Digital Publishing: Building New Revenue Opportunities on Frontlist and Backlist Books The Amazon Ap

1
Digital PublishingBuilding New Revenue
Opportunities on Frontlist and Backlist Books -
The Amazon Approach

• Presented by
• Jeff Steele
• Director
• Digital Media

2
Or

• How to make more money
• for yourselves and your authors
• on the books that you publish

3
Todays Agenda

• About Amazon
• What are Amazons users like?
• Why do they like the Amazon experience?
• How does the virtual bookstore compete
  effectively?
• Amazons Digital Programs
• Search Inside the Book Program
• Amazon Upgrade Program (New!)
• E-Books
• Print on demand
• Amazons Advantage Program
• What does this mean for you as a publisher?

4
About Amazon

• Our vision Be the earths most customer-centric
  company
• More than 59 million active customers accounts
  worldwide
• Orders have been shipped to over 200 countries
• Distribution operations in US, CA, UK, FR, DE and
  China
• On Amazons busiest day, over 3.6 million items
  were ordered (41 per second) worldwide
• Amazons international sites represent 45 of
  total revenues
• Media sales (books, CDs, DVDs) represent the bulk
  of Amazon revenues
• Our interests are aligned with publishers we
  want to sell more books

5
Amazon.com Demographics

• Reach one of the most sought-after online
  customer bases
• Average Income 79.5k
• 92 attended college
• 65 home owners
• 62 employed fulltime
• 59 married

Data Source Amazon.com Internal Survey
2006 Information contained in these materials is
confidential and proprietary to Amazon and shall
not be disclosed without Amazon's prior written
consent.
6
What Do Amazon Customers Value?
Absolute Importance
Amazon continually innovates to ensure that our
customers have the best shopping experience
possible
7
Customer Experience

• Every page is customized for the individual
  viewing it (except for first time visitors and/or
  those that do not allow cookies)
• Akin to changing your in-store promotions every
  time a new customer walks in the door
• Simple navigation throughout the store categories
  or through the site overall
• Ample opportunity to view lists (Amazon Top
  Sellers, New York Times Top Sellers, Oprahs Book
  Club) or to search out your particular item of
  interest
• Know what you want go straight to it
• The bookstore approach vs. the Amazon approach

8
Search Inside! Program

• An interactive and free way for publishers to
  merchandise titles on Amazon.com by allowing
  customers to digitally sample book pages at the
  point of sale
• Customers can browse sample pages and conduct
  targeted searches leading to more informed
  purchasing decisions
• Books in the program experience incremental sales
  lift
• Launched in the US in October 2003, 1 out of
  every 2 books sold on Amazon.com is in the Search
  Inside! Program
• Expanded recently to the UK, Germany, France,
  Japan and Canada
• Search Inside! is a program proven to help
  publishers and authors like you sell more books

9
What you as a publisher should know about Search
Inside!

• Amazon works closely with publishers to obtain
  the right to put titles into Search Inside!
• Our interests are fully aligned we are all
  about selling more books!
• Amazon does not scan books unless we have been
  given the explicit rights to do so by the rights
  holder
• Thousands of publishers around the world have
  signed Search Inside! contracts and have
  submitted books to the program
• Books are added to Search Inside! only for
  country specific sites that you have approved
• Search Inside! provides more relevant and
  frequent results than searching only the metadata
  of a book
• Search Inside! allows Amazon customers the same
  point-of-sale sampling as is possible in a
  physical books store (aka browsing)

10
How does Search Inside! work.
Statistically Improbable Phrases and Capitalized
Phrases
First Sentence
Citations
Customers who click into the books sample pages
are 2X more likely to purchase the book.
11
Amazon Upgrade
An exciting new program that allows customers to
upgrade their purchase of a physical book on
Amazon.com to include online access to the
digital book

• Enables customers to read, search and annotate
  books online. They can
• Read the book online while waiting for the
  physical copy to arrive
• Add highlights, bookmarks, notes and tags to any
  page or section of text
• Print pages, as well as copy and paste text from
  the book (within limits)
• Access your books from any Internet-connected
  computer
• Offers customers flexibility in how they read and
  interact with their books
• Introduces a new incremental revenue stream for
  publishers and authors from books that have just
  been purchased to books that were bought years
  ago
• Based on Amazons Search Inside! technology
• Now available in the United States, soon in
  Amazons EU countries

