programs

75. developing a digital roadmap

76. some of what we’re seeing…

77. 1. Vertical focus means we compete harder in fewer categories

78. developing reader (user)-centric models ~ based on key verticals

79. ? ebook $0.99 - $4.99 $$$ $19.95 $12.99 $5.99 $4.99 Complete Book of Baby Names 25,001 Best Baby Names ebook 25,001 Best Baby Names MM Baby Name Treasury iPhone apps

80. 2. greater need for partnership between authors, agents and publishers

83. ebook $0.99 - $4.99 $$$ $19.99 $14.99 $12.99 $17.99 Gruber workbooks Gruber SAT ebook Gruber Word-Master Gruber’s Complete SAT MyMaxScore Gruber Test Prep software iPhone apps

84. 2. Metadata matters

85. 3. Digital has cultural implications within your organization

86. impacts every department

87. 4. Conceptualizing beyond the physical book

88. The Book Wheel Print Apps/interactive /software Audiobook RTF Web PDF Book/Content Kindle/Mobi ePub Enhanced/ additional media Other/licensing

89. 3 different kinds of digital opportunity e-books apps web-based 1. 2. 3. enhanced e-books communities book publisher content sites developer interactive programs

90. Author Publisher Developer

91. software developer book publisher Software/App customerSoftware retailersPublicity, marketing and advertising that drives software purchasesContent editing for flexible format productUser-Interface and designTechnical programmingDatabase design and programmingPlatform and device portabilityOngoing content updatingOngoing software updatingOngoing consumer support Book or ebook customerBook or ebook retailersPublicity, marketing and advertising that drives book purchasesContent editing for fixed format productDesign and layoutPrinting and warehouse/storage capabilities Content

92. Let Every Nation Know Apple iBookstore November 2010

93. iDrakula App • Free, $1.99 Book

94. Where is the line between a book and an app?

95. enhanced ebook iPhone app software interactivity

96. 5. focus on the user/reader & that person’s experience

97. “You’ve got to start with the customer experience and work back toward the technology — not the other way around.” Steve Jobs May 1997

98. user interface= experience design

100. “We don’t pay for content. We pay for the experience.” Nick Bilton I live in the future and here’s how it works

101. Digital opens opportunities beyond ebooks Focus on key verticals Metadata matters Digital has cultural implications Publishers can conceptualize books in new ways Focus on user experience

102. enhanced e-books e-books web-based content the world for book publishers just got a lot BIGGER apps user-generated content communities

103. It’s not just the book that’s transforming. It’s the book publisher. Digital changes everything.

104. “We should try to be the parents of our future rather than the offspring of our past” -Miguel de Unamuno (1864-1936) Spanish essayist, novelist, poet, playwright, and philosopher

105. Thank YOU! Email: dominique.raccah@sourcebooks.com Twitter: @draccah LinkedIn Group: Ebooks, Digital Books and Content Publishing Network