Rising costs of postage and paper give publishers a major incentive to convert circulation from print to electronic, but adoption remains in the early stages.Newspaper and magazine publishers, besieged by rising costs, tumbling circulation and the frustration of giving their content away on Web sites, are gradually turning to downloadable electronic editions as an alternative to print.
Although the technology is in place and vendors are in the marketplace offering to convert print publications to digital facsimiles, experts agree that the evolution of electronic editions is in its early stages, and there are large obstacles to overcome.
As an alternative to printed periodicals, with their high costs for production and distribution, electronic editions offer many advantages. "They extend publishers' reach in the sense that the market for hard copy is dropping," said Jean Bedord, senior analyst for Shore Communications, in Cupertino, Calif. "It's flat at best, and there are a lot of inefficiencies for periodicals. [A periodical] has to be printed in a central spot. A label has to be put on it. It has to be physically transported to my mailbox. So each step along the way adds a cost. Then look at the newsstand and see how many copies get thrown away.
"I think the economics behind it are going to drive publishers into e-books, and the same thing is going to happen in the periodical space because the supply chain economics are going to drive it," Bedord said.
Kyu Kim, manager of enterprise solutions for E-Book Systems Inc., of Santa Clara, Calif., said publishers are slowly warming to the concept of electronic editions. "It's still in the early stage, but it's coming along, compared to two years ago when people did not even have the concept. Back then, one of the most frequent responses we got [to sales calls] was, 'We already have a Web site.' Today that barrier is gone."
E-Book Systems is one of several vendors who convert and process publishers' print files to create electronic editions. In its simplest form, an electronic edition is essentially identical to the print copy and is downloaded as a simple PDF-like file.
Other vendors in the space include Zinio Systems Inc., NewsStand Inc., NXTbook Media, Olive Software Inc., qMags and Texterity Inc.
A Time Inc. executive talks in depth about electronic publishing. Click here to read more.
Depending on which vendor does the conversion, the digital facsimiles can be read in a browser or with specialized reader software.
Kim said E-Book Systems can perform the conversion or train a publisher to do the conversions in-house. The advertisements can be enhanced with hyperlinks, for which some publishers charge advertisers a premium.
Kit Webster, president and CEO of NewsStand, described the current use of electronic editions as being limited to "early adopters," but said the business case is compelling. "Publishers face competition from themselves with free content on the Web. That just has to resolve itself. It's not sustainable in a time when publishers are facing a downturn in subscribers and advertising."
He added, "In the future, print does not go away, but it will diminish in share of distribution. The growing share will be in electronic editions and be customized and personalized and presented on different devices."
Readers are not rushing in
Industry experts attribute the lack of reader appetite for digital editions to a number of factors, starting with the awkwardness of the reading experience. Jack Shafer, press critic for Slate.com, has likened the experience of reading an online newspaper to "reading a newspaper through a six-pane colonial window in which five of the panes have been blacked out."
In an interview this week, Shafer said, "I have not seen anything that has really knocked me out." He said the idea of reproducing a broadsheet newspaper for on-screen viewing is like television news in the 1950s, "where the idea was a radio newscast with the picture of the guy reading the news."
Shafer said full-size electronic broadsheets "don't translate, not even on a big monitor." "It's hard to imagine 10 years from now that anyone will be making anything like the NewsStand [Inc.] version of a newspaper, a glorified PDF version."
Next Page: Advantages are apparent to publishers.
Shore's Bedord said the downloadable reader software that is required for some electronic editions is itself an obstacle. "That's the barrier: the fact that I have to download a little piece of software onto my PC. It's not hard; it's just the multiplication thing, like passwords. They're all easy, but each one of them is this incremental piece of complexity."
The companies that create electronic editions are working to improve the reading experience. Kim Dail, vice president of marketing at Denver-based Olive Software, said Olive has installed tools in its editions to allow readers to choose from five page sizes. Also, when a reader clicks on an article, it pops up in a separate window, where viewers can control the font size. Dail also pointed out that Olive's electronic editions, which are XML-based, can be read in a browser and do not require a specialized reader.
