Steve Potash

on floppy diskets in the nineteen eighties. So I am the proud recipient of an honor in this industry. I've been part of more digital book failures than any person alive because I started too early putting books on floppy diskets, and then a decade on CD RAM and by the late nineties mid nineties, when this Internet thing showed it had some promise, Overdrive was the pioneers that helped create the environment for the ebook and the audiobook markets today.

So we've been into this business much longer than most and we participate in many aspects of it. But Amazon is a direct to consumer closed system.

three file format. It's an open industry standard that allows any content creator to package their written work in a digital container and make it broadly available for retail booksellers for their own website, and it could be used by thousands of devices and reading apps. That is kind of the ubiquitous ebook standard today, and that's for books and texts and images you read on a screen in the

audio space. Overdrive has its own proprietary apps, but it is all really based upon the original audio files we get from the audio publishers and their suppliers, and we are leveraging some of the open industry standards and then applying as required by the rights holders the controls that manage access copyright digital rights management. So we are based on open industry standards and then to meet the requirements of the rights holders, we utilize copyright protection tools.

to take your web content. There are many tools to convert a PDF into epub, and there are lots of service based industries working inside publishing houses or as a service bureau to help content creators and publishers transition their files into an ebook marketplace.

And I know your audience is very familiar with the complexity of the music space and copyright and mechanical and license fee and royalties. There is a similar hierarchy and rights structure in publishing, less complicated than music. I'll thankfully say, but for every title, Overdrive seeks permission from the rights holder. And let's just say it's a publisher like Penguin, Random House or Simon and Schuster, that they are giving us the rights to the Stephen King novel that we could

sell in the territories where they have the permissions. So for let's say Simon and Schuster us they may give us a new Stephen King novel, and those permissions may be granted for North America. Because Stephen King and his agent may have done a deal for ebook distribution in London, or in Germany or in Australia with a different publisher, we have to go in every territory to those that have the rights to distribute the work in the territory.

And then similarly, we work with the publisher to get the permission on how they want to enable access for the institutional buyer and what rights they have with that digital file. I know that sounds like it's complex, and unfortunately it is.

Let's say you hear about a new bestseller that you're excited to listen to on your commute to work, and you're in love with audiobooks, And yes, we do educate millions of listeners that instead of paying for a subscription and a credit card and ads, your public library is an unbelievable, untapped off in resource for access to lifelong books. For free ebooks you can read on your kindle, Audiobooks you can listen to on your commute or on your walk,

or on your tablet. And so if you are a patron of a public library, as public library patrons have been doing for one hundred and almost two hundred years in this country, you walk into a public library if there's a popular book, they may have enough units and

it's available for you to borrow now. And in the physical print world, if there's if it's in demand and they're all checked out, you would add yourself to a wait list or place a hold, and when the book becomes available, the library would notify you your books available, pick it up. We have created a replication of that experience going to your digital virtual branch online searching and browsing for a book of interest, and with one click

you can immediately borrow the book. But for let's say this Stephen King new novel, Simon and Schuster as others, have created permissions that if a user if an institution and bob you're in the Los Angeles area and we have a dramatic, fabulous partnership with the Los Angeles Public Library.

So if a listener is going to Los Angeles Public Library excited about the new Stephen King, Simon and Schuster book, they may see that the library has of the e book or the audiobook, one hundred copies of the e book one hundred copies of the audiobook, depending.

borrow at a time. If that is the model that the library acquires the book under the ebook or the audiobook, well, then the experience is very similar to the print or the physical CD. For the audio, one user at a time. If they're all checked out, the patron clicks put me on the wait list, Libby will automatically notify them the book is available.

ways to make it available. I shared with you the most common way, one user at a time. They buy ten copies, ten users can read it, then the rest have to wait till it's the return.

in all categories. Digital magazines and periodicals, manga, graphic novels and comics, audiobooks and streaming video and we service every type of institution. We're best known for the success Libby and Canopy. Canopy is our streaming It's like Netflix for Library Canopy with the ka NPY similar to you can cut your subscription to Audible or other paid services with Libby for ian audio or audiobooks. Similarly for the streaming video platform. Canopy has the largest collection of feature films,

documentary and children and world cinema, more than Netflix. And again with the library card, the app is free and the content is free. We service public libraries and in the US where in every zip code in North America, US and Canada. We serve about sixty percent of the schools in the United States, so that's pre K through high school. Overdrive is globally supplying ebooks, audiobooks, streaming video, magazines, and content to universities, colleges. We are in thousands of

corporate knowledge centers. We supply the US military, professional associations and the like. So we supply almost every form of library, public, academic, school, corporate knowledge center, government, military, prison libraries. That is where we are best known worldwide, and today we are available

in over ninety thousand institutions. So pretty much anywhere humans exist, they are using our Libby oursa, our Canopy apps or platforms on set tops or browsers to benefit from content lifelong free content courtesy of their local library, university, or school.

We are now going to be the ebook supplier for borders. I just came back from ann Arbor. Well that wasn't it. You know, years before I said this is it, we are going to be the number one e book supplier and one billion cell phones, the biggest mobile cell phone worldwide. We just did no Kia. Well that was a few months before the iPhone was launched, you know, So you know we work today. Retail independent bookstores are very well supported by my buddy Andy Hunter at bookshop dot org.

