Subscription Services in the Context of Market Trends, presented by Jonathan Stolper, SVP Nielsen Book Americas, at Making Information Pay 2014, a track of IDPF's Digital Book 2014 at Book Expo America, on May 29, 2014

Subscription Services in the
Context of Market Trends
Q1 2014
Jonathan Stolper
May 2014

Copyright©2012TheNielsenCompany.Confidentialandproprietary.
2
Latest Nielsen Research:
• Streaming Music Subscription Services
• Streaming TV and Movies Subscription Services
• Book Subscription Services
.
Book Subscription Services Agenda

3
STREAMING MUSIC SUBSCRIPTION SERVICES
How have subscription services faired in other entertainment sectors?

4
Methodology/Data Sources
Data on Music Subscriptions:
Derived from NetView panel to analyze streaming behavior
• A representative panel of 220,000 US Internet users
• tracks consumer usage across all web sites and apps at work at home
and work
• Delivers high-quality audience data and analytics that are based on
observed behaviours at an individual user level (age 2+)

5
Total Music Streams
Nielsen Entertainment– BDS Streaming Data Q1-’12 – Q3-’13
Longitudinal, non-video provider data: Cricket, MediaNet, Rdio, Rhapsody, Slacker,
Spotify
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013
Total Streams: Overall Growth
MM Streams

6
Streaming Accounts for a Fifth of US Music Revenues
% of music revenues coming from streaming services

7
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Access To Sites and Services With Pirated Content Is
Decreasing…
Based on all who have accessed an illegal site or service
Source: Nielsen US NetView Panel Home and Work – Sept ‘11 – Oct ‘13
US internet users access sites
and services with illegitimate
content (10%)
22m
Users (,000’s) Reach
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Visitation to Pirate Sites and Services - Audience Size

8
Who Are Music Streamers?
Key Findings
• Younger adults (18-34) are more likely to be streamers and also
stream the most
• Heavy streamers lean slightly male, moderate streamers slightly
female
• Music streaming has not spread to the less tech-savvy
• Streamers are less likely to pirate content
• African Americans and Hispanics are more likely than the average
internet user to stream music

9
STREAMING TV & MOVIE SUBSCRIPTION
SERVICES
How have subscription services faired in other entertainment sectors?

10
Methodology/Data Sources
Data on Movie/TV Subscriptions:
• Nielsen Total Home Entertainment Panel; Full Year 2013
• 3,000 households active per quarter
• Record all Movie and TV transactions across all retailers, devices, and
platforms
• A longitudinal view, tracking panelists behavior over time

11
Streaming TV & Movies Subscription Services Are On the Rise
Especially in last 9-Months
19.9% 19.3%
18.2%
19.2%
21.2%
18.7%
22.7%
25.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
HH Penetration

12
Streaming Is Primarily Used for Television
Types of Content: %ofStreams %ofSubscription
Streams
Television 81.0% 80.3%
Movies 19.0% 19.7%
Action/Adventure 4.8% 5.4%
Comedy 2.4% 2.6%
Drama 3.5% 4.2%
Family 3.0% 3.0%
SciFi 1.0% 1.0%
Horror 1.9% 1.3%
Source: Nielsen Total Home Entertainment Panel; Full Year 2013

13Nielsen Total Market Panel: 2012:Q2-2013:Q2. Transactional Movie Spend By SVOD vs. Non-SVOD Households
$0
$5
$10
$15
$20
$25
$30
$35
$40
SVOD HHs NON SVOD HHs
Avg Quarterly SpendQuarterlyHHSpend
Streamers Spend Less on Transactional Content

14
Nielsen Total Market Panel: 2012:Q2-2013:Q2. Transactional Movie Spend for sVOD Adopting HHs.
Included: Longitudinal sVOD adopters with at least 2 months in the panel prior both pre and post adoption.
$16.44
$8.46
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
Before After
AVG/HH Spend sVOD Adopters
n=749
MonthlyHHSpend
Netflix
Hulu+
Amazon Prime
Redbox Instant
But Make Up For It In Subscription Costs

15
How Might All Of This Impact
Book Subscriptions….
• Don’t expect rapid take-off….growth is incremental
• Early adopters are more likely to be…
• Young
• Male
• Tech-savvy
• A reduction in illegal behaviors
• First to adopt tend to be heavier buyers…

