Amazon on The Global Transition to Online Bookselling (Russ Grandinetti at Launch Frankfurt 2013)

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The Global Transition to Online Bookselling -- Presented by Russ Grandinetti, Vice President for Kindle Content, Amazon

At Publishers Launch Frankfurt, Frankfurt Book Fair, 8 October 2013

Amazon now operates its books business locally in 11 countries across North and South America, Europe and Asia, affording them a detailed view of how quickly sales are moving online around the world – across both print and digital. Russ Grandinetti, Amazon's VP of Kindle Content, will talk about the pace of that transition globally and how that evolution compares to what’s already taken place in English in the US.  Grandinetti will also touch on a number of other topics about the continuing changes in the bookselling and publishing world as he sees them from Amazon's unique perch.

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Amazon on The Global Transition to Online Bookselling (Russ Grandinetti at Launch Frankfurt 2013)

  1. Growth of Online Bookselling Russ Grandinetti VP, Kindle Frankfurt Book Fair October 8, 2013
  2. Bookselling Is Fundamentally Changing Offline • Am I in the right locations? • Can customers find my book on the shelf? • How do I compare to other book choices? Online • How do I get a customer to think about books? • How do customers hear about and find my book among all that selection? • Am I attractive relative to their other entertainment choices?
  3. Bookselling is Fundamentally Changing Source: Bowker US UK % of consumer book purchases (print + digital units) made online 27% 35% 42% 26% 31% 37% 2010 2011 2012 2010 2011 2012
  4. 0 1 2 3 4 5 6 Kindle Speed of Growth USUK DE JP Amazon Paid Kindle Sales As % Amazon Print Book Sales Years since local Kindle launch 100%
  5. Kindle Owners Buy More Books 4.0 2.7 4.3 2.9 2008 2012 US UK DE
  6. Digital Creates Incremental Demand +35% 2.6x Greater availability creates: • more word-of-mouth • more reviews • higher sales rank • more recommendations Print Sales Kindle Sales 6 Months Before Kindle Release 6 Months After Kindle Release Roger Hargreaves Mr. Men series released in 1971 in print, in 2012 in the US on Kindle
  7. Online Is More Efficient For Publishers Print • Better In-stock • Lower Return Costs • Improved Working Capital • Lower Transportation Costs • Never Out of Stock with Print-on-Demand
  8. Online Is More Efficient For Publishers Digital • Zero Marginal Cost of Selling One More Unit • Transportation • Manufacturing • Distribution • Working Capital • Instant Global Reach • Perpetually In-Stock
  9. Online Is More Profitable For Publishers “...we expect to benefit from increased profit contribution and improved working capital dynamics due to diminishing physical plant requirements, inventory and returns related to our print business as well as faster payments for e-books.” –HarperCollins “operating EBIT was higher year on year, especially in the United States. This rise was helped by continued cost-cutting measures and lower return rates in North America and the United Kingdom due to increased e-book sales.” – Random House “publishing adjusted OIBDA for 2011 rose 28% to $92 million from $72 million for the prior year, reflecting lower direct operating costs” due in part to “the decline in expenses resulting from an increase in more profitable digital sales as a percentage of total revenues.”– Simon & Schuster
  10. Online Is More Profitable For Publishers Source: CBS Corporation Financial Results Simon & Schuster reported global financial results 9.9% 10.4% 13.1% Y/E Q2'11 Y/E Q2'12 Y/E Q2'13 12.1% 20.1% 25.7% Operating Income (OIBDA) Digital % of Total Sales
  11. English Books Sell Globally English Kindle Book sales to non-English speaking countries 2009 2010 2011 2012 2013 YTD
  12. Foreign Books Sell Globally Foreign language Kindle Book sales to English speaking countries 2009 2010 2011 2012 2013 YTD
  13. Bookselling Is Fundamentally Changing Offline • Am I in the right locations? • Can customers find my book on the shelf? • How do I compare to other book choices? Online • How do I get a customer to think about books? • How do customers hear about and find my book among all that selection? • Am I attractive relative to their other entertainment choices?
  14. Consumers Are Not Just Comparing Books
  15. 15 Books Need to Compete $1.29$0.99 $1.99 $4.99 / Free w/ Subscription FreeFree
  16. 16 What Is This Customer Thinking? Formats Price Paperback €7.22 Kindle €15.99
  17. Risks of Not Moving Fast Enough • Slow Catalog Digitization o Increased Piracy, Loss of Sales • Delaying eBook release o Increased Piracy, Loss of Sales • Digital Pricing too high (close to or above print) o Loss of Sales to competing low-priced content (books, apps, movies), Piracy • Lack of POD Utilization o Missed “surprise” units, lower international sales
  18. And miles to go before we sleep 98% 95% 89% 71% 64% 53% 46% US UK DE FR JP IT ES Not on Kindle % of top 1k authors in print with at least one Kindle book available
  19. And miles to go before we sleep % of Spanish, German, Italian, and French titles for sale in US 77% 51% 25% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Spanish German Italian French
  20. Millions 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2007 2008 2009 2010 2011 2012 2013 YTD Inventory-Free Distribution Amazon Print on Demand Selection
  21. 0 0.0005 0.001 0.0015 0.002 0.0025 0.003 0.0035 0.000% 0.005% 0.010% 0.015% 0.020% 0.025% 0.030% 0.035% Inventory-Free Distribution JK Rowling Revealed Print OOS Print Back In Stock Page Views Print Sales Kindle Sales The Cuckoo’s Calling – Amazon US Sales Est. “In Stock” Print Sales
  22. Improve Digital Quality Metadata – help customers find your books 1) Title / Author 2) Language 3) Series Information Content Quality – improve the reading CX 1) Fix spelling, typos, missing paragraphs/images 2) Book navigation
  23. Attention is a Scare Resource: Kindle Daily Deal CONFIDENTIAL
  24. DD+1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11 +12 +13 +14 +15 +16 +17 +18 +19 +20 +21 +22 +23 +24 +25 +26 +27 +28 +29 +30 with deal no deal Attention is a Scare Resource: Kindle Daily Deal 110x 18x 4x5x DD+7 DD+14 DD+30 3000x 30 days after the typical Kindle Daily Deal promoted title units were still trending 4 times higher than the pre-promo run rate DD+1
  25. Discoverability: Goodreads on Kindle
  26. On The Horizon: Kindle MatchBook Gives customers who purchase, or have previously purchased, a physical book from Amazon the option to purchase the Kindle version for $2.99 or less. Why does it matter? • Incremental Revenue • More Deeply Engaged Readers • Happier Customers
  27. Bookselling is Fundamentally Changing Source: Bowker US UK % of consumer book purchases (print + digital units) made online 27% 35% 42% 26% 31% 37% 2010 2011 2012 2010 2011 2012

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