12
What you as a publisher should know about Amazon
Upgrade

• Amazon Upgrade is based on Amazons Search
  Inside! technology
• Amazon Upgrade introduces a new way to generate
  incremental revenues for publishers and authors
  on just purchased books as well as on titles
  bought by customers years ago
• Amazon will work closely with publishers to
  obtain the right to put their books into the
  Amazon Upgrade program
• Amazon.com will pay publishers a of the list
  price for titles included in the program
• Publishers are paid 5 or 10 of the list price
  of the least-expensive print edition
• No cost to participate utilizes Search Inside!
  content

13
Amazon Upgrade Key metrics

• Of new book purchases, 4.33 of customers
  presented with the option to Upgrade a title, do
  so (average conversion rate)
• Rates vary by category
• 80 of Upgrade purchases are attached to the
  sale of a new physical book purchase
• New Upgrade purchased within 24 hours of the
  physical book purchase
• Previous Upgrade purchased more than 24 hours
  after the physical book purchase

14
Amazon Upgrade Conversion by Category
15
Amazon Upgrade Top Selling Titles

• Crucial Conversations Tools for Talking When
  Stakes are High (McGraw-Hill)
• Get More Referrals Now! (McGraw-Hill)
• The Pre-Foreclosure Property Investor's Kit How
  to Make Money Buying Distressed Real Estate
  Before the Public Auction (Wiley)
• Iraqi Phrasebook The Complete Language Guide for
  Contemporary Iraq (McGraw-Hill)
• Crucial Confrontations (McGraw-Hill)
• The Lean Six Sigma Pocket Toolbook A Quick
  Reference Guide to 100 Tools for Improving
  Quality and Speed (McGraw-Hill)
• SPIN Selling (McGraw-Hill)
• Hope is Not a Strategy The 6 Keys to Winning the
  Complex Sale McGraw-Hill)
• The No-Cry Sleep Solution Gentle Ways to Help
  Your Baby Sleep Through the Night (McGraw-Hill)
• Super Service Seven Keys to Delivering Great
  Customer Service...Even When You Don't Feel Like
  It!...Even When They Don't Deserve It!
  (McGraw-Hill)
• 10/17/06

Sales
Foreign Language
Parenting Family
Top-selling Upgrade titles vary by category, from
sales, to foreign language, to parenting
16
Amazon Upgrade Conversion by Price Tier

• Higher conversion rates result when the price of
  the Upgrade to customers is 10 of the books
  list price as opposed to 20 of the books list
  price

17
Amazon Upgrade Lower Price points drive
conversion
18
Other Digital Text Initiatives

• eBooks
• Amazon acquired Mobipocket in April 2005
• Technology based on the open eBook format (OEBF)
• Continued development of DRM applications that
  span the range of operating systems and mobile
  devices to allow great accessibility for eBooks
• Compatible with 20 mobile device platforms
  including all versions of Palm, Windows Mobile,
  Symbian, and Blackberry
• Widely recognized as a proven system to protect
  your digital assets
• Mobipocket has been embraced by all eBook
  stakeholders
• 1M consumers have downloaded the MobiPocket
  Reader
• 200 publishers currently produce MobiPocket
  eBooks
• 20 retailers and distributors currently sell
  MobiPocket eBooks
• Amazon is working with the publishing community
  to increase the number of titles available in
  Mobi eBook format

Amazon is committed to making the worlds books
instantly accessible anywhere, anytime.
19
Mobipocket Store
20
What is Amazon Advantage?

• Consignment program that allows independent
  content providers to list and sell their products
  on Amazon right alongside products that have
  massive marketing and distribution.
• Advantage can establish or complement a direct
  relationship
• 10s of thousands of Vendors, 100s of thousands
  of titles
• Online Self-Service Account Management
• Requirements
• North American distribution rights
• Valid ISBN/UPC/EAN Scannable barcodes
• Internet/email access

21
Amazon Advantage Benefits

• Amazon stores your inventory in our Fulfillment
  Centers on consignment
• Enroll any books, CD, DVD/Video, including
  backlist and not yet published titles
• Detail pages perform identically to owned
  inventory
• You control content like product information,
  reviews, cover art, etc.
• Items show in-stock and available to ship
  immediately
• Amazon.com provides fulfillment and customer
  service
• Low inventory commitment and limited returns
• Eligible for Search Inside, auto-merchandising,
  customer incentives, discounted Co-Op, and more
• Regular, accurate, invoice-free payments

22
Takeaways

• Discovery is key to purchase
• Flexibility is key to success
• People consume differently and presenting your
  content in a variety of formats yields a higher
  likelihood of purchase
• Presentation format
• Delivery opportunities
• Technology advances rapidly
• What was unthinkable (and failed) years ago is
  now very much a reality
• Your content is safe and secure
• People buy from brands they know and trust
• Amazon is well placed to be your partner in the
  digital publishing world