Giovanni Bonfanti and Marco Ferrario offer a scenario of the eBook market (World, Europe and Italy).

1. Reading Digital: Where Are We? Where Are We Going?
Do Readers Dream of Electronic Books?
e-book market
Milan, March 2013
Giovanni Bonfanti (A.T. Kearney), Edoardo Bottai (A.T. Kearney), Marco Ferrario (BookRepublic)

2. Preface
Objective
■ Provide an overview of digital publishing in Europe, Asia, South America and
North America, highlighting the primary differences and emerging trends
Approach
■We surveyed countries that cover 80% of the global book market
■All numbers presented for 2013 derive from:
• 40 interviews with key players (publishers, retailers…) from major markets1
• Analysis of public data from public sources / press search
■This is an ongoing research project that debuted at IfBookThen 2011 and was
presented in Frankfurt, London and New York
All the analysis presented in these pages are a summary of a larger research
that was developed as a joint effort of A.T. Kearney and Bookrepublic
1. EU: UK, France, Spain, Germany, Italy, Denmark, Sweden, Norway, Netherlands; North America: US, Canada; South America: Brazil, Mexico, Argentina;
Asia: Japan, India, China, Australia, South Korea A.T. Kearney 2

3. eBook market size is ~€3.5 Bn – Europe is second largest
region, driven by UK impressive growth
eBook Trade Market Size Regional eBook Market
Share by Country
(mln€; 2011; 2012E)
+32%
• U.S.: 95%
2500 • Canada: 5%
2011
2012 • UK: 64%
• Germany: 22%
1900 • France: 4%
• South Korea: 32%
• Italy: 3%
• Japan: 32%
• Spain: 3%
• China: 23%
• Other: ~4%
• India: 9%
• Other: ~4%
+200%
• Brazil: 40% - 50% +69%
540
440
260
180
1 5
North America South America Asia Europe
eBook
penetration 23-24% <0.1% 3.6%-3.9% 3.4%-3.6%
Source: interview with a panel of publishers / bookretailers, press search, EUROSTA, PWC, U.S. Bureau, AAP, A.T. Kearney / Bookrepublic analysis A.T. Kearney 3

4. Key market figures by country in 2012 - value
14.0%
eBook Market Penetration
(%; 2012E, value)
3.5%
UK
1.2%
2.8%
Germany
23.9% France
1.5% Japan
1.5%
2.6%
Spain
Italy
U.S. China
<1%
India 1.7%
E-book penetration <1%
on total book market
Selection of countries Brazil Australia
analyzed
2012 USA Brazil Australia Japan China India UK Germany France Italy Spain
Availability of titles 2,000,000
(100.000 self 11,000 600,000 70,000 300,000 n.a. 1,750,000 120,000 100,000 25,000 28,000
in local language published)
Tablet Penetration 60 - 3.8 5.0 12 5.9 3.2 5.4 2.7 1.6
(mln; %) 25% <0.5% 16.8% 4.0% 0.9% <1% 9.5% 3.9% 8.7% 4.5% 3.4%
eReader 48 1.0 9.0 3.8 1.5 0.45 0.4 0.9
penetration n.a. n.a
20% 0.8% 0.7% n.a 4.9% 1.8% 0.7% 0.6% 1.9%
(mln; %)
eBook buyer
58 15 4 8 n.a 25 10 8 2 n.a. 4
(mln)
Source: interview with a panel of publishers / bookretailers, press search, EUROSTA, PWC, U.S. Bureau, AAP, A.T. Kearney / Bookrepublic analysis., Bowker, Harris Interactive Kearney
A.T. Poll, Pew 4
Internet

5. Key market figures by country in 2012 - volume
eBook Market Penetration (trade)
(%; 2012E, volume) 20.0%
1.0%
Sweden 4.9%
34,0% UK
1.7% 5,5%
Germany
France
2.5% Japan
2.5%
U.S.
Spain
Italy
Xx%
E-book penetration
(volume)
Selection of countries
analyzed
2012 USA Japan Sweden UK Germany France Italy Spain
Trade 34% 5.5% 1.0% 20% 4.9% 1.7% 2.5% 2.1%
Self Publishing 2% <0.1% <0.1% n.a <0.1% n.a <0.1% <0.1%
A.T. Kearney 5
Source: interview with a panel of publishers / bookretailers, press search, EUROSTA, PWC, U.S. Bureau, AAP, A.T. Kearney / Bookrepublic analysis., Harris Interactive Poll, Pew Internet

6. So far, the main European markets’ growth has outpaced
forecasted ones…
Expected penetration of eBooks after 5 years from adoption This year Forecast
(% of trade book sales) Last year Forecast
22% 20.4% 20%
20% 18%
18% 16%
16% 14.0% 14% +0.8
14%
12% p.p.
12% +4.0
10% 8.1%
10% p.p.
8%
8% 10.0%
6% 6%
3.5%
Penetration
Penetration
4% 4%
2% 2%
0% 2.7%
0%
20%
1 2 2011
3 2012
4 5
20%
2011 2012
18% 18%
16% 16%
14% 14%
12% +0.5 12% +0.9
10% p.p. 10%
p.p.
8% 7.2%
6.0% 8%
6% 6%
4% 4%
1.5% 1.5%
2% 2%
0% 0%
1.0% 0.6%
3 3
2011 2012 2011 2012 A.T. Kearney 6

