The dwindling magazine publishing industry may be in for a new digital future. A study by Next Issue Media forecasts that digital—mainly iPad and other tablet-based—versions of periodicals will bring in $3 billion in subscription revenue by 2014.
Next Issue Media is a consortium of five publishers: Condé Nast, Hearst, Meredith, News Corp. and Time Inc. The new entity, headed by former TiVo president Morgan Guenther, was founded to develop, market and deliver magazines and newspapers to consumers via digital devices.
| Key study findings |
- Among device-owning subscribers, the availability of interactive editions at the point of renewal, at the same price as today's print editions, drives a 9 point increase in the overall subscription renewal rate, from today's 55% industry average to 64%.
- Many subscribers perceive print and interactive formats to be complementary; 30% of renewing subscribers choose a bundled print and interactive edition, at a 33% premium to the stand-alone price of either.
- The interactive format enables effective cross-selling via recommendation engines and browsing features; 17% of current subscribers make additional purchases.
- Automatic renewals eliminate the traditional "bill-me later" model and greatly reduce churn, from an average of 45% today to 25%.
- The introduction of interactive editions in an online store setting, at the same price as today's print editions, triples uptake rates among device-owning non-subscribers, from 5% to 15%.
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Conducted by management consulting firm Oliver Wyman, the study
predicts high consumer interest for digital publications. The
projections account for potential cannibalization of some print
subscription dollars by new tablet-based editions, but says the $3
billion market will include $1.3 billion in incremental revenues
nonetheless.
The study simulated expected revenues by
quantifying expected demand across some 230 existing titles and
surveying 1,800 U.S.-based consumers. In addition, the study focused
solely on subscription products and did not address other potential
tablet-based revenue streams, such as advertising, commerce or
single-issue magazine sales.
iPad adoption rates are quite impressive. Apple has sold more than 1
million units per month, for a total of 4 million since launch. And this
is only the beginning; tablet sales are likely to skyrocket as cheaper
versions are introduced and holiday season approaches.
This
information underscores the need for the photography industry to
develop a pricing system for digital uses—if not specifically for
periodicals, which are flocking to the tablet platform in droves. For
the moment, many digital uses of images previously published in print
magazines do not generate revenue for image owners or distributors.
However, some agencies are trying to change this: X17 is currently
involved in a legal dispute with People over its new iPad app’s use of celebrity images, according to The Hollywood Reporter.
In
this climate, the scheduled keynote address at the upcoming conference
of the Picture Archive Council of America is timely. Condé Nast vice
president of editorial operations Richard Levine will discuss the impact
of the iPad and the future use of content. Condé Nast currently
publishes iPad versions of GQ, Vanity Fair and Wired, with interestingly mixed commercial results.