And Andy is doing a great job letting all the independents add a full catalog of Ian audiobooks so they can compete with the Amazons and the and some of the other big boxes.

or iPads and you know the current ebook environment. And we've over the years, we've had the traditional booksellers, the schools and libraries tried to develop a digital business because they had all of the embedded relationships with the authors in the supply chain. They knew all the publishers, they had the relationships with the rights holders. They service the library and university, and you know the big school district communities, so these would be the Baker and Taylors and the

Ingram book groups or in the k twelve defilettes. So all of those traditional booksellers to schools, libraries, institutions, every one of them then developed a digital extension to their physical or their print businesses, and many of those are still in the market today. So we have competitors with Baker and Taylor has a platform called Boundless. There's a legacy CD RAM and DVD distributor to libraries, Midwest Tape out of Holland, Ohio. They created a competitive platform called Hoopla.

All of them followed us, but collectively overdrives Libby and Canopy. In the North American public library, we are the dominant leader in many cases, we are the sole supplier to many of these biggest systems in the markets, but we do have competition, and in international markets we have competitors in Germany and here and there, all over the space. And if I look at Universe, it's a different group of competitors. If I look at students in the classroom

from kindergarten through high school, we have educational competitors. But for the mainstay of you know, public library, consumer ebook and audiobook, it would be the traditional book suppliers to the market and the few I mentioned.

book inventories that public libraries used last year. So collectively, all of our competitors might you know, be sharing about fifteen percent of the spend, and we capture the majority of it. And it's not by contract or exclusivity. It's by delivering the best experience for the patron and the listener. It's by having services and features within the experience that want people to use our libby app or canopy. And we're constantly and we do have some competitive advantages that

frustrate others. So, for example, in the US, the dominant way many of the adult fiction community enjoy books and

reading are on their kindle. Overdrives the only supplier where you can borrow a new bestseller New York Times Bestseller from the Los Angeles Public Library in Libby and through an arrangement an agreement with Amazon, you can borrow it from the library and within a moment open up your kindle paperwhite and start reading the book you borrowed for free in Libby from the library in kindle, and at the end of the fourteen or twenty one days on

your kindle, the book expires and gets checked back into the system, all managed by Overdrive. So Overdrive in twenty eleven added a read with Kindle option, and because we're the only ones, Amazon entered into that arrangement with This is another reason why most libraries who are buying popular books will look at Overdrive and Libby as the supplier, because if you bought the book from one of the

other suppliers, you would not have the kindle option. So that is just one of many competitive reasons why we've been successful in winning the business. Because we deliver value. We're accountable as well as public libraries and our schools and our universities, and our government agencies, military and prisons are mostly nonprofits, and Overdrive has developed into a mission

based company. We know that if we're going to capture federal, state, regional taxpayer money and budgets, we have to earn and be held accountable for how those taxpayer federal funds are being utilized. And we develop, we deliver proven value, and we hold ourselves up to higher standards. And for those reasons, we have continued to grow our footprint in those markets and frustrate our competitors.

hear the words. We add categories of content that are not supported by a Kindle device, So often if you are picking up a select title, if it doesn't have Kindle compatibility, or there is some other inability for the Amazon Catalog to do the enablement. But for most of the English language popular trade books. Trade books are the popular books you see at Amazon, Barts and Noble. We have a very high percent Kindle availability in the US, so yes, you will see some books and sometimes it

might only be a gap. We just added it it's a hot new book, and you know we're getting in sync with the Amazon catalog because we're not actually sending the file to the Kindle. We've engineered with Amazon a process that allows Kindle to fulfill the title under the terms and conditions of the library permissions we have. So you will find some occasional books that you can open. And this would be for example, I believe our magazines.

Libby does fantastic on magazines, but I don't believe Kindle is supporting our magazines so that you will see pockets of inventory you can borrow in Libby in the US where there's not an immediate Kindle availability.

digital books, they still could have several other competitors. Usually when they have multiple competitors, it's because they're buying it for a selection of either titles that we don't offer for one or various reasons, or some other legacy reasons. So yes, but it's very rare that they're going to buy the same title, the new Sarah Jay Moss or

you know Dan Brown, or you know John Grisham. They will occasionally buy the John Grisham in my platform and one of my competitors, because they do have an audience of users and it could be seniors that learn this system, and they don't want to learn a new system. You know, it's America, and we do not have we do not you know, handcuff our buyers with you know, restrictions, and

you can't buy for my competitor. I want to win the business because I offer the best value, the best service, and the best selection.

you know, bookmarks and you know merchandising. We're not exclusive and many of our customers have multiple suppliers, but they're buying usually smaller select and they may have a variety of reasons why they did that.

now we call the Big five. It used to be the Big six, but then Penguin and Random House merge, so we have the Big five. So in the US, the Big five dominate maybe sixty of all of the popular trade book sales. And that's you know most of the New York Times bestseller list and the marquee authors you're familiar with. Our relationship with each of them is a direct distribution agreement. In most cases we provide them

access to our marketplace. Overdrive has developed and has been operating for twenty five years, the single largest B to B digital book supply chain for retail and institutional buyers. So with a Penguin Random House, a Simon and Schuster, a McMillan, a hartper Collins, for example, we have negotiated or operating under published terms of sale. Most cases it's

a distributor discount off of a digitalist price. So we have the ability to sell a unit of a Penguin Random House bestseller, this new John Grisham.

the publisher. I will say this, Overdrive has a very large digital book institutional business to library schools and universities.

We send to the big five publishers hundreds of millions of dollars annually, and the majority of the money that library schools and government agencies pay for the rights for you to borrow as a student, as a taxpayer, as a library patron, the majority goes to the publisher, and then the publisher has their deals with the agents and authors, so every time someone buys a book and is being used at a public library, the majority of the revenue paid by the library goes to the publisher.

might have. That as a price you're paid.

