Magazine publishing may be worth $40 billion in the US, according to First Research – but the industry’s existing business model and changes in media consumption habits over the last few years present an immense challenge that threatens the sector’s very existence.
Newsweek became the latest publisher to close the doors on its print edition back in November, highlighting not only the deficiency of print compared with the efficiency of digital, but also placing a clear signpost that magazine publishers have reached an intersection without a map.
What Newsweek’s owners have no doubt realized is that news reporting – in general a commodity product – can now only be distinguished by the quality of its analysis and the speed of delivery. Newsweek may have had the content, but it was still missing the critical element of timeliness.
Digital competitors can provide analysis nearly as instantaneously as the breaking news itself. A once-a-week publishing schedule -- coupled with substantial physical printing and distribution costs -- cannot keep up with continuous and low-cost digital distribution.
Early in 2013 Newsweek will launch a digital-only edition, using tablet-based e-readers, and presumably largely emulating the design experience of print. But is this the right model? The decisions they make now will determine whether they grow and prosper, or end up pushing up trees rather than printing on them.
As publishers arrive at an intersection they are all choosing different routes. Some opt for a website with a mix of free and paid-for content (Pearson for example has done this successfully with the Financial Times in the UK). Some take the advertising-supported route, keeping content free for consumers. Others, like Newsweek, close their print issues and launch digital magazines for e-readers.
Digital, however, is not a panacea. The latest ABC figures highlight a decline in digital magazine subscriptions; seemingly these are failing to gain traction even though digital e-readers and tablets proliferate. In fact the e-reader market is booming – with the recent introduction of Apple’s smaller format iPad mini tablet, and publisher Barnes and Noble’s Nook being launched to the UK market, for example.
But ebooks, which some bullish estimates say will account for 50% of the market by 2014, are a different proposition entirely to digital magazines. Indeed, research from world magazine industry body FIPP shows that seven out of 10 people find digital magazines “annoying” and 48 percent said they took too long to download. And while nearly three quarters of respondents claimed that video content enhanced digital magazine reading, 46 percent said that they were “just a gimmick”.
So it would be wrong to look at the success of ebooks as a predictor of the future for digital magazines.
People buy books to read, and magazines to fulfil a need or solve a problem. For some magazines it is obvious. People buy Car and Driver, for example, to help them make a practical, safe or cost-saving decision about their next vehicle. But for most magazines the problem being solved or need being fulfilled is not so clear.
The internet is also eroding publishers’ brand strength, as individual journalists increasingly develop a marketable personal reputation. The noted wine expert Robert Parker, for example, has for 35 years marketed his vintage expertise via his Wine Advocate print and online newsletter. Recently he announced he’d be going digital-only, shutting down his print edition and moving his 50,000 subscribers – each of whom pay $75 per year for total revenues of around $3.75 million dollars annually – exclusively to his website. No publisher necessary: in this case, Robert Parker is the publisher and he gets to keep all the revenues.
Publishers must identify the job their readers buy their magazine to fulfil before they make the decision about which business model will provide them with a way to monetize the value that they bring to readers.
Much like Robert Parker has done for himself, publishers must identify the value they can provide and develop it to the point that it is saleable. Many publishers are already weighing up the value of key columnists, and should find ways to share the opportunity equitably with them so the sum is greater than its parts.
Even a stellar media persona doesn’t guarantee the right result. Just recently Martha Stewart Omnimedia announced the closure of two of its four magazines. Carrying too many different titles for not enough readers or advertisers simply doesn’t add up. It never did -- but when the audience shifts to digital, there’s an ever-smaller pie remaining to be carved up for print.
In spite of Newsweek’s veritable reputation there clearly wasn’t enough value in the print product to convince advertisers and readers in sufficient numbers that the publication was a worthy purchase. Its sister digital publication, The Daily Beast, survives -- not necessarily because it has cracked the added-value equation but because, being digital-only, its production costs are so much lower and its publication cycle so much faster that the threshold for profitability is far lower. In other words, it can be deemed a success with a much smaller audience than Newsweek could have sustained.
Dropping the print publication was the right move for Newsweek’s parent -- it gives The Daily Beast space to find the niche that will successfully attract readers and advertisers. While the demise of Newsweek is sad for those of us who still love print, there’s no question that, in this case, killing the messenger was the right move. However a digital magazine is an online answer to the same problem that Newsweek faced with its print issue, minus the production costs. As publishers move online they should focus on how their viewing audience can be turned into new revenue streams instead of relying solely on advertising to support content.