16
BOOK SUBSCRIPTION SERVICES
So how are book subscription services playing out in the book industry?

17
Books & Consumers Methodology
US & UK consumer market tracker studies providing demographic and psychographic information on
today’s book buyer:
 6,000 book buyers per month in US drawn from a national representative sample
• 75 questions about book and ebook purchasing
• ~72,000 book consumers annually
• ~200,000 book purchases annually
Deliverables:
 Annual Reviews
 Industry Standard Quarterly Reports
 Genre Landscapes – quarterly
 GenreProfiles – annual
 Adhoc analysis
 Return to sample
 Syndicated Deep-Dives e.g. Children’s, Ebook Consumers, Travel
Developments:
 B&C lite and dashboard solution
 Retailers, AGFA, device manufacturers
 Segmentation and clustering studies
 Forecasting

18
Books & Consumers Coverage
Book buyers Books bought
What?
Where?
When?
Demographics
Media usage
Leisure habits
Why?
Who for?
Book spend
Sex, age, region, socio-economic, family
Newspapers, magazines, devices, social media
Online, offline, cultural
Publisher, format, genre,
author, price, discounting
Channel, retailer
Month, quarter, YTD
Discovery, influences, use
Sex & age, relationship,
occasion
Reading attitudes

19
Book Buyer Activities in Q1 2014
0% 10% 20% 30% 40% 50% 60% 70%
None of the above
Took out a subscription to read ebooks where you pay a monthly fee
to download a number of books (e,.g, via Safari Online, Oyster, etc.)
Read a book in serialized form
Went to an e-bookstore and e-reading platform that lets you pay only
for what you read
Subscribed to AmazonPrime and downloaded a Kindle book to
borrow for free each month from the Kindle Owners' Lending Library
Subscribed to AmazonPrime and downloaded streaming content of
movies and/or TV shows with Prime Instant Video
Downloaded a book related 'app' to a device such as a smartphone,
tablet, or ereader either free or paid for separately
Went on vacation to a destination significantly far from your home
(personal, not business)
Visited a public library either in-person or online
Purchased one or more books (any type, such as, hard cover,
paperback, audio, e-book, etc.)
Cooked using recipies
4%
9%
17%
17%
16%
23%
33%
40%
56%
68%
68%
Nielsen Books & Consumers Monthly Survey
Respondent Level Summary (Book Buyers ~6,000 per month)

20
Most Popular Subscription Services (of the 9%)
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other, please specify
24Symbols
Entitle (formerly eReatah)
SkillSoft (Harper Collins)
Scribd
Direct from another publisher
Harlequin
Oyster
Safari Online
AmazonPrime
4%
17%
19%
22%
23%
23%
23%
27%
34%
79%
Q1 2014

21
Book Buyer Activities in Q1 2014
0% 10% 20% 30% 40% 50% 60% 70%
None of the above
Read a book in serialized form
for what you read
Went on vacation to a destination significantly far from your home
(personal, not business)
Cooked using recipies
4%
5%
17%
17%
16%
23%
33%
40%
56%
68%
68%

22
How Do Subscribers Compare (Gender)?
0% 20% 40% 60% 80% 100%
Purchased one or more books (any format.)
for what you read
46.4%
48.7%
52.6%
53.7%
55.7%
56.4%
60.8%
53.6%
51.3%
47.4%
46.3%
44.3%
43.6%
39.2%
Male Female

23
How Do Subscription Services Compare?
0% 20% 40% 60% 80% 100%
Scribd
Safari
Online
Oyster
AmazonP
rime
61.1%
62.1%
60.4%
60.6%
38.9%
37.9%
39.6%
39.4%
Male Female

24
How Do Subscribers Compare (Age)?
0% 20% 40% 60% 80% 100%
Downloaded a book related 'app' to a device such as a
smartphone, tablet, or ereader either free or paid for separately
Subscribed to AmazonPrime and downloaded streaming content
of movies and/or TV shows with Prime Instant Video
Went to an e-bookstore and e-reading platform that lets you
pay only for what you read
borrow for free each month from the Kindle Owners' Lending
Library
Took out a subscription to read ebooks where you pay a
monthly fee to download a number of books (e,.g, via Safari
Online, Oyster, etc.)
27.3%
28.1%
36.4%
36.5%
36.8%
37.4%
40.5%
27.5%
28.4%
32.5%
34.9%
35.0%
36.8%
40.0%
13-17 Yrs 18-29 Yrs 30-44 Yrs 45-54 Yrs 55-64 Yrs 65+ Yrs

