Q&A: Peter Meirs of Time predicts that digital publishing will gain acceptance once the technology is in place to deliver a better reading experience.
The magazine publishing industry has been busy for years transforming itself to take full advantage of the Internet, but it's a tricky transition. Readers have come to accept and expect news content on the Web, but no clear path has developed for transitioning magazine-style journalism to the digital medium.
Time Inc. has experimented with distribution of digital magazines, and Peter Meirs, director of alternative media technologies at the company, recently sat down with Andreas Pfeiffer to discuss the future of magazines, both print and digital.
Well, let's start with the tough question: Where do you view the future of publishing—in your case, magazine publishing?
If you look at the problems that we're facing today, one would have to conclude that there's got to be some sort of alternative to print that will be available to a broad range of people—not just to those people who are interesting in digital publications—because they want to take advantage of things like faster cycle time, or because they're traveling and they don't want to carry around lots of magazines. The cost of producing a print magazine is rising disproportionate to the consumer price index.
We're facing some serious pressures from our distribution channels; the U.S. Postal Service is presenting rate cases that are difficult for us and probably untenable for many, many publishers. They've announced a 5.4 percent rate increase and then next year it's going to be perhaps more than that.
So, the cost of producing magazines with rising distribution, fairly unstable paper supply, paper market, competition with more than magazines—catalogues are our biggest competitor for that resource—so that the overall cost of producing magazines is becoming a serious issue.
The alternative is digital versions [of magazines]. Digital versions, two or three years ago, were considered very futuristic, uninteresting to most people, the quality of the reading experience wasn't good enough, people couldn't really differentiate between a digital magazine and a Web site, they didn't understand the value difference, and I think that that's going to change.
So, coincident with pressures on publishers to manage those costs, there will be technologies out there that will help provide a better reading experience digitally, and I think those two factors are going to drive adoption of digital publications faster in the next five years than the 10 years that preceded it.
Is there already traction in the market for digital magazines?
The figure that has been quoted to me by a couple of vendors is there's about 3 million digital publications downloaded a month, 3 million. And most of those are trade publications—controlled circulation, technical publications—and that makes a lot of sense. Those are the early adopters for digital.
Click here to read about Peter Meirs' presentation at the recent Circulation Management show.
But if you look at the audited figures, the circulation leader on the consumer title side, under ABC [Audit Bureau of Circulations] is PC Magazine with 195,000 claimed paid subscribers, which is really significant because their rate base is somewhere around 1.4 million. So, that's significant for it is a double-digit proportion of their total rate base. After that, the numbers are much lower.
So, how are the readers taking that? Are they buying digital magazines as a supplement to paper, as a replacement of paper?
There are some publishers that are offering a digital version as a supplement. A lot of publishers are offering the first issue or the first couple of issues in digital form and then they switch over to a print distribution after a certain point, and the reason for that is to create more reader loyalty or to improve retention by instantly fulfilling the subscription the day that the subscription is started.
So, if someone called up a fulfillment house and ordered a subscription to a magazine, within a couple of minutes they can get their first issue, and in the meantime their record is being put into the fulfillment system and in many cases it will probably take four to six weeks for their name to be part of the print subscription word process.
It's a way of serving that first copy substantially faster than what's been done historically. So, that's one of the ways that digital has become part of the publishing cycle.
Some publishers are using digital magazines to do promotions and sampling. It's an opportunity for them to put a full issue of one of their magazines into the hands of tens of hundreds, thousands even, millions of people, at an extremely low incremental cost compared with if they tried massive sampling with print. Some publishers, I can't tell you who, are operating a digital version of their magazine along with the print at sort of a premium.
Next Page: Archives serve as an incentive to drive subscriptions.
Do you think for the average consumer, not Mr. PC Enthusiast, do these things show up on the radar? Do people perceive it as something interesting? What's the perceived value of a digital magazine?
For some people, it's the only way they can get their hands on the content. If they live in a place where you cannot access a printed copy, there's value there. Some people like it because it's digital, therefore it's searchable, so there are features in a digital publication that are not available in the print publication. They can archive digital issues and search across their archives. They can throw out their printed copies and still have the content.
Rich media adds another layer, and as publishers start to understand how they can integrate rich media into the magazine, they will be able to offer things and make a digital version perhaps more desirable than the print version.
