Case in point: Sean Nolan, VP, general manager for Rodale Digital, declared that magazine content on mobile devices “absolutely” does not mean the end of the newsstand. “That’s not what we’re seeing at Rodale,” he said.
Rodale views digital offerings as part of its mission to create premium content and distribute it through all appropriate channels - the goal being to enhance and extend brands, not replace print or its channels, he stressed.
Pointing out that smartphone sales will outnumber PC sales by next year, that mobile traffic will eclipse fixed Net traffic by 2014 and that about half of Rodale’s advertising now involves integrated media deals, Nolan said that Rodale has an “obligation” to readers and advertisers to “make sure that the issues on the newsstand remain relevant” - and to build awareness of these - by extending into all of the other channels through which people now consume branded content.
“People are inundated and overloaded with media, but when [they] walk by a newsstand, they’re going to know Men’s Health, because they’ve been seeing us in all corners of the digital universe,” including tablets, smartphones and social media, he said.
Like other publishers, Rodale continues to derive the lion’s share of its revenue from print products, which are “the heart and soul of our business,” Nolan emphasised. Rodale offers iPad editions of its magazines, but sales of these are very small - in single-digit percentages - compared to the newsstand, and they’ve slowed as the “cool factor” has worn off, he reported. His take: Tablets are great for reading books but, at least in present iterations, not great for reading a whole magazine.
Nolan explained that Rodale is focusing primarily on using apps to “chunk up” content that makes sense for mobile use and complements, rather than competes with, print content. Meaning offering tool-oriented apps that serve on-the-go readers (like workout and healthy eating reference guides), generally priced at about $2 to $3, in iOS and Android platforms. In addition, Rodale is using these apps (and social media) to help drive single-copy sales - sending its app users messaging promoting the content in the latest print issues just arriving in stores. He also stressed that Rodale’s “unique and authoritative” content - in contrast to “commoditised” news and entertainment content - have minimised consumer resistance to paying for its content across platforms.
Effect of gas price hikes
As Nolan and other speakers stressed, recent months’ hikes in US gas prices likely have been the single biggest contributor to further-depressed newsstand sales. (Q1 dollar sales dropped nearly 6%, according to MagNet, including an 8.5% drop in the “celebrity” titles that account for 24% of total dollar sales, and had previously been relatively less impacted by the economy.) While per-gallon prices exceeding $4 are ludicrously low compared to the rest of the world, the US economy is scarily dependent on cheap gas, and speakers offered various research confirming that the hikes have caused consumers to consolidate grocery / other shopping trips (disastrous for impulse-driven items like magazines), and to cut back on buying magazines and other discretionary items.
But here’s what wasn’t discussed - at least from the stage. Yes, apps are at this stage a miniscule business next to print, and publishers report that most (80% or more) magazine-edition app buyers are new readers. Importantly, they’re also by and large younger readers - critical both to future consumer revenue prospects as print magazine demographics age, and to publishers’ hopes of selling integrated advertising at more lucrative rates by shifting buying metrics away from circulation guarantees, to total readership / audience numbers. (Publishers can’t wait for the autumn Gfk MRI readership metrics, which will incorporate digital platform readers for the first time.)
But it’s also true that subscription-based (as opposed to high-priced single copy) apps - and bundles of magazine app / online / print subs - have just begun to be offered - and that some models being tested clearly support pushing up the overall sub-based revenue yielded (in part by still emphasising massive percentage savings off print newsstand prices) while maintaining print rate bases.
For example, Condé Nast is charging $59.99 per year for a New Yorker iPad sub - and just $10 more (about $1 more per month) for a bundle also including print (remember: this is a weekly) and full online access. Why? Because the magazine’s average 2H 2010 print sub price was just $43.15, while its newsstand sales (cover price $5.99) were down 12% (about 33,000 copies, versus 882,000 paid subs). “This is one of those moments of technology advancement that I think can help us get that appropriate [consumer] value equation out there,” summed up Condé EVP consumer marketing Monica Ray.
While that sub equation is hard to argue with, at least given the still-prevailing circ rate base guarantee and publishers’ self-created way-too-cheap print sub prices / revenue yields, won’t models like that inevitably teach new, younger brand converts that buying print newsstand copies (which yield much higher per-copy profits for publishers) makes zero sense?
Gen Y is said to be prone to buying on impulse (immediate gratification), but with young people among the hardest-hit by unemployment, how many are going to pay $4 to $6 for a newsstand copy that can be had for maybe 25 or 50 cents - delivered to their doors?