It's only a B to B shopping. So your listeners, unless say are a buyer at a nonprofit institution, library, university, government agency, they can't go in and look at my catalog. But for the ninety thousand institutional buyers that have access to go into my warehouse to see what books are available, they see majority of it are the digitalist price that

was established by our supplier. We just benefit from them setting the price putting it in, and we operate off of our gross margin discount from what you know, the difference from what I sell the book to what I have to pay the publisher for the unit. So for if I have to pay the publisher fifteen dollars and I sell the book for twenty five, you know, then I'm earning the ten dollars gross margin. So I earn

forty points and the publisher got sixty. I mean, if my math is right, So that's that is the model. We get a digital list price, we sell it at the digital list price. We pay the supplier minus our distributor discount. Now, in some cases Overdrive might discount the price and I might get, you know, eat into my gross margin. In some cases, we might have the publisher say, we want to up unit sales, we want to sell it to more doors. Let's let's create a sale like

back to school. Like back to school is a very big campaign we're in the middle of now, Bob. And it's not just for schools. It's for public libraries, for universities. It's even for corporations that are helping professional development or remote or continuing education or professional development. So we may have publishers say, hey, for the month of August September, we're going to reduce the price of all of our books.

And they've justified that because they are correct in saying that when we sell a license for a library to lend this book out, we know that it will be used by multiple users over the course of a calendar year. And they also know that during the period of the digital access for that book, they're unlikely going to be buying a replacement copy. So when a library bought a physical book or a stack of audiobooks, and audiobooks really is the reason why overdrive success in the early two

thousands rolled across the country. We were solving a big paint point for libraries. If your listeners are still going into public libraries, maybe for themselves or parents or grandparents and getting mom or dad an audiobook and they get a hearts clamshell plastic case like you used to get a Blockbusters and it's filled with a sleeve of twelve CDs. That's how people were using audiobooks before we invented download

audiobook at the library. But guess what, after about three or six months, the library had to buy replacement units. When we were first selling our digital book value proposition to libraries, and you bought an ebook or an audiobook, I said, you know what, you buy this unit never lost, never late, never damaged, lever scratched. So publishers said, an author said, at least when the library or the school bought my book every year or every few months, I

might be selling additional replacement units. At least when they were buying my digital books. The book couldn't be anywhere in an instant so there were limitations on the number of actual readers that could benefit from that print copy or that box of CDs. So the publishers of the big best sellers and their agents and authors started to demand that they would only sell into schools and institutions that had permissions to possibly let fifty people use it

in a year or more. They wanted a higher price per unit. So today the reality is that for many of the best sellers that when the first book comes out, and the book industry also kind of like the video industry. You know, it first used to be theatrical first, and then it went into pay per view, and then it got into you know, the streaming, and then eventually it went into the home channels and CD and DVD markets.

So the publishing industry still still has a premium on when the new book comes out and it's called a frontless title. When the frontless New York Times bestseller drops, they really want to maximize the impact at retail first format hardcover sales. They're trying to keep the velocity and

the buzz up. And then as a book after twelve months or twenty four months, starts to become a book that they would call it's now moving into the publisher's mid list and eventually backlist for the author and publisher, we'll often see the prices to the library decline. So we have a complex because we've been doing digital library and we've created the dynamics of now I think we have over thirty thousand individual suppliers to our digital distribution

platform globally. We've allowed the suppliers, the aggregators, the JK. Rowlings and Potter Mores when they say here's how we're willing to make Harry Potter available in forty languages worldwide. We want this price, we want this model. We have to listen to them and see how we can accommodate. So Overdrive another reason why we are the dominant supplier because we've invented and developed most of the platforms that all our competitors have emulated or copied over the years worldwide.

Our capability of meeting the rights holders requirements is unparalleled.

will discover your book and sell more print. We'll sell more print to the library, will create more demand for your book at Apple and Kindall and Barnes and Noble and elsewhere. We have been proven to be such a valuable discovery and sales partner to the author in the publisher community that I'm proud to say almost all of the Big five now have also given overdrive permissions for other models besides the one user at a time.

file and then that's it forever. So they invented the way that they said, I'm willing to sell to the institution, but I want them to every two years have to renew their license. So we created a system of metered access levers. The first metered access level was introduced about fifteen years ago by HarperCollins. They said, especially think about nonfiction. Think about reference. If you are a library and you're buying a reference book, an evergreen title, a dictionary, a

reference book that people use to look up. It's not for pleasure reading, it's not a beach read, it's for looking up in research. Do they want to sell that book and maybe it doesn't get updated but once every ten years? Do they want to sell that book once and then that's it. The library buy five copies, will never sell another copy of that dictionary until there's a massive update. So publishers fifteen years ago said, we want to find a way that if we do sell it,

it's not perpetual. So HarperCollins fifteen years ago introduced the first of these levers. They introduce, when the library buys my new popular HarperCollins ebook. We want the library to lend it out twenty six times. After twenty six times, they want them to buy a replenish unit. So that was introduced. Within a year or two, we had one of the other Big five who said, we are willing to give you books popular bestsellers, and they introduce a meter of We're willing to sell you the ebook for

library lending. One user at a time. They buy five copies, five people in the wait list. You wait your turn. But for each unit, we want each unit from the data goes live, we want the library title of that unit to expire in two years. So that's meter to Access twenty four months. During COVID, we then had libraries at urgencies and wanted to fill holds. Penguin Random House said, to be even more flexible. How about we now let libraries buy the same unit that PRH made Meter to

