WARNING!

VIEWER DISCRETION ADVISED

THIS INFORMATION MAY BE DEPRESSING

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 Book Publishing ‘09
“The Recession”

By Martin P. Levin, Esq.

Cowan, Liebowitz & Latman, P.C.
1133 Avenue of the Americas, New York, NY  10036
 (212) 790­9200
cll.com

CLL Not  for reproduction without permission
 Book Industry Annual Growth
2005-2008(E)
Million$

$37,085

$36,344 (E)

$35,686

$34,629

+3.2% +3.9% +3.3% -2.4%

2005 2006 2007 2008 (E)

CLL Source: 2005-2007 Book Industry Trend 2007

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2008 Estimate using sample of 81 publishers-AAP
 Book Industry Sales by Segment
2007-2008 (millions)
Category 2008 2007 % change
Adult hardcover 1,555.3 1,787.7 -
13.0%
Adult paperback 1,452.5 1,402.5
3.6%
Adult Mass market 807.9 832.5 -
3.0%
Children’s/YA hard. 795.5 908.4 -
12.4%
Children’s/YA paper. 560.5 526.8
6.4%
Audio Books 159.1 201.5 -
21.0%
Electronic books 53.5 31.8
68.4%
Religious Books 608.3 658.1 -
7.6%
CLL Higher Education 3,670.9 3,573.4 4
Source: Association of American Publishers
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 New Book Titles & New Editions
(2002-2007 ) (Units)

295,523
291,922

282,500
276,649

266,322

247,777

2002 2003 2004 2005 2006 2007

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Source: R.R. Bowker
 Now -- Add on Demand and Short Run
New Titles

276,649

134,770

Traditional Print on Demand

CLL Source: R.L. Bowker May 2008

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 20 largest book publishers in the
U.S. – 2007 ($ millions)
(Top 10)
Rank Publisher Sales

1. Pearson $5,295
2. McGraw-Hill $2,367
3. Reed Elsevier $2,018
4. Scholastic $1,734
5. Cengage/Thomson $1,480
6. Random House $1,266
7. Educational Media $1,102
8. Harper Collins $972
9. John Wiley $854
10. Simon & Schuster $762

CLL Sources: Open Book Publishing, Inc. November 2008

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 20 largest book publishers in the U.S. –
2007 ($ millions)
(Next 10)

Rank Publisher Sales

1. Thomson Corp. $737

2. Holtzbrinck Group $550
3. Hachette Livre $515
4. Wolters Kluwer $477
5. Readers Digest $375
6. Informa $372
7. BNA $295
8. Rodale $246
9. Encyclopedia Britannica $220
10. Harlequin $198

CLL Sources: Open Book Publishing, Inc. November 2008

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 --And for the 20% of remaining sales…

There are 3,223

publishers according
to Literary Market
Place

Source: Researched by Angel

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 How Bad Can it Get?

“While 2008 ended on an

disappointing and even discouraging
note for many in the book industry,
the outlook for the new year is even
bleaker.

One-time adjustments by retailers

and underlying shifts in the structure
of the book industry will make 2009
the worst year for publishing in
decades, and could lead to a long-
term fundamental change in the
business.”

Peter Olsen
PW January 5, 2009

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 Olsen foresees:
 The worst for Borders, B&N struggling
 Growth of Amazon threatening
independent book store
 Increase in returns in first half 2009 to
finance inventory
 Lower initial printings of new titles
 Pressure from bookstores for higher
discounts and promotion $
 Longer payment terms
 New round of consolidations of
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 Stocks Plunged In 2008
Company 12/31/07 12/31/08 % change
Marvel Entertainment 26.71 30.75 -
15.1%
John Wiley 42.84 35.58 -
16.9%
Educational Dev. Corp. 5.47 3.70 -
32.3%
Pearson 14.49 9.54 -
34.2%
Amazon 92.64 51.28 -
44.6%
Reed Elsevier 53.90 29.84 -
45.4%
Courier Corp. 33.01 17.90 -
45.8%
McGraw-Hill 43.81 23.19 -
47.1%
Barnes & Noble 34.45 15.00 -
56.5%
Scholastic 34.89 13.58 -
CLL 61.0% 13
R.R.
Source: ReedDonnelley
Business Information 37.74 13.58 -
 But…
on the Other Hand

