Digital Reading: New Partners, New Opportunities

1. THE SOUND HORIZON BOOKS 2.0: NEW PARTNERS NEW OPPORTUNITIES Dominic Pride E‐Media Forum  25 January 2011

2. ABOUT THE SOUND HORIZON Dominic Pride: Founder / Managing  Director •Strategic Change  •Innovation Management •Mobile / converged service development •Service Marketing •Partnership Development Some of our Clients:  March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 2

3. ABOUT THE SOUND HORIZON Meets Where Insight Execution Dominic Pride: Founder / Managing  Director •Strategic Change  •Innovation Management •Mobile / converged service development •Service Marketing •Partnership Development Some of our Clients:  March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 2

4. TODAY’S SESSION Making sense of the new digital order for publishers today and tomorrow @thesoundhorizon #EMForum March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 3

5. TODAY’S SESSION Making sense of the new digital order for publishers today and tomorrow 1.Getting to grips with digital reading @thesoundhorizon #EMForum March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 3

6. TODAY’S SESSION Making sense of the new digital order for publishers today and tomorrow 1.Getting to 2. The digital grips with ecosystem digital reading @thesoundhorizon #EMForum March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 3

7. TODAY’S SESSION Making sense of the new digital order for publishers today and tomorrow 1.Getting to 2. The digital 3. Your new grips with ecosystem partners digital reading @thesoundhorizon #EMForum March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 3

8. TODAY’S SESSION Making sense of the new digital order for publishers today and tomorrow 1.Getting to 2. The digital 3. Your new 4. New world grips with ecosystem partners new models digital reading @thesoundhorizon #EMForum March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 3

9. TODAY’S SESSION Making sense of the new digital order for publishers today and tomorrow 1.Getting to 2. The digital 3. Your new 4. New world 5. Your grips with ecosystem partners new models change digital reading agenda @thesoundhorizon #EMForum March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 3

10. 1. INSIGHTS: GETTING TO GRIPS WITH DIGITAL READING

11. READERS ARE TAKING THE TABLETS.. 2010 saw signiﬁcant adoption of standalone e-readers and multifunction tablets with almost 28m (1) units shipped worldwide IDC: IDC: 10.8M  17M  e‐Readers Shipped in 2010 Tablets Shipped in 2010 The enabled base for digital reading is already spreading beyond early adopters (1) Source: IDC Worldwide Quarterly Media Tablet and eReader Tracker. http://ow.ly/3IIqr 25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 5

12. ..AND WILL SOON BE ADDICTED Key analyst revises “conservative” forecast upwards as tablets become “must-have” CE devices • Forester: 1/3 of U.S.  • While 100+ tablets  consumers will own a  prepare for launch in  tablet by 2015 (1) 2011(2) including: • BlackBerry PlayBook Moto XOOM Tablet devices represent a signiﬁcant opportunity for publishers (1)Forrester Blogs http://ow.ly/3JX12 (2)BBC News - CES 2011: Tablets do battle at Las Vegas show http://ow.ly/3IIe9 25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved.  6

13. E-BOOKS: A KEY GROWTH AREA While physical retail contracts, analysts agree on upswing in revenues from digital book sales Global E-Book Revenues 2010-2105 ($Bn) 3.0 R 38% 2.0 G AA $2.80Bn 1.0 $0.97Bn 0 2010 2015 Publishers are already creating new structures to exploit this expansion Source: eBook Buying Is About To Spiral Upward - Forrester Research: http://ow.ly/3IH3T 25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved.  7

14. SO WHY IS THE SKY FALLING? 25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved.  8

15. DIGITAL CHALLENGES LIE AHEAD March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

16. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

17. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services Digital will not offset the decline in retail March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

18. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services Pricing and margin in Digital will not offset the digital environments decline in retail March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

19. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

20. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services DRM Consumer backlash Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

21. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services DRM Consumer backlash Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers Competition for authors’ content from other media. March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

22. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services DRM Consumer backlash Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers Competition for authors’ content from other media. Disintermediation by self- publishing platforms March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

23. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services DRM Consumer backlash Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers Competition for authors’ content from other media. Disintermediation by self- publishing platforms Competition for audience and revenue in “reading” category. March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

24. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services DRM Consumer backlash Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers Competition for authors’ content from other media. VCs and disruptive startups targeting reading Disintermediation by self- publishing platforms Competition for audience and revenue in “reading” category. March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

25. DIGITAL CHALLENGES LIE AHEAD Digital behaviours established by other services DRM Consumer backlash Pricing and margin in Digital will not offset the digital environments decline in retail Growth potential for reading beyond e-readers Competition for authors’ content from other media. VCs and disruptive startups targeting reading Disintermediation by self- publishing platforms Perpetual, accelerating pace of innovation Competition for audience and revenue in “reading” category. March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 9