Access twenty four months. Now you can buy the same best seller metered access twelve months at fifty percent the price. So overdrive has supported and today in our catalog, unfortunately, we support and when we go internationally, we saw that in Germany the publishers were licensing books to libraries for forty eight months or fifty serfs, whichever came first. So Overdrive had to develop the capability so we could support

the Berlin Public Library, Hamburg or you know, Munich. So unfortunately, when I said, the business has got it complex based on the marketplace and they restrictions or the permissions that were set by the rights holders. This is why it's becoming more complicated and challenging in the for the buyer, and Overdrive has been evangelizing, simplifying and providing the tools.

is extremely powerful, they will push back into that. They'll say, well, you know, our business model doesn't work, our customers don't want it, our libraries pushing You read in the Wall Street Journal about this all the time, Okay, especially expiration whatever. Is this just something that people have to accept or is there a pushback? And to what degree is Overdrive itself saying hey, you know you're killing the business by doing this.

in Congress. I've been in the US and globally. There is an anti library e lending bias that has permeated this market, and there are bias and stereotypes against e lending, and as a result, the libraries have been forced to evaluate if they want to be relevant with the migration to an online, mobile, digital world with a mobile and everyone's smartphone and listening in your car and you know, Bluetooth and every device in your house. The libraries have

had to swallow hard. The prices in many cases are onerous, the restrictions are challenging. It puts tremendous stress on the institutions. And the real trauma now is not even what this environment. Yeah, this is the overhead for a market that's been going through the pains of transitioning from analog to digital as many industries have growing pains and accommodations and so many of the things that are being done now, and there's all you know. So the pressures that the libraries are

put under has been daunting. But I could say this overdrive has been consistently delivering over twenty five years incremental progress because we have a north start. We are a mission based company. In twenty seventeen we became a certified B corporation. If we are going to capture significant tens of millions of dollars in every state from their public funds to educate, entertain, comfort and support the communities from cradle to grave, we have to be advocates for those

institutional buyers. And I can tell you we have pushed and we have been successful in getting fair, flexible and more reasonable accommodation and movement from the Big five than any other force in the market. And we are constantly getting wins for the buyers. But there's still a lot

more work to do. I don't want to name names, but we have some very big, prominent publishers that if you just looked at their terms, you would think that they really do not want any libraries to buy their books because they've made it so onerous and so difficult, and as a result, librarians have say I'll only buy the book if I have to so that author and that publisher unless they have a must have book it's now you know, made it to a motion picture, the

author's coming to town. They will buy that author's book as few as they have to, only because they want to be relevant and they don't want patrons saying, what's the matter with you?

propositions to libraries. One is called all access. When we saw during COVID the dynamic spike in demand when all the physical libraries close and every student in America became a remote and distant learner, and the cries came out from the librarians and the cities and the superintendents of the big school districts, including LAUSD and New York Public schools. They said, we're not going to be here for two

years and our kids don't have a book. So we had to go to the publishers and say we need to create instant availability.

You want to have fifty thousand people read the same book at the same time.

in at morning. It's called book ops or operation buying for the NYPL and Brooklyn Library. They come in, they say what was added over the weekend in that model. I buy that model first because I can use that available inventory anytime anywhere. If all of a sudden there's a big demand on the best seller, I could buy one hundred units and knock out one hundred holds at once because I got a low.

per lend. So Overdrive has provided tools to the library so they could go into our massive catalog of millions of in copyright digital books and in many cases of valuate because schools, libraries, institutions use books for different purposes. So I argue to the author and the publisher, if you give the market multiple ways to buy your product, you'll sell more.

knowledge centers. Books are used in so many different ways, and we have engineered multiple solutions and it's evolved over the last you know, three decades.

you know, books weren't that important to him. But subsequent to that antitrust, you know, all you saw were articles about, well, the independent bookstores coming back. Look how well physical is doing now. Libby is an unbelievable success. But I want to carve out something and I want to leave that aside for a second. Do the publishers still understand that the future is digital or are they still hanging on

to the physical model and using digital reluctantly? And to what degree are they sophisticated on this subject.

to change their business process. And quite frankly, it's happening in the last year or two. There's been a real awakening that the traditional print model is not only declining and at risk, but there was like a major shock wave just recently when the industry decided that they're going

to just quit mass paperback publishing. I mean, the biggest impact would be for the thousands of drug stores and small independent retail that when the magazine jobber came in to freshen up the newsstand and the magazines next to the American greeting guy who was freshing up because it's a real estate business. At least they also dropped in the top twenty best selling paperbacks and maybe was an impulse item at the bookstand or at the train station.

Mass paperback going away as a format. That's huge, I mean everything they've been trying to protect. They also have had this legacy value proposition that the most important thing that the Big Five now have been, you know, obsessed over for the last decade is the New York Times bestseller list. Let's face it, you know, the Big Five. This book business, the trade book business is so based on the mega, the mega breakout book. You know, a publisher or a retail bookstore chain has a good year

or back. A bad year could be based on one author, could be based on one.

to the audiences. And even over the last just year, I've seen a dramatic investment of publishers and authors where the author is now holding back more approval on the tours, on the branding, and almost every author now is investing. An author is a brand. So for any New York Times bestseller, they're not necessarily sending you to the publisher's website to learn about my tour. They want the direct

relationship with the reader. We are working and so many authors are now coming to us directly and the author. The rise of the author is a brand. The rise of the author is even creating new dynamics for how the publisher is catering to keep that best selling author. It used to be just on the size of the advance check and they go to auction and who got

the best You know, who negotiated the biggest upfront. Many of these new author deals and agency deals are not only author, show me your reach, show me your platform, Show me what you're going to do to grow the audience for my brand. How are you going to build

a sale for my backlist? You know, we've done such The good thing about Libby's success in scale Bob is unlike Amazon and Apple and Google, who have billions of data points, Libby has billions of data points on how a reader was looking for what to read next, where they discovered it, how they came to the library, how they came to a digital edition, where they borrowed the book, how they open. All of this is anonymized and privacy

is sacred. But we have the aggregated data endpoint of how a book was borrowed, where was used?

of sessions. She then went to the second publisher, and we noticed over this thirty year history that when this second publisher brought out a dozen books, they didn't read as far into the e they didn't listen as far in the audio that represented her voice. She lost hundreds of millions of minutes of people listening to her story. And the only thing different I could tell was she changed publishers. And you would say no, actually, when they

went to number two, it went up. Oh, and so the first publisher said, oh, well, she had a following. By the time they got to book four, people had heard of her. That wasn't it, Because after twelve books she went to publisher three and it dropped down again.

