1. eTextbooks Driving the future of education William Chesser Matt Harris

2. Changing Face of the Music Business The music industry is not in the business of producing music, but producing CDs. Are you in the content or textbook business? The business of producing CDs is coming to an end. As the container changes, so do the business models. How will you choose to manage the options you have as your containers change? David Byrne's Survival Strategies for Emerging Artists and Megastars, Wired Magazine, Issue 16.01

3. Content drives the platform decision Music is a social experience by nature. Technology allowed us to capture the social event of music for distribution. Content designed for teaching and learning is most effective in a social environment. How will technologies allow us to fully utilize the true nature of this type of content? Add value

4. What factors are effecting the transition? Music Industry Textbook Industry Recording costs have dropped to zero Manufacturing costs have dropped the sales break even point to almost nothing XML has provided the ability to separate/distinguish content from presentation Proliferation of digital ready sales channels

5. Emerging models: music industry Artist Equity Stake Standard Distribution Deal License Deal Profit-sharing Manufacturing & Distribution Deal Self-distribution Model David Byrne's Survival Strategies for Emerging Artists and Megastars, Wired Magazine, Issue 16.01

6. Student Infrastructure The ECAR Study of Undergraduate Students and Information Technology, Volume 6, 2007, EDUCAUSE Center for Applied Research

7. Key Findings 98.4% of students own computers 73.7% of these are lap tops 64.0% of student entering university own a lap top less than 1 year old 52.4% never bring the lap top to class 25.0% bring lap top to class regularly The ECAR Study of Undergraduate Students and Information Technology, Volume 6, 2007, EDUCAUSE Center for Applied Research

8. 8 Sizing the market 2006-7 US textbooks sales: $6.5 billion Textbook units sold US: 130 million Units sales growth since 2002: flat Per-unit consumer cost growth since 2002: 18% Percentage currently selling as digital: <1% Conversion to digital in 2008: 2%? 3%? Source: NACS, http://nacs.org/public/research/higher_ed_retail.asphttp://nacs.org/public/research/higher_ed_retail.asp 8

9. 9 Key market forces College textbook prices have risen at twice the rate of annual inflation over the last two decades (tuition has risen more) Since December of 1986, textbook prices have nearly tripled Ave. cost of books and supplies per student at 4-year public institutions for academic year 2003-2004 was $898 (more than 25% of the cost of tuition and fees). At 2-year public institutions per student cost for books and supplies was $886 (representing almost 75% of the cost of tuition and fees) Used text sales as percentage of textbook sales: 30-40% Used text sales as a percent of all campus store sales: 20% Source: NACS, http://nacs.org/public/research/higher_ed_retail.asp 9

10. Search Bookmarking Social networks Try-before-buy Online + Download Sharing Emerging e-textbook value proposition Price Printing time Past Present Future P+E (from MHHE) Multimedia

11. Emerging Models: Textbook Industry Direct to consumer –Digital only (whole and partial) –P+E –Publishers site –3rd party Traditional/bookstore channels –Digital only –P+E Institutional –Bulk sales –Institutional wide licensing Integrated into learning system or self-assessment platform

12. Sales Options Product Type License Terms Business Models Channels Whole titlePerpetualB-to-CRetail Individual chapters X days from redemption B-to-B Wholesale Distribution ReferenceExpire on X datePrint + DigitalFulfillment Standard collectionExamination Copies Custom collectionLMS support

13. Retail Sales Product Type License Terms Business Models Channels Whole titlePerpetualB-to-CRetail Individual chapters X days from redemption B-to-B Wholesale Distribution ReferenceExpire on X datePrint + DigitalFulfillment Standard collectionExamination Copies Custom collection

14. LMS Support Product Type License Terms Business Models Channels Whole titlePerpetualB-to-CRetail Individual chapters X days from redemption B-to-B Wholesale Distribution ReferenceExpire on X datePrint + DigitalFulfillment Standard collectionExamination Copies Custom collectionLMS support

15. Special or Institutional Sales Product Type License Terms Business Models Channels Whole titlePerpetualB-to-CRetail Individual chapters X days from redemption B-to-B Wholesale Distribution ReferenceExpire on X datePrint + DigitalFulfillment Standard collectionExamination Copies Custom collectionLMS support

16. 16 Summary slide Textbooks are behind music industry in moving to digital…but not too far Textbooks are moving first and fastest w/i publishing The market is ready: –End users –Stakeholders (faculty and schools) –Channels partners XML is a key (and liberating) component

17. 17 Q & A