7. …and in volume terms the relevance of ebook will be even
higher in the coming years
Expected penetration of eBooks volume
(% of trade book sales) Comments
59%
US
• In 2014, U.S. market will
60%
experienced the overtake of
53% the digital quantities: books
50%
will sold more digital than
46% paper
UK
40% • UK market will continue to be
36% 41% the “best proxy” of the U.S.
market, and the countries to
35%
30% be analyzed to capture “what’s
20% next” in the European market
29%
20%
20%
Average main
13% European • In 2015, In Europe, 1 book out
countries of 5 will be digital
10% 8% • Germany
• France
4% • Italy
• Spain
0% • Sweden
2012 2013 2014 2015
Source: interview with a panel of European publishers, press research; A.T. Kearney / BookRepublic analysis A.T. Kearney 7

8. European average price has declined over the last three years,
this in fact will erode margins in the future
European Average Price
(€ - average from interviews with publishers / book retailers )
10 – 12 € Price drivers
12
• Drivers that could raise the price:
– Consumer perception:
10 - Price of “correspondent” print book
– Law:
- Fixed price law
8
7-8€ - Commissionaire Model adoption
6
6-7€ • Drivers that could push down the
price:
– Consumer perception
4 - Special deals (i.e. Amazon)
- Price of other “mobile
2
entertainments” (apps, MP3…)
- Self publishing
- Revenue model (subscription
0
0,2-1€ model; pay per read…)
2010 2012 – Law:
- VAT reduction
- Retail model adoption
A.T. Kearney 8

9. The challenge is to look beyond the trade ebook market
Where we are… …New areas to be explored
Paid ebook
Collaborate with other media players to
maximize return of investments in
• Growing in quantities but eroding technology and better seize content
margins
• Should be seen as a stepping stone
to opening up new opportunities
Address and seize the power of a larger
• …is not just content customer base: readers are in fact much
more than only trade (self publishing, free
and piracy)
Enhance content and service leveraging
on new technologies and opportunities
driven by data
How to capture opportunities from these new areas?
Source: A.T. Kearney / BookRepublic A.T. Kearney 9

10. To catch these business opportunities publishing players should
be able to “play” with three pillars of digital
Publishing is going to be…
• Enable further readers’ engagement
• Evolve the reading experience in a social experience
Technology
• Enable multi-level reading paths
• Enable new ways to get the content
• Become “retailers“: know and profile your own customer
• Track market reactions in real time
Data
• Treat literature and stories as big-data
• Measure any kind of interaction between content and user
Content • “Publish stuff that matters” (Tim O'Reilly)
A.T. Kearney 10

11. A.T. Kearney is a global team of forward-thinking, collaborative partners that delivers immediate, meaningful
results and long-term transformative advantage to clients.
Since 1926, we have been trusted advisors on CEO-agenda issues to the world’s leading organizations across
all major industries and sectors. A.T. Kearney’s offices are located in major business centers in 38 countries.
Americas Atlanta Chicago Detroit Mexico City San Francisco Toronto
Calgary Dallas Houston New York São Paolo Washington, D.C.
Asia Pacific Bangkok Hong Kong Kuala Lumpur Mumbai Seoul Singapore Tokyo
Beijing Jakarta Melbourne New Delhi Shanghai Sydney
Europe Amsterdam Budapest Helsinki Ljubljana Moscow Prague Vienna
Berlin Copenhagen Istanbul London Munich Rome Warsaw
Brussels Düsseldorf Kiev Madrid Oslo Stockholm Zurich
Bucharest Frankfurt Lisbon Milan Paris Stuttgart
Middle East Abu Dhabi Johannesburg Riyadh
and Africa Dubai Manama
A.T. Kearney 11

12. Bookrepublic is a leading Italian player within IFBOOKTHEN is an international network of
the digital publishing industry with an local events taking place in Milan, Stockholm,
integrated system including: Madrid and Barcelona, providing trends and
top highlights about the digital publishing
The first Italian Independent ebookstore with
business.
a growing customer base who appreciates high
quality editorial contents. The ongoing  The local formats grant the upcome of
interaction with the reader and the creation of a specific issues related to any single market; the
partecipatory meeting place for readers, discussion inside the network allows a great
publishers, booksellers and authors enhanced by exchange of different experiences.
original reading paths, contribute to his
distinctive positioning in the Italian market.
An advanced ebook distribution platform for
small and medium sized publishing houses with
the most advanced online tools and services.
Our positioning: Visit us:
http://www.bookrepublic.it
Original https://exlibris.bookrepublic.it/
Contents
http://www.ifbookthen.com
Ongoing
Unique
Interaction
Care for
with
Partners
Readers
A.T. Kearney 12

13. Contacts
Giovanni Bonfanti Marco Ferrario
Principal CEO / Cofounder
A.T. Kearney Bookrepublic
giovanni.bonfanti@atkearney.com marco.ferrario@digitpub.it
+39 02 76295 225 +39 335 604 6861
Edoardo Bottai Marco Ghezzi
Manager COO / Cofounder
A.T. Kearney Bookrepublic
edoardo.bottai@atkearney.com marcog@bookrepublic.it
+39 02 76295 476 +39 348 22 44 836
A.T. Kearney 13