These are the kind of untold insights we now have with publishers and authors, and we are willing protecting privacy, anonymize aggregated data and with the permission of libraries and our suppliers. Are these are the data points that are going to change how we build audience for our suppliers and their authors.

and we publish it on format for audience. So I can tell you for adult fiction, for adult nonfiction, for ya young adult, I can tell you by subject, by genre, by sub subgenre, so you know, when you know Amish romance was a hot thing and everyone got into Amish romance, we could tell you in Amish romance whether it was Kensington or Harlequin.

in Libby could start in ten thousand starting points. You could be at your local library, in the library searching on the public catalog where you could see a QR code at the end of a shelf, saying did you know this book's available in Libby?

let them know how they're performing, how they're trending. So if you let's say you're a publisher or travel books, let's say ebooks, and you want to get market share, you're a lonely planning You're competing against Rick Steves and you know five other travel book you know voters, and you know all the others. You want to know how am I performing in my category? How's my market share? Am I trending up or down? Are they buying my Europe or they only just buying my Disney Disney World

twenty twenty six. So you are trying to improve sell through and market analytics, we can provide you down to almost the zip code, just like the Bouchers or the Neils sins would tell you how you're performing at retail or some of the other data services overdrive. First of all, we provide the publishers so the supply chain sees real time which institutions bought their book, and they have a clue on how many units, what was paid, and how

they're performing. With so much of this data, we do have the ability to put out the Libby fifty or the Libby hundred.

And so, you know, in the early days when libraries were buying books and they put up a list of books you could borrow, they just alpha sorted it. And so people came into a library and they say, well, I want to try this, and the first thing that came up was one thousand and one you know whatever. It was one thousand and one Ways to Tie your Shoe and I, you're on, how are we selling all this? And I said, everybody's just trying the new system. So

he was Alpha blessed. They all bought it. People said I want to try it. Let me try this thing I heard about, and so they downloaded this book. And so so the bottom line is it has evolved and merchandised every single library today. When you go into an LA County Library or LA Public Library to two separate systems. And here's a little Libby hack for your listeners. Libby

supports your ability to get multiple library cards. So if you have a card from the County of Los Angeles and you have a library card from lapl the City Library downtown, when you're in Libby searching or looking for something to read, you will get the benefit of both collections. And they both have different collections. They may have many of the same but one may have a shorter wait list for that new bestseller. So with Libby, you can have multiple library cards and work Beverly Hills or in

Huntington Longbridge, Orange County. We're in every library in California, so when your listeners have at least two or three library cards, this also and so for us to say what's the best circuing book in Southern cal we could look at every library in southern cal and we can say for this region, this is trending. These are the best by audience, by category, by genre. So it's we have board data and we are offering it up. As I said, just protecting privacy and permissions.

was a big schlip. So putting out some of the issues. You and me both know that going to educational institutions in the future it will all be digital for numerous reasons, portability and the issue of being able to replace for changes instantaneously. My question is to what degree is that happening? And I'll use this is not a perfect example, but I'll use the classic example of Kodak Digital's coming, I mean, Digital's coming never came. Then in one year digital wiped

out Kodak. So what is the future of digital reading? Vis a vi physical?

We are working with a company in the UK called Ulpuscroft and the gentleman who is the founder of the foundation there, he invented what's now a beloved product by seniors. It's called large print. Before this, gentleman said, why don't we make a book where the type size is accessible to those that are aging or have failing vision or macula degeneration or high corrective lenses, so the print book will always be around. The print book is one of the most beloved gifts. Giving a digital book.

a lot of press. If you look at it, I don't want to want to throw the it's really a z it on the ass of consumption. So yes, a coffee table book, etc. Those will exist, just like people have vinyl collections. Okay, but in reality, isn't it going to be the extreme outlier and everybody's really going to be reading digitally?

I do believe in the digital future, and every book being printed today does have a digital simultaneous except for some you know international and you know small foreign markets. The future is purely digital. But we have a bigger problem, and that is long form reading and book consumption is on the decline. And this is also coming into headlines

more mainstream recently, and it hasn't been new. The decline of reading by adult reading of long form print books has been on the decline since the invention of television. If you look at the pie chart of all of our disposable time for entertainment or consumer activities, that slice that used to be long form adult book reading by every demographic age, gender, race has been shrinking.

the market and it's not just domestic. The decline of book reading in the UK. In Germany is actually a little faster than we're experiencing in the US well, because we came from two communities that had more literate baseline, so you know, they live longer. In Germany, every community has multiple independent retail bookstores in every neighborhood. It's a book culture.

or long form reading. And I'm excited to say we're having great success working with our educational and library institutions and finally for the most astute publishers being better and more appreciated for how we are trying to reverse this decline in demand for the product. Now, music, the market grows every day. Everybody wants music, and music is not going away. But long form reading of books that's under attack and that has been on the decline, and there's no answer for it right now.