25
How do Subscription Services Compare?
0% 20% 40% 60% 80% 100%
Scribd
Safari Online
Oyster
AmazonPrime
7.6%
11.2%
9.4%
8.3%
39.7%
41.8%
42.5%
40.8%
49.6%
42.2%
46.2%
42.9%
3.1%
3.0%
1.9%
4.1%
0.0%
1.3%
0.0%
2.5%
0.0%
0.4%
0.0%
1.4%
13-17 Yrs 18-29 Yrs 30-44 Yrs 45-54 Yrs 55-64 Yrs 65+ Yrs

26
How do Subscribers Compare (Income)?
0%
20%
40%
60%
80%
100%
Visited a
public library
either in-
person or
online
Purchased one
or more books
(any type,
such as, hard
cover,
paperback,
audio, e-book,
etc.)
Downloaded a
book related
'app' to a
device such as
a smartphone,
tablet, or
ereader either
free or paid
for separately
Took out a
subscription
to read
ebooks where
you pay a
monthly fee to
download a
number of
books (e,.g,
via Safari
Online,
Oyster, etc.)
Subscribed to
AmazonPrime
and
downloaded
streaming
content of
movies and/or
TV shows with
Prime Instant
Video
Subscribed to
AmazonPrime
and
downloaded a
Kindle book to
borrow for
free each
month from
the Kindle
Owners'
Lending
Library
Went to an e-
bookstore and
e-reading
platform that
lets you pay
only for what
you read
13.4% 14.0% 15.1%
20.4%
17.0% 17.7% 17.9%
9.5% 10.0% 10.8%
13.4% 12.6% 12.6% 11.6%
4.4% 5.0% 5.9% 7.4% 6.3% 7.1% 6.0%
$150,000 and over
$100,000-$149,999
$75,000-$99,999
$50,000-$74,999
$35,000-$49,999
$25,000-$34,999
$15,000-$24,999
Under $15,000

27
How do Subscription Services Compare?
0%
20%
40%
60%
80%
100%
AmazonPrime Oyster Safari Online Scribd
5.5% 4.7% 6.5% 7.6%
4.8% 3.8% 2.6%
5.3%
9.9%
7.5% 8.6% 3.8%
13.1%
11.3%
14.7%
10.7%
24.0%
25.5%
26.3%
21.4%
21.2%
17.9%
17.7%
24.4%
14.7%
18.9%
15.1%
17.6%
6.7%
10.4% 8.6% 9.1% $150,000 and over
$100,000-$149,000
$75,000-$99,999
$50,000-$74,999
$35,000-$49,999
$25,000-$34,999
$15,000-$24,999
Under $15,000

28
Subscribers Continue to Shop for Books in Other Outlets
$60.80
$105.80
$10.00
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
Non-Subscribers Subscribers
Monthly Fee
Book Transactions
4.9 books
7.7 books

29
Subscribers Are More Likely to Plan Book Acquisition
51%
36%
22%
23%
12%
17%
15%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No
Not Planned, Impulse purchase
Planned a book at that specific
time, but not specific bk
Planned this specific book, but
not at that specific time
Planned this specific book at
that specific time

30
Book Subscribers Are More Likely to Have Also
Pirated Books in the Last 6-months
20%
17%
15%
14%
7%
5%
2%
3%
0%
5%
10%
15%
20%
25%
Obtain from a friend via IM e-
mail or flash drive
Download from a public/open
torrent site like The Pirate Bay
or another torrent site or
service.
Download from a public/open
cyberlocker such as RapidShare
or Megaupload
Obtain from a friend via a closed
internal network like Dropbox or
cloud systems
Yes
No

31
In Summary
• Book subscription people are higher book buyers than the norm.
• Mostly Men
• Younger
• Wealthier
• Their book purchases are less “impulsive” than the norm
• They continue to maintain other book purchase habits
• Are more likely to have pirated books in the past – need further study to see
if subscription service have decreased their pirated activities

32
Ideas For Further Study…
• Adoption, Loyalty, Substitution
• Content, Selection
• Attracting a Wider Audience

Subscription Services in the Context of Market Trends, presented by Jonathan Stolper, SVP Nielsen Book Americas, at Making Information Pay 2014, a track of IDPF's Digital Book 2014 at Book Expo America, on May 29, 2014

Subscription Services in the Context of Market Trends, presented by Jonathan Stolper, SVP Nielsen Book Americas, at Making Information Pay 2014, a track of IDPF's Digital Book 2014 at Book Expo America, on May 29, 2014

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