Executive summary ........................................................................... 4
The key takeaways ............................................................................ 5
Devices ....................................................................................................................................5
The book industries...................................................................................................................5
Pricing ......................................................................................................................................6
And newspapers and magazines? ............................................................................................6
Investment conclusions ............................................................................................................6
The stock calls ..........................................................................................................................7
Estimate, recommendation and target price changes ................... 8
The device .......................................................................................... 9
Summary:.................................................................................................................................9
Where we are and where we’re going .....................................................................................9
Does the device matter to the publishers? .............................................................................13
How the content changes............................................................... 15
What is a digital book?............................................................................................................15
What is a digital magazine?.....................................................................................................17
What is a digital newspaper? ..................................................................................................18
Parallels from elsewhere................................................................. 21
What the music industry got wrong........................................................................................21
Why books and music are not the same.................................................................................23
Sales and marketing................................................................................................................38
Paper cuts – how much cost comes out of publisher models? ..............................................39
Returns ..................................................................................................................................39
Modelling margin and profits in the digital era........................................................................39
Newspapers and mags – the e-impact .......................................... 42
How does it work in print?......................................................................................................42
Consumer spend – will more newspapers and mags get bought?.........................................42
Pricing press in the digital era – still being work out ...............................................................43
Axel Springer – Bild pricing strategy – pushing for a premium ...............................................45
The Times paywall experiment ...............................................................................................46
Advertising – doing it smarter – but how much upside?.........................................................47
Retail and distribution – direct relationships? Eventually.........................................................48
Local market issues ................................................................................................................65
Approach to date ....................................................................................................................66
Valuation ................................................................................................................................73
Risks ......................................................................................................................................73
Pearson............................................................................................. 74
What are the exposures?........................................................................................................76
Local market issues ................................................................................................................77
Approach to date ....................................................................................................................77
E-migration risk assessment ...................................................................................................78
Model adjustments .................................................................................................................78
Valuation ................................................................................................................................78
Risks ......................................................................................................................................79
Sanoma............................................................................................. 80
What are the exposures?........................................................................................................82
Local market issues ................................................................................................................82
Approach to date ....................................................................................................................83
E-migration risk assessment ...................................................................................................85
Model adjustments .................................................................................................................85
Valuation ................................................................................................................................86
Risks ......................................................................................................................................86