contained the supplemental materials. So if you're Pierson or Gale Ahote Mifflin or McGraw hill Wiley trying to sell your textbook for the state of Texas or Illinois for history one oh one, and you get a big adoption, that's a big deal. Your textbook gets adopted for a three or five year cycle. That could be seven figures for

that book and that imprint. So to do that, publishers had to compete and add special value add Before the Internet, they used to offer teachers editions and quizes and supplements. Then it went to the CD in the back of

the textbook. Now, for the last fifteen twenty years, publishers have gone direct and created ancillary supplemental value add So right now every piece of coursewear or curriculum may be offered directly from the publisher, is part of a learning system or also you've seen the rise Amazon, Barnes and Noble Education follow it, check vital Source. Many other platforms have aggregated all the digital college textbooks and either offer pay as you go or a subscription. So that market

is pretty far along on the digital transformation. If I go to K twelve, now we're at the infancy last year twenty twenty four. If I look at the spend, and it's a big number. For the one hundred and fifteen thousand K twelve schools in the US alone, the spend on coursewear, textbook, curriculum, school library, special ad, summer reading, intervention, English language learning is a second language for immigrants. It's

in the billions. And yet if we look at where are they in the transformation from analog, physical to digital ebooks has not really entered the elementary school, the middle school, or the high school at any scale yet, except that Overdrive has been evangelizing and growing that market.

For all those that have children in the schools, we have a Libby for students app called Sora.

Digital Library. You could be in any of the five boroughs, you have a student in any of their charter schools, STEM, academies, whatever, ps, whatever, one oh one, you have SORA and you have the ability for your student to benefit twenty four to seven just like Libby, except SORA is built in student learning, gamification, reading, daily reading challenges and the like. So our engagement for growing the audience and the transition to digital is accelerating.

We're seeing in corporate America a broad adoption for employees to have benefit for professional development wellness. HR departments are adding digital lie libraries. Our first digital library was Microsoft Corporation twenty years ago.

digital library for their workforce globally. Anytime anywhere you need a book and how to program this thing, you got it. Corporate Knowledge centers. During COVID, they provided all of this comfort and wellness and you know, am I okay and all of that you know, access during these you know, troubling and uncertain times. So the momentum we're seeing in corporate libraries. You know, our largest corporate partner is a

US Department of Defense. About fifteen twenty years ago, every branch of the military said we want to serve our community worldwide. So Navy Knowledge Online Services one point seven million readers. It's not only the active military and the officers, and it's a it's a students at the War College. You could be on assignment in a nuclear submarine and you your commandant says, we want you to read Jefferson's War.

Listen to the audiobook in your bunk. They are getting this from the US Department of Defense through a platform, and they're opening it with Libby. So we are building and growing an evangelize seeing books and reading and education and comfort and entertainment globally and overdrives. Footprint is fortunately expanding and helping publishers and authors offset some of these other challenges they're seeing in retail.

dealing with for about four years now. Libraries and librarians and educators and public schools and school librarians being villainized and coming under attack for a false narrative for a

political gain. Unfortunately, this has created a toxic environment in many communities and has created local pushback and has challenged so many of the underlying principles that have made every community better because a public librarian educated their children, helped those seeking a job from divided, a public internet terminal for those that had no broadband in their home, and that continued when the recent election cycle put a party into the White House, and they came after this April

and took the funding from the Institute, from Museum and Library services, and that playbook now is being replicated in several state capitals.

And I've been on the record what has happened is unfortunate and tragic, and in many communities, the most impacted will be the small and rural librarians who because a few dollars that trickled down from Washington to their state library, it got distributed like here in Ohio to our eighty

eight counties. That is essential service money. That money in some rural and farm communities allowed the librarian to go in and open the door or pay for the broadband that the community needed to come in and sit in the parking lot so they could check their email or see if their job and they could find a job.

Just like it's just a tragic situation unfolding. I'm proud to say that in many of the larger metro areas, because they've built multiple sources of funding, that some of these cuts may not impact the material budgets, the money that they use to buy content, books and subscriptions. But it's a real concern, and the greater concerns are in the small and rural communities that will be impacted even

more so. You know, we have stories every day where the impact of the presidential executive orders or some of the state capitals who have taken and said in the protection of minors, this false narrative that we need to protect our children and implemented some of these playbooks. Most of the voters who put those elected officials and offers are going to be the ones that suffer the most. That's a reality, and it's happening every day. It's not

something that's coming. It happens every day. Now the money's been cut, they're fighting, flying back bits and pieces or trying to find alternate sources of funding, and Overdrive as a partner in that effort.

by the name of Olivia Humphrey from Perth. She saw a problem in some of the universities in Western Australia, the universities who were teaching film and or were signing documentaries and film in the classroom could not supply the teachers the classroom or the students with access to the videos or the films. And so she negotiated, like with the film studios, could I get permission to create a platform for academic libraries to license a digital video and

stream it for these educational purposes. So Canopy was born in Australia, it launched, and today still Canopy is worldwide in more university libraries and public libraries. After several years of success in the university library, Olivia with her young family moved to San Francisco and said, let's get into the big markets the US North America. And then she

started to sell the universities in North America. But she said, well, since I'm in libraries, and since we do have films of interest for public libraries, documentary, foreign films, some you know, film noir and boutique, and lots of unbelievable art films. The curation of the Canopy collection is so eclectic that people love Canopy because of the curation. What is in those catalogs and what have been selected from these out of the way book festivals, and we have a team

is just outstanding. Now today, Canopy has evolved because when she introduced it to public library she did not have the appreciation for how public libraries worked and how they could their sources of funding, and how it might use in a consumer space. So when she came to the US and I saw the excellence of their product, of their user experience, I approached Olivia and I said, look,

