A 5.6% decline in Q3 print ad pages for the major consumer magazines tracked by Publishers Information Bureau erased first-half growth, leaving PIB titles’ combined ad pages down 1.1% for 2011’s first nine months.
As for the newsstand, due largely to successful specials / “bookazines”, mainline titles’ losses slowed in early fall (units -2% to -3%, dollars -1% or less), per MagNet data. However, there was no improvement in recent double-digit drops in checkout weeklies’ sales, which have been the biggest factor in newsstand losses — and the industry has a long, long way to go to begin recovering from cumulative unit losses of 27% and dollar losses of 17% between 2007 and 2010, plus first-half 2011 losses.
Yet, in recent weeks, the press has been redolent with upbeat declarations emanating from the industry’s most powerful companies, as well as mid-size and even some smaller players. Why? Well, some titles will still realise print ad (and even newsstand) gains in 2011. And growing diversification into new revenue streams like marketing services and digital advertising / sponsorships is indeed helping reduce companies’ reliance on print advertising as a percentage of total revenue.
But much of the optimism centres on recent developments in the digital circulation / devices arena. Hearst Magazines president David Carey recently said that Hearst’s paid magazine tablet circ had reached 300,000 per month, and would double “in short order”. Hearst is projecting $10 million in e-sub revenue by summer 2012. Further, Carey speculated about a shift, albeit “over a long period of time”, wherein Hearst’s combined tablet subs might grow to perhaps 6 or 7 million, with print subs perhaps numbering 22 million, instead of their current 25 million.
Condé Nast president Bob Sauerberg projected that Condé will yield $15 million in circ and advertising revenue from tablets this year (at last report, it had about 225,000 paid digital subs per month). Time Inc has been more circumspect about tablet revenue projections, and still hasn’t reached sub-marketing deals with Apple and Amazon, but is running a full-blown media campaign to whet tablet-users’ appetites by touting its commitment to making all of its titles available on various tablets by January 1.
Hearst, Condé, Bonnier, Future plc and others are on board for Apple’s new iOS 5 Newsstand, so as to enable users to consolidate publication apps in a dedicated folder and get automatic updates of latest issues. However, there’s undisguised glee that (mirabile dictu) Apple’s iPad / App Store are turning out not to be the only game in town.
As of October, Hearst, which claims to be the only publisher offering titles on every device in the marketplace, had all 19 of its brands on Nook and Zinio platforms, versus three on the iPad (and is yielding more subs overall from non-iPad platforms). Ignoring tech snobbism, Hearst (among others) is aggressively making the most of “replica”-edition uptake by tablet users not enamoured of the bells and whistles in full-blown interactive apps. Tablet editions have “finally allow[ed] us to monetise our content digitally,” Carey stated, also stressing the revenue potential of advertising in these editions, which recent industry studies indicate is more reader-engaging than print advertising.
Warm welcome for Kindle Fire
Carey described Amazon’s new Kindle Fire as “absolutely critical” to accelerating tablet-sub volume growth. Meredith execs said the Fire will make tablets attractive to price-sensitive middle Americans. And Condé’s Sauerberg greeted the Fire with near-messianic fervour.
In addition to relishing the prospect of $199 Fires stealing market share from still-much-pricier iPads, publishers are psyched about Amazon’s massive e-commerce platform and transaction-based marketing capabilities, greater willingness (than Apple) to aggressively spotlight / promote magazine apps, and somewhat more cooperative stance re sharing customer data.
Amazon’s cut of app sales may not be any better than Apple’s 30%, but publishers reportedly are pushing Fire apps at prices higher than those in other digital platforms and, in some cases, higher than print subs. Indeed (mirabile dictu again), Sauerberg said that Condé is in general looking to push up its app prices, by leveraging apps’ far-greater (versus print subs / newsstand) price elasticity, given the ability to nimbly test a range of app offers (single-issue purchases, auto-renewed by-month subs, etc).
Condé believes that digital content will allow it to “redefine the product” and “revalue the consumer proposition,” enabling a transition from selling subs to selling “access to a branded experience,” Sauerberg stressed.
Chris Anderson, editor-in-chief of Condé’s Wired, elaborated in Advertising Age, calling the shift to digital “a once-in-a-lifetime opportunity to rethink business models.” Once “rich content can be distributed globally at virtually no cost on platforms that have billing relationships already established (iOS, Android, Kindle, etc), we can experiment wildly with who pays and how much,” he said. “Ad-dependent models can diversify into profitable subscriber models (digital subs can make money where print cannot)”, and magazines will be true cross-platform brands able to use “e-commerce, licensing, premium memberships, lead generation, etc”. Business models that “work great in other industries are now within the reach of media, too,” he enthused.
In short, magazine execs who remain cautious about the business-model / financial ramifications of counting so heavily on apps / digital content versus the core, still-lion’s-share print business - and are willing to say so for attribution - are increasingly rare. (Can anyone name one aside from Jann Wenner?)
I’ve made no bones about my own concern that publishers are courting danger with digital / print sub bundle pricing that further devalues consumers’ perceptions of print - as well as by failing to invest sufficiently in leveraging data / marketing capabilities with real promise for reinvigorating the highly profitable newsstand channel. Still, it’s refreshing to see the industry invigorated and fully engaged in fighting to leverage the power of its brands / content to achieve a significant, hopefully lucrative position within the morphing media universe.