If you have an entertainment magazine that covers music or it covers film, to be able to show a sample, to do an audio sample of a song, do a video or trailer of a movie, that can be very compelling.
How is Time pursuing digital magazines? Are there publications on the horizon?
We've done a lot of experimentation. We originally looked at digital magazines as a replacement to print. The idea being that if you can qualify a digital magazine, you can produce it for less money, and if you're able to count that into your rate base, you're able to save on the expense side, especially since our distribution and our consumable costs are rising so quickly. We wanted to have some sort of a hedge and still maintain our revenue stream.
What we've discovered is that most consumers are not really ready to switch over to digital versions. We think there's an audience there, but we don't think it's sizeable.
Click here to read Andreas Pfeiffer's latest take on Apple's plan to switch to Intel processors.
But what we think we can do is use digital magazines to create awareness of our print products or to drive up print subscriptions through digital sampling programs, and we've done that with Business 2.0, we've done a promotion with Money magazine, we sent an entire issue of our prelaunched version of Money to a million people.
We've done other sampling efforts with Your Diet Magazine, and we've converted some of our nonpaid subscriptions to digital, for instance, Sports Illustrated, or Campus, which is a publication that is distributed across the U.S. to 72 colleges and universities in print form.
Sports Illustrated wanted to extend the reach of that publication, so they offered a digital version on their Web site for people to sign up. There was no cost attached to it, but they were able to broaden the distribution by thousands of copies.
So, do you think that as we move ahead, digital magazines will replace the printed publications, or will they be different publications, linked to the main brand and providing something else?
That's the real question: What will a magazine be in five or 10 years? Right now, digital magazines look a lot like print magazines because that's really the only way that ABC will count them. So, publishers are really constrained to re-creating the physical publication in digital form.
But in a number of years, with the incorporation of rich media, with better reading systems, at some point people are going to say the magazine should fit the media, it shouldn't be a duplication. In which case, it could evolve into a form of its own.
If the cost of a [print] magazine starts to rise to a point where publishers will be forced to raise subscription prices radically or charge substantially more on the newsstand, demand is going to decrease, and publishers need to do something to keep that readership because otherwise that readership is going to go to a different part of the media mix.
But do you think that the attraction of paper is going away? Today, the physical aspect of glossy magazines still seems to be quite attractive.
They are. I think there's always going to be a place for print magazines, but it isn't clear to me that it will be practical to produce them years from now. Between pressures from conservation groups, and a real breakdown in the distribution supply chain, the cost of producing printed publications may become so great that there's no one buying them.
There will probably be some publications that people will always want in print: National Geographic may always be there as a print publication. Other publications, perhaps not.
Next Page: New workflow simplifies transition to cross-media.
Which brings us to the question of interactive content. How would you describe the difference between a Web site and a digital magazine?
Well, I would say the best way I can compare the two is to say that a Web site is amorphous. There's a place you go and then there's many places you can go from there. There is no form or shape to it. It's all about relationships between that content and other content.
A magazine has a start, a middle and a finish. There's a sense of completion when you've gone through it. There's a sense of organization there. And people are very attracted to that model.
You can tell a story in a magazine, but you cannot tell a story on a Web site.
Right.
What are the technical challenges that you face when you move to digital magazines? Are there tools in place?
There are. We are much better prepared to create digital versions than we were just a few years ago. Moving from our proprietary work processes wasn't that difficult. Ten years ago we were predominantly on a Scitex workflow. Repurposing that content was difficult. Moving to a desktop workflow using standard technologies and using formats like PDF, which are highly extensible, has made repurposing much less complex.
We still have some issues. A lot of our titles are still providing their pages as PDFs with the fonts vectorized to the printers, and therefore it still puts a burden on the digital magazine suppliers to create a searchable index by doing OCR (optical character recognition) or other methods.
Click here to read about the use of PDFs on the Internet.
In a perfect world, we would be sending our PDFs with embedded fonts, and then the digital vendors would be able to leverage that and have a searchable document at the start of their process. They still have to do some transformation on color space, they have to change the resolution of the photos, unless we do it.
We want to do the very least: We want to be able to create a workflow where we get down to the end of the process, pages go to the printer, pages go to the digital vendor and there's no extra work on our part.
You would think that it's sort of a perfect market for cross-media publishing, right?
It's the definition of cross-media publishing.
What are the biggest challenges lying ahead?