you have done what I've dreamed of doing. You have an unbelievable catalog, you have a great platform and user experience. And they also integrated with all the set top players, so you can get Canopy on Roku, Apple TV, or Samsung or any of your smart TVs. In addition, Canopy ka n o, py dot com. You can run at anything with the browser. And of course I natively run the Canopy app on iOS or on my Android smartphone. So they had they had the best platform, they had

the best catalog, they had the best user experience. I said, Olivia, I either want to partner with you, buy you, or I'm going to be competing with you. And it took a twist in turn, she went to a private equity and eventually we acquired it about four or five years ago. And so today Canopy is the most valuable streaming product. We just got from Yahoo and many other media the

five streaming best platforms. Regardless of price. Canopy. You'll never get asked for a credit card, you'll never see an ad and it is purely delight So Canopy has one of the largest film libraries and over the last several years now that Overdrive with our reach, we've scaled it up into public libraries. We've changed the user experience to make it simple for public libraries and patrons. So today

the public library can add Canopy. Like I'll be in San Francisco seeing our partners as San Francisco Public Library. It's available at Los Angeles Public Lives Library and they subscribe to Canopy. And Canopy has a core collection that is adding thousands of films every year. Because some of the rights come in and out, we negotiate with major suppliers. Like one of the biggest deals I ever signed it Overdrive was when we did a five year exclusives with

BBC Studios in London. Because we have so many Anglo file you know, they just love everything British and the downtown Abbey crowd and all that. We signed a multi year exclusive for library and institution with BBC and it's been extraordinarily popular. We now are negotiating next to Amazon, Prime, Hulu, Disney,

Netflix and the others at all the big studios. So we when we acquired Canopy, they we had a film team and the head of our business units Southern cal We have a team in California because we are working with all the major studios. So whether it's lions Gate or Warner Brothers, we are in the rooms negotiating alongside. When they're carving up the out the geos and they're coming up the territories, and when they're carving up the platforms,

we're in there saying we want institution. We want to have day and day or whenever it's available for those markets. We want public library, academic library, and some of the

other governmental special institutional markets. And just like we do with the Amazons and the Netflix, we may get it for a particular term when we're dealing with the mgs and you know the restrictions, and of course the whole video community has their own kind of rights management, you know, technical qualifications and we of course abide by all that

and for the patron, it's just a win. If you are subscribing to the half a dozen to dozen monthly subscriptions that you use on and off, or maybe less or more. In the peacocks and this plus and that plus, you may discover that about a high percentage of the movies the documentaries.

this market. I have complaints. Now in Singapore, we have such a fantastic success. The entire country of Singapore just is almost standard on Libby and Sora.

for that big deal, say how much for Singapore. But now I got to go back to all those studios and say, you know, let's face it, Crazy rich As. That's you know, when Crazy rich As came out as a Warder Brother film or you know, and we've been selling the books like crazy you know heaven Chan. Of course they wanted that. But so it's a really exciting time.

we don't have the budget. But the reality is, you know, just as we talk about the evolution of streaming video and library in this ecosystem, if you asked me five years ago, pre COVID, what was the number one circulating reason a product or the reason people went to their local public life or in the US, it was to

borrow a DVD or Blu Ray. I could tell you in many metro markets, just pre COVID, let's say twenty eighteen, twenty nineteen, if you looked at what was the foot traffic to the libraries throughout the United States, one of the top reasons people went was to pick up that DVD or Blu ray they reserved and they got from the library for free to take home for their family.

has been building back. But unfortunately in many markets here, like in Cleveland, Ohio, we're overdrives headquartered, our biggest public libraries still are not at the twenty nineteen levels of visitors in their branches or foot traffic in their central library. So as a result, everything has been moving towards streaming.

When the library wants they had canopy, they can either buy the whole collection and set a monthly budget and we can monitor in the usage and kind of throttle it because they're giving you as a user, Bob, if you go to Los Angeles Public Library, LAPL will give you each month maybe thirty tickets, and every time you want to watch a feature film, a documentary or children's childrens.

much per year, so much per month. But with small libraries with no experience in the demand for streaming, Overdrive introduced what we call like we did for ebooks. We created all access, a bundle, flat fee unlimited. Overdrive introduced Canopy plus packs. So if you don't know the demand, you don't know what we have plus packs, staff favorites, all time classics. You want books for your kids, you could buy a Canopy plus fix for children, and we

have tiered pricing. If you're in a little parish in Louisiana and your total population of five thousand, maybe for under five hundred bucks a year, every kid can stream.

and only pay a small service fee annually. So, just like we did with our market evolving, if you give the institutional buyers multiple ways to buy, you will sell more, you will open new doors, and you will also evolve to see where the market and the demand and the budget will drive your growth. So libraries budget, we give them multiple options to suffice. We have a lot of budget for video. And if you're transitioning. Let's say you're lapl and you budget a million dollars. I'm making this

up every year for new Blu rays or DVDs. You've been transitioning, so you're saying, well, we're going to start because the usage of the physical good is declining. As it declines, we're moving that budget and we're transitioning into canopy. So that's been going on for the last few years and it's accelerating.

that's under reported. We don't have the you know, all of the detail. Let's face religious Christian Bible sales, not all of that is always reported up. There's so much activity on direct to consumer.

sampling a book. If you've been in the Libby, you know, before you borrow or get in line, you could open and go through ten percent for free.

And in many cases I have authors and publishers thanking me because I discovered on a Libby I bought my print sales went up. I was just last week I was meeting with my partner in Fort Myers Lee County Library System, Southwest Florida by Naples and the and the librarian said, we used the demanded Libby to buy print.

lead to retail sales. But can I connect all those dots now?

