How to manage all the emerging digital channels is probably the publishing industry’s biggest challenge. While opening up so many new opportunities, writes Jim Bilton, digital is also creating all kinds of headaches in a business where there are now so many plates to spin at the same time. Will publishers manage to hold it all together? That is the key question at the core of new research undertaken for the Specialist Media Show.
Leicester University and Wessenden Marketing undertook a major survey for the Specialist Media Show in association with InPublishing and PPA. The research fits into the Publishing Futures tracking programme which is managed by Wessenden Marketing. This latest phase, with the fieldwork undertaken in March 2011, polled the views of 203 publishing companies across a wide range of consumer and B2B markets. It also has a more digital focus than the main Publishing Futures tracking survey.
Wobbly publisher confidence
The whole context to the survey is how publishers feel about their own business operations. Looking at “How confident do you feel about the financial success of your company over the next two years, on a scale of 1 to 10”, the overall result was 6.8 out of 10 – a solid score. Comparing with the other waves of the tracking programme shows that confidence levels rose from 6.7 in April 2009 to 7.1 in December 2010, before dropping back in the latest wave in March of this year. The current uncertainty about the general economy is feeding through into the publishing business.
Yet while it is the uncertainty about the general economy which is driving everything, there are also growing concerns about finding the correct business model for digital applications. The following sections zoom in on consumer magazine publisher responses…
Websites and online content
* 87% of the sample of consumer publishers have active websites with editorial content.
* Only 23% are currently charging for online content, but another 18% intend to charge in the near future.
* Of those who do charge, by far the most common method is a monthly subscription.
* The most common charging band is the £20-50 per year range with an average of £35.33 per year.
There is no dramatic shift in the industry model for consumer magazine websites, but more specialist publishers are experimenting with some kind of paywall or subscriber-only areas for readers who have paid for a print subscription. Where a separate charge is being made, this is at very ambitious levels, suggesting that it is the more specialist publishers with enthusiast data who feel that they can charge premium rates.
Digital magazine editions
* 36% of the sample are charging separately for their digital editions, with an additional 13% bundling the digital edition in free with a paid-for print subscription. Just over half are giving away their digital editions free of charge.
* 86% are planning to charge the consumer more for their digital editions in the future.
* Of those who do charge for their digital editions, only 16% pitch the price at the same level as the print edition, with the remaining 84% discounting the digital edition. The resultant average price of a digital edition, where it is charged for, is 20% below that of the print edition.
* 65% of publishers producing digital editions expect advertiser investment in their digital products to increase in the future.
There is clear growth in the number of publishers who are bundling their digital editions in with their print subscriptions. Publishers are also increasingly looking for advertising income as most seem to have come to the conclusion that even if they can get consumers to pay for a digital edition, the price that they are prepared to pay is well below print edition prices and additional revenue is required to make economic sense of the whole channel.
* 20% of the sample already have an app which is operational, with another 37% intending to launch one. Yet there is still considerable uncertainty as to whether and when to commit to the whole area of apps.
* The iPhone and iPad currently dominate in terms of the platforms used with around 80% of the app producers creating apps for both Apple devices. Android phones (18%) and Android tablets (7%) are beginning to feature and are predicted to grow quickly. Blackberry is just about on the radar (7%), but is predicted to show the fastest future growth in terms of apps being created for it.
* 29% of publishers are generating no revenue from their apps with another 9% having some form of sponsorship. 62% are charging the consumer with a 58:42 split between one-off payment versus an ongoing subscription.
* Where a charge to the consumer is made, the approach is much more polarised than with digital editions. 40% of apps are pitched at the same price as the print edition whereas only 16% of digital editions are at the same level. However, where apps are discounted, the price reduction in comparison to print is much more aggressive than with digital editions. The resultant average price of an app is 25% below the print edition in comparison to the average 20% discounted price for digital editions.
* In terms of the type of app, the two major areas are simple replicas of the print magazine (37% of publishers creating) and enhanced content (33%). Other specific functions, such as listings and gallery, are being used by 23%.
Apps have been welcomed by publishers as an area where the consumer may be prepared to pay and to pay more than for simple digital facsimiles. Yet there is clearly a great deal of price experimentation going on at the moment and considerable uncertainty as to which platforms to back.
Other digital plans
Respondents were asked whether they were planning to use any of a range of additional digital media in the next two years…
* 52% are planning digital editions for a wider range of ereaders and tablets. The assumption is that this is going to a largely paid-for model with 71% aiming to charge via an ongoing subscription.
* 51% are planning online audio and video content. This is seen to be a free-to-consumer service which is sponsored or ad-funded where possible, but which would be provided even with no revenues accruing with only 8% of publishers attempting to charge the end-user.
* 42% are planning a digitised archive with the assumption that this will be either free-to-user or part of a subscription bundle of services.
Behind the digital media which offer some prospect of publisher revenues lies the burgeoning social media scene. 60% of business publishers and 48% of consumer publishers see social media as being important in their marketing. The key applications are for creating awareness, driving traffic to the core, branded website and for building a sense of community and loyalty.
Business publishers are generally more active in the whole area of social media, with Twitter and LinkedIn being the top two B2B channels. Consumer publishers are starting to experiment more, with Twitter and Facebook being the two key B2C areas.
The organisational implications
A recurring theme running behind the whole survey is whether publishers have the talent, knowledge and resource in-house to manage all these media channels at the same time. This is not just about creating digital content, but is also concerned with selling digital services to advertisers and using digital marketing to reach the end-user. As one B2B publisher put it: “There are now so many promotional options for clients. They don’t have the time to make proper and detailed assessments. We don’t have the quality of staff to sell across platforms effectively.” It is also not just about having the right staff or the right number of staff, but is also about creating a company structure which allows their talents to be harnessed effectively. The shape of the organisation has become a real challenge in a multi-platform world.
And it’s not all digital!
This latest wave of publisher research is very focused on digital marketing. Yet for most companies, print remains the engine room of the organisation and the real profit generator of the business. Also, live events are growing in importance for both consumer and business publishers.
While publisher confidence remains slightly erratic, it is still relatively robust, showing that publishers are facing up to the challenges with some optimism. Or as one publisher in the survey put it, “We are not on the verge of change. We are ten years into it.” Experimentation is clearly the order of the day with publishers trying to generate digital revenues more assertively and creatively than in the past. Yet each channel has its own dynamics and image as far as the end-users go, especially in terms of their perception of the value and cost of the medium.
Yet there has been a distinct change in mood within the industry. Two years ago, there was a real sense of doom in the face of the digital juggernaut. Now the mood is more of a sense of stressed anxiety, where opportunities beckon, but there are simply too many choices and investments to make. To quote a rather weary consumer publisher: “Trying to get it all kick-started is a real resource challenge. Not just the strategy, but all the systems and procedures that follow on. Then keeping all the balls in the air at the same time.”
This survey was commissioned by the Specialist Media Show and highlights were presented at the Conference on 25 May 2011 by Jim Bilton. To read more articles based on the findings, visit www.thespecialistmediashow.com/news/research-news.html