Print media has a high survival rate

to name a few…

Publisher Founded
Scholastic 1920
Simon & Schuster 1924
Random House 1925
Business Week
(6 weeks before the crash) 1929
Fortune
(4 months after the crash) 1930
Marvel and DC Comics 1930
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 COMING ATTRACTIONS

 Increase in reading—Good News!

 Google settlement
 Massive Spending on Education--
$141 billion
 Mobile Technology
 Social Media
 My Space
 Face Book, etc.

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 More Americans are reading

Leisure Overall
Reading
Reading Rates for all
Rates by Race
Down age groups
& Ethnicity Up
Up

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  If approved on June 11, 2009
 Google will
 Scan copyrighted books from data base
 Scan out-of-print books – sell ads
 Set up a Registry (i.e. ASCAP) at revenue
cost =$34.5 million
 Pay $45 million to rights holders
 For full details see
www.googlebooksettlement.com
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Mobile Technology
 More books available on Smart
Phones
 Readers – 1.5 million public
domain books now available from
Google
 Professional – doctors, etc.
 School and college students
 New publishing applications now
being developed
 Microsoft now offers windows
Mobile 6.5 and Internet Explorer is
in development

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 Social Networks

My Space Facebook
 Founded: 2003  Founded: 2004
 Owned by News  Owned by private-
Corp. founded by Mark
 Value: Unknown Zuckerberg and
Dustin Moskowitz
 100 millionth account
reached on August 6,  175 million active
2006 users worldwide
 Now in excess on  Value: Microsoft
106 million accounts bought 1.6% for
$240 million
 Attracts 230,000 new
users/day  Estimated value:
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 Massive Spending on Education
$141 billion

 Direct Funding for Education — $77 Billion

 $40 billion in state stabilization funds to help
avert education cuts
 $13 billion for Title I
 $12 billion for IDEA
 $5 billion in competitive incentive grants to
states
 $5 billion for Early Childhood
 $2 billion for other education investments

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 Massive Spending on Education
$141 billion
 College Affordability — $30.8 Billion
 $17 billion to the Pell Grant program
 $13.8 billion to boost the tuition tax credit from
$1800 to $2500 for families earning up to
$180,000
 Additional School Modernization — (up to)
$33.6 Billion
 An additional $8.8 billion in state stabilization
funds
 Finally, the Act provides for states and school
systems to issue $24.8 billion dollars in bonds
for renovation, repairs and school construction
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 New
The Old Agenda Item
 Started in the Depression
 A practice that
 Needs urgent attention in this recession

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 Returns
Billion$
Returns
Revenue 27.6%

$14.5 billion

$4.0 billion

2008 2008

CLL Source: Association of American Publishers

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 Returns by categories

Calendar Year to Date

Category Average Mid-Range

Adult hardcover 37.7% 22% --50%

Adult Paperback 22.7% 14%--30%
Adult Mass Market 44.6% 37%--57%
Children’s/YA Hardcover 20.6% 13%--32%
Children’s/YA Paperback 20.3% 13%--25%
Audio Books 27.8% 14%--44%
Electronic Books 0.3% 0%--0%
Religious Books 19.8% 13%--27%
Higher Education 23.9% 9%--81%
University Press Hardcover 21.1% 12%--28%
University Press Paperback 25.3% 14%--41%
Total Professional 18.3% 6%--20%

CLL Sources: Association of American Publishers

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 Options for reduced returns

 Offer a non-returnable discount

 Keep present discount and set up a
bonus plan for efficiency
 Read and comment at our blog at:

http://cowanliebowitzlatman.blogspot.com

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 Cowan, Liebowitz & Latman

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