DEVELOPED BY DIGITAL BOOK WORLD & PUBLISHERS LAUNCH CONFERENCES Publishing Start-Up Survey SUMMARY RESULTS PRESENTED BY MIKE SHATZKIN FOUNDER & CEO, THE IDEA LOGICAL COMPANY TUESDAY, JANUARY 14, 2014

Publishing Start-Up Survey Respondents

43 publishing start-ups  From 8 countries  Including 10 start-up publishers  Diverse range of types and sizes 25 traditional book publishers  From 8 countries  Staff tasked with meeting with and evaluating start-up propositions

Respondents include self-funded and bootstrapped operations through to three rounds of investment totaling near $8m Total full-time employees range from 1 to 150 Started as early as 2002 and several slated to launch in 2014 Average age of over 2 years old First, the start-ups…

Geographic distribution of start-ups Respondents came primarily from the US, but also from the UK, Germany, Canada, South Africa, Israel, Russia, and Japan

Causing disruption 74% of start-ups surveyed consider themselves “disruptive” to one or more of the players in the traditional book publishing value chain:

Greatest challenges start-ups face “We've been doing this a while. We've done more than people know. To get anywhere you have to execute ferociously to drive revenue. It's a tremendous amount of work. That often gets overlooked – it's a lot of work.” “It’s a lot of work.”

Greatest challenges start-ups face Working within slow publishing sales/business development cycles and often reluctant publishers Managing pivots Marketing (B2B and B2C)  Building user base/audience (of both authors and readers)  Generating (and maintaining) interest and engagement among readers, authors, and publishers Handling DRM Funding/operating capital For start-up and e-first/e-only publishing houses:  Building clout with traditional publishing partners (e.g. bookstores, media)  Developing robust sales and distribution capabilities  Understanding the digital marketing and advertising landscape

Now, the publishers… No. of titles published per year

Geographic distribution of publishers Respondents also primarily from the US (over 50%), but also from Canada, Italy, the UK, Germany, South Africa, Portugal, and Australia

Who meets and evaluates start-ups? Role/title of the person(s) tasked with evaluating start-up propositions: (select all that apply)

Biggest technology problems publishers face Data  Getting useful data, analytics, and metrics  Internal data management (incoming and outgoing) Digital asset management  Creating and managing metadata  Marketing assets Shifting to an XML workflow Digital marketing, promotion, and discovery Staffing for a digital workflow  Lack of personnel  Need for new skillsets and training  Sometimes lack of interest Managing and updating internal systems and technology

What these publishers would be investing in… Marketing and discovery Metadata App development Workflow/collaboration technologies Anything that weakens Amazon’s hold…

What are the problems the industry faces today? Who are the key stakeholders for whom each of those problems are a pain point? For what types of content and for which markets do these problems (and their hoped for solutions) apply? Finding common ground (and points of contention)

Problems/pain points Start-ups: What problem(s) are you trying to solve? Publishers: What problem(s) would you like start-ups to tackle?

Problems for whom? START-UPSPUBLISHERS Accessibility Authors (54%) Readers (43%) Publishers (26%) Readers (56%) Libraries (44%) Publishers & Retailers (26%) Audience engagement Authors (54%) Readers (46%) Publishers (43%) Publishers (63%) Authors (57%) Libraries(31%) Content/Editorial Authors (54%) Readers (37%) Publishers (37%) Publishers (38%) Authors (19%) Retailers & Agents (13%) Data/Insight/Intelligence Publishers (66%) Authors (57%), Agents (29%) Readers (26%) Publishers (94%) Retailers (38%), Libraries (31%) Aggregators (31%) Discovery/DiscoverabilityAuthors (63%) Readers (57%) Publishers (51%) Publishers (69%) Readers (50%) Authors (44%)

Problems for whom? START-UPSPUBLISHERS Enabling social interaction Authors (51%) Readers (49%) Publishers (31%) Publishers (50%) Authors (38%) Readers (31%) Improving workflow Authors (49%) Publishers (37%) Agents (26%) Publishers (81%) Retailers(25%) Aggregators (25%) Marketing Authors (77%) Publishers (43%) Agents (31%) Readers (26%) Publishers (75%) Retailers (44%) Authors (38%) Aggregators (25%) Simplifying/enabling transactions Publishers (46%) Authors (40%) Readers (34%) Retailers (44%) Publishers (38%) Readers & Aggregators (19%) Simplifying technologyPublishers (51%) Authors (51%) Readers (34%) Publishers (50%) Readers & Retailers (38%) Aggregators (25%)

To Publishers:

Content/markets Start-ups: At what types of content/markets are your services aimed? Publishers: What content/markets do you publish/serve?

Start-ups working with publishers What cooperation do you need from established publishing players? (select all that apply)

Publishers evaluating start-ups

Some start-ups publishers are glad they made time for….

Advice from start-ups Find ways to better serve and support authors Go D2C: Cultivate direct relationships with readers Establish new ebook sales terms/models for special use cases (e.g. classrooms) Think mobile Develop long-tail SEO, discoverability, and digital marketing strategies Rethink DRM

Some predictions “Fiction and non-fiction are diverging as they go digital, and while the focus has mostly been on fiction up till now, things are about to warm up for non-fiction.” “Publishers will use start ups for: hiring base for engineering talent and out placement source of employment for departing executives. “