1. Copyright 2013 The Nielsen Company. Confidential and proprietary.THE U.S. COLLEGE TEXTBOOK MARKET AN OVERVIEW OF THE NIELSEN PUBTRACK HIGHER ED SYSTEM1

2. Copyright 2013 The Nielsen Company. Confidential and proprietary.PubTrack Higher Ed: What is it? The Go-To source for data about U.S. College Course material sell through and adoption. Used by nearly 100 clients2 3. Copyright 2013 The Nielsen Company. Confidential and proprietary.WHAT IT IS. Nationally representative sample of trends through campus bookstoresPrimarily supplied by college bookstores (in-store + online)Tied to a school (via Carnegie Classifications/FICE codes)Online retailers not included (cant be tied to schools)Data on other alternate sources (e.g., student swaps, etc) not included3 4. Copyright 2013 The Nielsen Company. Confidential and proprietary.Where does the data come from? Course material P-O-STracks new and used Point-of-Sale Data on Course Materials from 4yr, 2-yr, and ForProfit schoolsSample represents ~65% (FTE) of the US Higher Ed marketData collected from over 3,630 bookstores, & online etailers tied to over 2,500 schoolsAdoptionDemandCourse Book in Use and Instructor data collected from college registrars officePre-order wholesaler data from over 4.200 stores and etailers4 5. Copyright 2013 The Nielsen Company. Confidential and proprietary.WE EXTRAPOLATE!Strenuous efforts by internal and third party expertsEternal Data Sources (BookStats, BISG Student Attitudes, Carnegie etc.)Increased accuracy of projected salesAccounts for representation of missing channels volume (Amazon and other non-bookstore etailers) 5 6. Copyright 2013 The Nielsen Company. Confidential and proprietary.HOW IS THIS INCORPORATED INTO PT-HE TOOLSET? Available for Academic Year/Full Year only Available on Course Summary & Publisher/Discipline Reports Individual ISBN data not extrapolated6 7. Copyright 2013 The Nielsen Company. Confidential and proprietary.PubTrack HE Data Sources: . Campus Book Stores o Discipline level o ISBN tagging o Returns o Sell-outo B&N o Follett o Nebraska Books o ~ 1,500 Independent campus storesOnline Book StoresPublisher Fileso B&NCollege.com o MBS Direct o eCampus.comPubTrack Higher Education o Professor Names o Course codes o Carnegie CodesCourse & Department Informationo Apollo Group-Axia College o Apollo Group-Univ. of Phoenix o Laureate Education o Corinthian College, Inc. o ITT o DeVryWholesalers Demand Datao MBS o Follett DemandFor-Profit Institutions7 8. 8Copyright 2013 The Nielsen Company. Confidential and proprietary. 9. Copyright 2013 The Nielsen Company. Confidential and proprietary.THE BIG PICTURE . What are US college students buying for their courses?9 10. US College Textbook Market (Est. Value) MillionsCopyright 2013 The Nielsen Company. Confidential and proprietary.US LONG TERM TRENDS 14,000 12,000200910,000$10,164$10,7192010$11,471$12,513$11,6108,000 6,0004,000 Copyright 2012 The Nielsen Company. Confidential and proprietary.2,000 0 201120122013Source: Nielsen PubTrack Higher Ed 10 11. Copyright 2013 The Nielsen Company. Confidential and proprietary. Copyright 2012 The Nielsen Company. Confidential and proprietary.THE MAJOR PLAYERS STAY CONSTANT Market Share of Top HE Publishers (Est. Value) 40% 35% 30% 25% 20% 15% 10% 5% 0%34%34%33%21%21%21%16%15% 5% 4%201115% 5% 4%5% 4%2012Pearson Higher EducationCengage LearningMacmillan Publishing, Inc2013 McGraw-Hill, Inc.John Wiley & SonsSource: Nielsen PubTrack Higher Ed 11 12. Copyright 2013 The Nielsen Company. Confidential and proprietary.THE TOP DISCIPLINES STAY CONSTANT TOO Market Share of Top HE Disciplines (Est. Value) 14% 12%12%10% 8%9%9%9% 7%6%7%6%7% 6%6% 4%4%4% Copyright 2012 The Nielsen Company. Confidential and proprietary.13%12%4%2% 0% 2011 MathematicsEnglish2012 Biological SciencesPsychology2013 Computers & Information SystemsSource: Nielsen PubTrack Higher Ed 12 13. Up or Down? GrowthDeclineDisciplineDisciplineESLMarketingVo-TechLegal StudiesInterdisciplinary StudiesGeographyLinguistics Chemistry Library Information Science MathematicsArchitecture 14. Top Selling Courses 2013 Discipline: Course Psychology: Introductory Foreign Languages and Literature: Spanish: Language: Elementary Biological Sciences: Anatomy and Physiology: Introductory: Two Term Computers & Information Systems: Applications: Office Suites Chemistry: Introductory: General: General Mathematics: Software Biological Sciences: Introductory: Non-Majors English: Composition: Introductory: Rhetoric English: Composition: Introductory: Handbooks: Complete Interdisciplinary Studies: Orientation to CollegeUSD (mil) $285,043 $234,377 $208,648 $196,961 $174,726 $161,238 $159,473 $151,556 $141,958 $132,08614 15. Students Seek AlternativeRetail Sources (B&C)45% 40% 35%30%Amazon.com25%eBay/Half.com20%other ecommerce15%College bookstore10% 5%0% AY 2010AY 2011Source: Nielsen Books & ConsumersAY 2012AY 201315 16. Trends in how students purchase their books: Source: Nielsen Books & Consumer60% 50%40% In Store (in person) 30%Online app/device download20%other10%0% AY 2010AY 2011AY 2012AY 201316 17. DIGITAL GROWTH IMPACTS PAPERBACKFormat80% 70%68%66%62%Paperback60%60%Hardcover Digital textbook50% 40%30%27%25%25%25%20% 10% 1%3%6%8%0% AY 2010AY 2011AY 2012AY 201317 18. New vs. Used18 19. Even as digital grows 100%Over 70% new units90% 80%70%66%60%64%66%67%67%68%71%50%% new units40%% used units30% 20%34%36%35%33%33%32%29%AY 07AY 08AY 09AY 10AY 11AY 12AY 1310% 0%19 20. And New $ Have Even Greater Share 100% 90% 80% 70% 60%72%69%70%72%72%77%75%50%New Dollars40%Used Dollars30%20% 10%28%31%30%28%28%24%26%AY 07AY 08AY 09AY 10AY 11AY 12AY 130%20 21. The Keepers: Lowest Used Book Rates % used Engineering Computer Training & Certification Food Science Computers & Information Systems Mathematics Biological Sciences Accounting Foreign Languages and Literature Chemistry ESL22% 21% 21% 19% 18% 17% 16% 14% 13% 9% 0%5%10%15%20%25%21 22. Used Book Rates 49% 48% 47% 46% 45% 44% 43% 42% 41% 40% 39%48%47%47% 47%46% 46% 45%44%43% 43%22 23. New Textbook Prices Rising, but Used is holding steady! $100.00 $90.00 $82.17$80.00 $73.85$70.00$77.25$69.95 $64.31$60.00 $50.00$85.73$56.98$58.89$60.47$60.69$62.94 avg new price$50.74avg used price $40.00 $30.00 $20.00 $10.00 $AY 08AY 09AY 10AY 11AY 12AY 132323 24. Bundles & Custom24 25. Biggest shift: towards more custom versions 100% 90%7%5%7%5% Supplements80% 70% 60%67%58%61%50%50%Package/Bundle40%20%30% 20% 10%0%Print12% 13%Digital13%19%18%17%23%AY 12 $AY 13 $Custom0 AY 12 units AY 13 units.25 26. Pricing Comparison of 2 Gen Chem textsBrown/LeMay (12E 2012)Tro (2E 2010)UsedNewUsedNewPrint Book$ 113.59$ 137.52$ 109.23$ 152.92Custom versions$ 131.80$ 168.05$ 123.60$ 167.67Packages/Bundles$ 141.21$ 151.52ebook$ 73.68$ 91.61 Custom Tro generated over $3Million in value! 26 27. Insert Image HereSell through Analysis.. What percent of students enrolled actually buy the required textbook? Data shows one large publishers sell-through in 4 intro courses100% 90% 80% 70% 60%4% 4%50%20%40%2% 3%10%30% 20%used rent40%10%3% 3%9%5% 4%16%new rent used new29%32%28%EconomicsMathematicsPsychology0%English27 28. Insert Image HereSell through..What if its custom? Data shows one large publishers sell-through of custom product in same 4 courses 100% 90% 1% 80%12%70% 60%1%6%50% 40%0%7%1%13%new rent used73%new30%50%20%used rent50%44%EconomicsMathematicsPsychology10% 0%English28 29. Focus on Digital29 30. Pricing of Digital Overall average textbook price: $64 (New & Used flat from 2011)Overall average digital textbook price: $61 (up from $56 in 2011)30 31. Wide Array of e Top 5 Disciplines with Highest e-Textbook RatesAY 2013 Computers & Information Systems Foreign Languages and LiteratureUnits Up from 5% in AY 1220.8%7.6%Business Health & Health Related Professions6.0%Chemistry5.8%5.8%31 32. Rentals 32 33. Rental growth especially strong for Used!TermNew Rental UnitsNew Rental Used Rental Sales (Millions) UnitsUsed Rental Sales (Millions)AY 111,482,881691,642,28463AY 123,217,4871464,076,895140AY 13 Growth from AY124,276,9101947,031,35526633%33%72%90%Note: Rentals as sold through PT-HE Data Suppliers: Not including Chegg 33 34. Top Disciplines for Rentals: RankDiscipline 1English2Psychology3Mathematics4History5Biological Sciences34 35. ADOPTION AND DEMAND35Copyright 2013 The Nielsen Company. Confidential and proprietary. 36. Copyright 2013 The Nielsen Company. Confidential and proprietary.TARGET PROFESSORS FOR PROSPECTS/REVIEWS?RUN ADOPTION REPORT36 37. 37Copyright 2013 The Nielsen Company. Confidential and proprietary. 38. Copyright 2013 The Nielsen Company. Confidential and proprietary.DEMAND: FUTURE ADOPTIONS38 39. Copyright 2013 The Nielsen Company. Confidential and proprietary.LIST OF SCHOOLS ADOPTING39 40. Conclusions: Higher Ed Course Material Sales remain strong Bundling and Customization is working driving strong sales Stand-alone Digital textbooks remain a small part of the market, but critical as components of overall package Rentals, especially used, are growing strong! Still ways to make $$ in this market. 40 41. Copyright 2012 The Nielsen Company. Confidential and proprietary.41