Well, the biggest challenge for digital magazines regardless is the rights situation. The fact that a publisher needs to be willing to invest in a lot of front-loaded costs like securing digital rights across the entire magazine.
I mean, if they're interested in creating a digital magazine that will sit side by side with the print version and be counted within the rate base, for ABC to qualify it, it needs to be an identical facsimile of the print, and in order to do that, you need to secure all those photos.
So for a lot of publishers, they look at this opportunity and they say, OK, what's the size of my readership, what's the potential of my readership, what's it going to cost me to create the digital publication to gain that. And unless they're really looking at investing in the future, they may be reluctant to even offer that model.
In parallel with that, how has the online strategy evolved at Time for the Web sites, the content strategy? Has that had significant changes in the past five years?
Yes, it's changed a couple of times. At one point, sort of coincident with the bust of the dot-com bubble, there was a real retrenchment in terms of investment in the Web site—not just timing, but most companies were losing advertising support, and one of the strategies that AOL and Time Inc. incorporated was to put some of that content behind what we call a curtain because it really wasn't a model that was sustaining itself.
It wasn't a revenue model that was sustaining itself in its present form. So, the idea was to take advantage of the fact that this was desirable content and perhaps don't make it available unless you're a subscriber to AOL or you're a subscriber to one of our publications, make the content sort of drive demand.
So, we made a change a few years ago where we put our content behind the curtain in hopes that it would drive more people to take subscriptions to AOL or buy newsstand copies, whatever would give them access to this content.
Next Page: Publishers must help readers recognize value.
So, when you buy a newsstand copy, you also have a log-in that you can go into the site? How does this work in the market?
It's a marketing device and they've been doing this for a while, but now that Internet advertising has sort of rebounded, there's a recognition of that opportunity. There didn't seem to be a lot of liability by taking the content back behind the curtain.
Now it's clear that there's a revenue opportunity that didn't exist two or three years ago, and we want to take advantage of it, so we're starting to expose more of our content publicly again.
It used to be if you went to peek at some of our magazine Web sites, if you tried to get into the content, you would get hit with a challenge page that would say you're welcome to read that, all you have to do is subscribe to the magazine or take out a subscription to AOL or—I can't remember what the other options were—and now they're actually starting to offer more content to viewers. Not the good stuff, necessarily, perhaps not the archives.
And one of the strategies is if you keep the archives protected, you make that an inducement or an incentive for people to the magazine because then they can read the archive.
The New York Times has the model that they don't charge for the content when it's fresh, and then the archive, you can buy it on a story-by-story basis. Does that work?
We were doing that with Time Magazine, Pay Per View. So you could read the article. Time.com will typically expose probably six or more featured articles from Time Magazine on the Web site and then eventually that becomes unavailable. But the strategy now is not to sell by the story, but to make access to the archive a requirement to subscribe.
So, what is the big underlying evolution in digital content? Consumers are happy to pay for a cinema seat, yet they do not want to pay for online content?
I agree with you completely, I think people will pay for things if they perceive value, and if you go to the movies, you're spending $10 or perhaps more, but there aren't too many other alternatives that provide the same social experience.
I mean, you could rent a DVD. I have a beautiful system at home. My movie-viewing experience is better at home than it is publicly just because I've made it that way, but the fact is I still go to the movies because I'm getting something that isn't available broadly.
With the Web, there is so much choice that people sometimes can't differentiate good choices and bad choices. And so it's up to publishers, it's up to media companies to make that much clearer than they make it today.
Digital magazines are different than Web sites, and they have an opportunity to create that point of differentiation. They haven't been that successful because the user experience isn't that great, it's not that easy to show that difference, but I really do think that device evolution [and] user interface evolution will help demonstrate the value that you described.
And do you think the e-book market is coming into focus?
Yes, but not in the way the original e-book companies thought it would. I don't care what Sony does, Philips, there really just is never going to be a market for a proprietary e-book reading device.
Click here to read Jim Louderback's column defending e-books.
I think e-books will just sort of become part of people's media experience when devices evolve to the point where they're all things to all people, they're like a PDA or a cell phone.
Everything is the convergence of all the functionality if they're carrying this device around, that does all the things that they need it to do, and it has a display that is of a quality that people accept. They'll read e-books, but they won't read e-books because they want e-books—they'll read e-books because books appear on the device that they read off of.
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