26. 2. TO THE DIGITAL ECOSYSTEM

27. UNPRECEDENTED CHANGES AHEAD "The next decade of opportunity.. will be about … helping customers create an "intelligent economy" on top of this mobile, virtual, and social technology platform. In 2011 cloud-based solutions, mobile devices and apps, wireless broadband, virtualization and converged infrastructure, social networking, smart devices, and "big data" analytics — move from early-adopter status to the beginnings of mainstream adoption.” “Welcome to the New Mainstream” : IDC Chief Analyst Frank Gens, Source: IDC: Welcome to the New Mainstream: http://ow.ly/3JnLP March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 11

28. FROM PHYSICAL VALUE CHAIN … Actor  Create  Maximise   Manage risk Deliver   Sell book Role work revenues Market book book •WriOng •Finding /  •EdiOng •Storage •Store mgmt •Revising developing /  •PrinOng / Binding •Transport  •Billing •PromoOon placing talent •Product MarkeOng (incl. returns) •Customer  Activity •Release management •Royalty  •Account  service collecOon mgm.t March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 12

29. FROM PHYSICAL VALUE CHAIN … Actor  Create  Maximise   Manage risk Deliver   Sell book Role work revenues Market book book •WriOng •Finding /  •EdiOng •Storage •Store mgmt •Revising developing /  •PrinOng / Binding •Transport  •Billing •PromoOon placing talent •Product MarkeOng (incl. returns) •Customer  Activity •Release management •Royalty  •Account  service collecOon mgm.t March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 12

30. …TO DIGITAL VALUE ECOSYSTEM Authors Auto‐ VCs moOve Content Agents Consumer  Electronics Developers Mobile Networks Consumers App Stores ISPs Social  Brands Networks Agencies Digital Retail Portals AnalyOcs Providers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 13

33. …TO DIGITAL VALUE ECOSYSTEM Authors Auto‐ VCs moOve Revenue Agents Consumer  Electronics Developers Mobile Networks Consumers App Stores ISPs Social  Brands Networks Agencies Digital Retail Portals AnalyOcs Providers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 14

34. …TO DIGITAL VALUE ECOSYSTEM Authors Auto‐ VCs moOve Revenue Agents Consumer  Electronics Developers Mobile Networks Consumers App Stores ISPs Social  Brands Networks Agencies Digital Retail Portals AnalyOcs Providers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 14

35. …TO DIGITAL VALUE ECOSYSTEM Authors Auto‐ VCs moOve Attention / Agents Engagement Consumer  Electronics Developers Mobile Networks Consumers App Stores ISPs Social  Brands Networks Agencies Digital Retail Portals AnalyOcs Providers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 15

36. …TO DIGITAL VALUE ECOSYSTEM Authors Auto‐ VCs moOve Attention / Agents Engagement Consumer  Electronics Developers Mobile Networks Consumers App Stores ISPs Social  Brands Networks Agencies Digital Retail Portals AnalyOcs Providers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 15

37. WHAT IT MEANS FOR YOU March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 16

38. WHAT IT MEANS FOR YOU • You are connected to everything – You are exposed to disruptive innovation March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 16

39. WHAT IT MEANS FOR YOU • You are connected to everything – You are exposed to disruptive innovation • Control will be impossible – Finding niches, collaboration and symbiosis  become important March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 16

40. WHAT IT MEANS FOR YOU • You are connected to everything – You are exposed to disruptive innovation • Control will be impossible – Finding niches, collaboration and symbiosis  become important • You will have diﬀerent models for partners – Each channel has speciﬁc needs and drivers March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 16

41. 3. DIGITAL ECOSYSTEM PARTNERS

42. YOUR NEW ECOSYSTEM PARTNERS What do they need and what can you expect in return ? Digital Retail Consumer Access Agencies Electronics Partners and Brands They •Volume •Differentiation •Acquisition •Inventory •Margin •Brand Loyalty •Retention •Audience need •Support retail •ARPU •Engagement proposition You need •Volume •Distribution •Distribution •Data share •Margin •Placement •Activation •Conversation •Activation •Billing •Feedback March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 18

43. YOUR NEW ECOSYSTEM PARTNERS What do they need and what can you expect in return ? Digital Retail Consumer Access Agencies Electronics Partners and Brands They •Volume •Differentiation •Acquisition •Inventory •Margin •Brand Loyalty •Retention •Audience need •Support retail •ARPU •Engagement proposition You need •Volume •Distribution •Distribution •Data share •Margin •Placement •Activation •Conversation •Activation •Billing •Feedback Your business models and proposiOons will change depending on partner  March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 18

44. e partn ers ar Yo ur new selling are w •hard s s •acce ory •in vent rv ices. e ed se e of T hey n e futur h s W hat’s t ucts in thi d yo ur pro nt? e env ironm 19

45. THE SOUND HORIZON 4. NEW WORLD, NEW MODELS

46. BOOKS TO E-BOOKS: 1.0 to 1.1? “the ebook  [doesn’t] really  have that much  to oﬀer  consumers over  a physical book” [publishers should] turn from the disruptive innovations of ebooks and  ereaders to the creation of sustaining innovations that improve those  technologies.  Ania Wieckowski ‐Harvard Business Review Feb 2010 March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 21