Advantages for publishers
While readers may be slow to catch on to electronic editions, publishers can see the advantages now.
"I believe the benefit for the publishers of electronic editions is the economics," said NewsStand's Webster. "The economics are really compelling for controlled circulation magazines and only slightly less compelling for the others." He said that facsimile editions are counted in qualified circulation by the BPA and the ABC (Audit Bureau of Circulations), so they boost circulation for advertising purposes.
Bedord predicts advertisers will come to appreciate the value that electronic editions provide. "My take on advertisers is that they clearly are agnostic about the media, provided you're delivering the eyeballs."
She said electronic editions have an advantage over print in that their usage can be tracked and reported to advertisers. "To the extent that new technologies can deliver return on investment, they are way ahead of traditional media. With something like a digital download, you know exactly how many people have downloaded it.
"I think there is an awful lot of promise out there, but it's not yet to where advertisers are comfortable shifting a major part of their dollars over there yet," Bedord added.
"During the dot-com bubble, it was proven that banner ads do not work and that response on popups is about zero percent," said E-Book Systems' Kim. "However, if you deliver the full magazine, people will be able to enjoy those full-page ads. It's not intrusive; it's actually part of the reading experience."
There also are advantages to international distribution of magazines, particularly the cost savings from not delivering the magazine and the elimination of damage incurred during mailing, Kim said. One of E-Book Systems' customers, Advanced Imaging magazine, has started delivering electronic editions to all its European customers, he said.
Some publishers use digital editions to drive print circulation. Click here to read more.
For some publishers, there is an advantage simply in offering electronic editions. Greg LaFollette, executive editor of the CPA Technology Advisor magazine, said, "I do a lot of things because we're a tech magazine as a demonstration of technological prowess. If I were publishing a gourmet food magazine, I would not digitize, but I believe we have an obligation to eat our own dog food." CPA Technology Advisor recently began offering electronic editions created by E-Book Systems.
Similarly, Kit Jeerapaet, president of Dupont Registry Autos magazine, said, "The benefit is that it puts us on the leading path of virtual magazines. There are magazine companies where the Web site is very secondary. We want our site to be just as strong as our magazine." Dupont publishes electronic editions of its all-advertising magazine using E-Book Systems.
Jeerapaet said Dupont's advertisers also appreciate the speed to market that electronic editions offer. "Now advertisers can put an ad [in the print and electronic editions] and maybe get a phone call on their ad before the print version is even delivered."
Electronic editions also offer new revenue opportunities. LaFollette said CPA Technology Advisor charges advertisers a premium to place hyperlinks in their electronic ads or to have their ad bookmarked with an on-screen tab.
Readers might see benefits
There are advantages for readers as well. Jeff Martin, director of business services for NXTbook Media, said readers appreciate the familiarity of the magazine format. "A Web site has a home page, but finding sections can be difficult. It's not as organized as digital magazines are."
Shore's Bedord cited the advantage of reading offline. "Being hooked up all the time is not a good option. Having the choice of going offline and still being able to read is an advantage." She predicted it will take five to 10 years for electronic editions to really catch on.
Slate's Shafer, on the other hand, said electronic editions are not for him. "I can only imagine using them under special circumstances. If I were going to be gone for two months, rather than come home to a two-month stack of newspapers, I might have a two-month [electronic] archive."
He said a design breakthrough is needed. "I think the prize will go to the innovator who breaks the mold and invents a new design grammar [for electronic editions.]" Publishers must "harness the power of the computer" by merging electronic editions with powerful search capabilities that can find an archived story from the publication immediately, he said.
Not all the issues holding back electronic editions are technological, according to Shafer. "If NewsStand is too good, it cannibalizes the legacy medium completely. We do not know the implications if suddenly 80 percent of The New York Times circulation is switched to electronic, what it would do to the ads?"
The Times has lots of experience doing print ads, he said, compared with just two years of producing digital equivalents. "Maybe the advertising there is not going to be as effective," he added. "So I think that everywhere in the newspaper industry they're very cautious. No one is building a revolutionary newspaper."
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