Los Angeles Public Library last year was our top public library circing Libby books and they circulate on average over one million books a month now. Also, Los Angeles Public Library spends with overdrive to acquire multiple copies, licenses, new materials, bumps up the ability to service. Under these other models. They spend annually approximately almost ten million a year to

keep their Libby catalog fresh, complete and current. So the library is spending one library in California and it's number one in circulation under the leadership of John Zabo and amazing library leaders at LA Public Libraries plus to have they are a rock star globally. I have people all over the world that look at how New York Public or LA Public or Toronto Public, or I'll be up in Seattle with our partners at King County. These are

libraries are innovators. Libraries have been evangelizing books and creating the market for reading and pushing people into lifelong reading since there was a library in Alexandria three thousand years ago. We know that this is a growth market and I'm proud to say that when I'm in New York or London talking to the Big five or whoever. Overdrive as far as a source of revenue for the trade publishers is always in the top five. Who's number one, who

generates revenue for them? It's Amazon, Amazon's number one worldwide pretty much number two and three. Depending on what segment, what audience, what geo, it might fluctuate between an Apple of Barnes and Noble or audiobooks, maybe Spotify and you know, Nordic Countries is your rock star. Now couple of courses in the mix and b you know the others. But overdrive as unit and revenue sales to the publishers. In

some cases we may be number three. We are delivering hundreds of millions of dollars annually to the creed or community, and the publishers and the authors are getting, on average, possibly even more for the privilege of someone benefiting from a book from that school or library than they're getting from buying it at retail. And let's face it, when

you we have no secondary market. When they sell to the library, they're not competing against used book sales or eBay or you know other other forms where you know, libraries are not benefiting and some of them are arguing they should from the first sale doctrine. You know, you bob or I Bob I buy a book and I want to gift it to my daughter, I want to give it to the library.

get that memo, shame on them. Someone's going to take their business. And it's happening every day.

public performance rights. So Canopy in the public library is not quite at the level of revenue that we've what you enjoyed from the book business. Because I've been giving many of the biggest public libraries in North America have been on Overdrive platform and now with Libby for twenty plus years. So we started with Cleveland Public twenty three years ago, so LA Public Library we've probably launched around four h five so twenty years we've only been in

the supplying of the Canopy video business. Now, you know, just under five years. And since we acquired Canopy, the models and the collection wasn't as well aligned for the public library space, and we've made some real milestones. This simplifying the tickets was a major way of streamlining because before, when people borrowed movie from Canopy for the tickets, the

librarian didn't know how much it was costing them. But now when they see films in the Canopy catalogs and they see that this is two tickets, this is one ticket, this is no ticket. If they want to highlight for a subber reading program a film that is low ticket use, they know that it's going to be lower costs for them because they're paying for the platform and the collection, and users can get more views. And every end user now has a simpler I give you, I give you

thirty tickets. You know where you are. Every time you launch Canopy, it shows you how many you have available. In the upper right hand corner, you're you're using down your tickets for the month and then it resets.

I believe that in the next five to ten years, as a confluence of the technology and our positioning with these it's the secret weapon overdrive has is a network of dedicated community servants informational professional known as librarians, and they have been dedicated for a world enlightened by reading.

When someone walks into that public library anywhere in the country, they don't look at how your dress or what your zip code is they are there to welcome you and provide you whatever it is which will help you in your time of crisis, in your time of celebration, at every point of the journey. And what excites me is I honestly believe we are going to change the literacy pandemic in this nation. Childhood illiteracy is just a fact of life. And you know, unfortunately where you are, you

know this is where zip code matters. If you are in a in a neighborhood where you have access to less funded public libraries or less funded public schools and they don't have access to all the material and resources and interventions, it's likely that your students will not have the same progression how they learn to speak and read books and progress in their academic journey. This is why so many states are now leaning forward in the science of reading, or there's been a decade mandate to read

by three. We know that if a student isn't by the third grade reading at the appropriate grade level, you could almost chart out the rest of his life on his earnings, his academic and his even his health and wellness. That's all impacted by the foundation of reading and literacy. Now in the urban markets, that we are dedicated to

support every public library in America. Yes, we're so blessed that if you are a Libby fan commuting and you have multiple tableists and streaming platforms, we are better than slice bread. And I love the love letters and the you know, we have fan bases worldwide, but that doesn't

motivate me. I want to improve the life of those who need a book to take care of their parent, or to make a reversal of their decline of their health, or to help them get that job so they can apply for that manufacturing opportunity, workforce development, adult literacy, health literacy. We are going to I go to every week, you know, the first of the year, I'm at CES, marching around. I spend about a third of my time at the Senior Tech sponsored by AARP. Because we're all aging, We're

all going to need assiste of technology everything. Yes, I could make the font larger, and I need to make the audiobook louder, and I want to speed it up or slow it down. But the invention of you know, I'm going to be everything you read and hear is going to be instantly available in every language. We are going to be able to adapt the book and the modality of presenting the content and the concept to every reader in untold ways that are going to make a difference.

So this is this is what excites me. We are going to make We are going to turn around a nation that has been over decades becoming.

University Hospital, and I'm all about health literacy. Yes, we have the best doctors and the best apps, and the best science and the best clinical data. But at the end of the day, it's you, the patient who has to make the change. If I don't stop eating this and do that, if I don't get off my butt and do this, I am going to suffer that outcome.

digital books on my phone. Secondly, I'm always reading a physical book and I find a word I don't understand, I start to touch. Because I'm used to digital books, I can give the definition. Well, you've certainly amplified what's going on in the ebook digital revolution libraries, and I want to thank you so much for taking this time with my audience.