1- Making Information Pay 2009 -- HEALY, LEIGH WATSON (Outsell, Inc.)

A Time of Great Change: Insights from top publishing executives on the future of our business Book Industry Study Group Making Information Pay 2009 May 7, 2009 Leigh Watson Healy Chief Analyst lhealy@outsellinc.com © 2009 Outsell, Inc. All rights reserved.

About Outsell The only worldwide syndicated research and advisory firm serving the media and information industry. • Global team of 50+ professionals • Tracks information sectors in the US, Europe, and Asia • Fact-based analysis of markets, companies, trends, technology • Actionable advice to private and public institutions • Subscription, membership, and custom consulting services 2 © 2009 Outsell, Inc. All rights reserved.

Meltdown • Industries get wake-up calls • Ego-driven, unhealthy vs. transparent, accountable • Mass markets vs. long-tail • Industrial age vs. knowledge age • Recession accelerating structural change • Not on the other side yet 5 © 2009 Outsell, Inc. All rights reserved.

Signs Appearing Out In • Consumption • Conservation • Spending & credit • Barter & saving • Secrecy • Transparency • Authoritative • Shared voices • Big • Small • Living in future • Living in moment 6 © 2009 Outsell, Inc. All rights reserved.

Longer Term • World is global for knowledge • National & local for physical goods • Sustainability & citizenship are in • “Trust is the new greed” • “Flat is the new up” • Change always takes longer 7 © 2009 Outsell, Inc. All rights reserved.

Segment Performance, 2009 • BISG data confirms flat is the new up • Book publishing revenues flat in 2009 • Adult & juvenile trade – flat to slight growth • Professional, scholarly – slight growth • Elhi and college – single-digit decline follows 2008 growth • Religious – decline less steep in 2009 9 © 2009 Outsell, Inc. All rights reserved.

Companies Doing Well • Market share/brand leaders • Innovators and boutiques • Real-time data/work-flow solutions • Tactical support or lead generation • Digital DNA • Cash positive and building 10 © 2009 Outsell, Inc. All rights reserved.

Benchmarks & Innovation Metrics • Revenues on par or better than segment growth • 55%+ gross margins • 10%+ net income • $215K+ revenue per employee • 13% revenue from new products • New product cycles – 2 to 9 months • Price increases 5% or less Respondent Base: 62 11 © 2009 Outsell, Inc. All rights reserved.

Leader Sentiment • Expect return to growth by Q2 2010 • Staying head-count neutral •Salary freezes & reductions •Exiting poor performers • 3 budget scenarios • Recession as opportunity 13 © 2009 Outsell, Inc. All rights reserved.

Top Planned Investments • Sales & marketing • New product development • Technology – digital tipping point • Staffing (editorial, IT) • Process & infrastructure redesign • Global expansion 14 © 2009 Outsell, Inc. All rights reserved.

“We’re moving from a physical war fought with weapons to an economic war fought with information. We must restructure our business to fight this war and challenge our business models, cost models, etc. It is all shifting.” 16 © 2009 Outsell, Inc. All rights reserved.

Five Key Themes for 2009 • Content/platform & experience execution • Business model focus & execution • Social media/community execution • Strategic marketing & product marketing execution • Operational execution 17 © 2009 Outsell, Inc. All rights reserved.

Come By and Visit Us Outsell, Inc. 330 Primrose Road, Suite 510 Burlingame, CA 94010 Tel. 650.342.6060 25 Floral Street, Suite 1.02 London, WC2E 9DS Tel. +44 (0)20 8090 6590 http://www.outsellinc.com 19 © 2009 Outsell, Inc. All rights reserved.

1- Making Information Pay 2009 -- HEALY, LEIGH WATSON (Outsell, Inc.)

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