47. Digital content is  not a format or  a replacement  for a physical  product. 22

48. SERVICES NEED MORE THAN CONTENT 23

49. SERVICES NEED MORE THAN CONTENT Content – Media – User‐generated – Metadata 23

50. SERVICES NEED MORE THAN CONTENT Context – Time  – Device / Environment – Location Content – Media – User‐generated – Metadata 23

51. SERVICES NEED MORE THAN CONTENT Community – Bonds with friends – Social capital – Wisdom of crowds Context – Time  – Device / Environment – Location Content – Media – User‐generated – Metadata 23

52. SERVICES NEED MORE THAN CONTENT Community – Bonds with friends – Social capital – Wisdom of crowds Context – Time  – Device / Environment – Location Content – Media – User‐generated – Metadata Three “Cs” are needed to make compelling services and apps 23

53. SOCIAL READING IN ACTION     @Eleanorjb has just  got to the wedding bit, but  she’s reading a paper book.  LOL! 24

54. SOCIAL READING IN ACTION     Should be  revising Bronte but      @Eleanorjb has just  halfway through #Eclipse  got to the wedding bit, but  instead. Just got to the bit  she’s reading a paper book.  where they kiss. hep:// LOL! bit.ly/df 24

55. SOCIAL READING IN ACTION     Should be  revising Bronte but      @Eleanorjb has just  halfway through #Eclipse  got to the wedding bit, but  instead. Just got to the bit  she’s reading a paper book.  where they kiss. hep:// LOL! bit.ly/df •Content •Context •Community •Audience •Awareness 24

56. CLOUD SERVICE – WHY NOT READING? Syndicated • All  my reading in  the cloud • Optimised for all of  Shared my devices and  locations • and therefore  reading styles! • My reading comes  with me when I  change devices • Personal  Investment  rewarded by  recommendations  Tablet Mobile / In-Car Handheld Netbook E-reader March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 25

57. API MODEL: LEARNING FROM TWITTER • 60K+ applications /  services use API • “Firehose” now for  commercial customers • Usage enabled by  open platform, not  service • Why not a books API? March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 26

58. THE SOUND HORIZON 5.YOUR CHANGE AGENDA

59. PHYSICAL AND DIGITAL READING RISK Risk Physical Digital Non Payment Y Y Unsold Inventory Y Bankruptcy Y Y Physical Theh Y Fraud Y Y Data Theh / Breach Y Y Risk and credit management will be crucial as publishers engage new partners  25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved.  28

60. YOUR ROLE IN THIS TRANSFORMATION? • C ‐ Collaborate – Enable and prepare for new partnerships • Control and ownership will not be possible • I ‐ Innovate – Recognise and enable “open” innovation • Manage the associated risks • A ‐ Anticipate – Plan for permanent change • Plan to recognise new generatives 25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 29

61. Innovation will take place with or without you March 19, 2010 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 30

62. THE SOUND HORIZON Thank You! dominic@thesoundhorizon.com www.thesoundhorizon.com slideshare.net/thesoundhorizon @thesoundhorizon #books20 #EMformum Books 2.0 Group

63. COPYRIGHT AND ATTRIBUTION Here’s the small print. Please read before you get upset about anything. 1. Usage and Distribution This presentation is covered by a Creative Commons Attribution‐NoDerivatives CC BY‐ND 3.0 License. You may transmit and distribute this presentation without permission from the  author. You may not  produce a derivative work and you must attribute the author as the source  Full details are viewable at. http://creativecommons.org/licenses/by‐nd/3.0/ 2. Trade Marks The Sound Horizon, the company logo and accompanying straplines are trade marks of Sound Horizon Ltd. Any other trade marks, logos or company names are provided for editorial and illustrative purposes.  No endorsement whatsoever is made or implied by the use of any company  name, logo or other trademarked material. 3.  Third Party Content  Third party content is provided for editorial and reference purposes only.  Where information has been used from third parties, the source has always been clearly indicated, and  where possible a link to the relevant source. Sound Horizon Ltd. asserts no claim to be the author of such work and asserts no title to such information. 4. Liability  Every effort is made to ensure the accuracy of any information provided in this work. Any figures reported from third parties are presented “as is.” However no information contained  in this work should be used as the basis for investment decisions, and Sound Horizon Ltd. acknowledges no responsibility for any investment or business decisions made on the basis  of information contained in this work. 5. Takedown The Sound Horizon will respond promptly to any request to take down content from websites managed by Sound Horizon Ltd, or accounts managed by Sound Horizon Ltd. on third  party sites. An notification or request should me made to webmaster@thesoundhorizon.com   25 January 2011 Dominic Pride. The Sound Horizon 2011. Some Rights Reserved. 32

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