Thursday, March 8, 2012

Cosmopolitan's 100K in perspective: give 'em credit, they did it with one arm tied around their backs

AdAge's Rupal Parekh yesterday posted an article that proclaimed that Hearst Magazine's Cosmopolitan had reached the 100,000 mark in "paid digital subscriptions".

The Hearst Magazines title seems to have beaten other brands to the mark, reinforcing the idea that digital will be a big platform for Cosmopolitan. But it's also a good sign for magazines' digital ambitions in general.
Optimists will, of course, applaud the achievement, while cynics dismiss it. Both side's arguments have validity. The proponents of digital magazines, this site included, can point to Cosmo and claim that they are vindicated in their position that digital magazines, and tablet magazines, in particular, are the future. Cynics, this site included, can point to Cosmo as a bad example: with 1.5 million readers, reaching 100K equals less than ten percent, and besides, a magazine that puts "sex" and "abs" on the cover of every issue is at an unfair advantage, right? Try doing that for EndoNurse Magazine.
Cosmopolitan, as Parekh's article points out, has been on the Zinio platform since 2005, giving them a bit of a head start on other magazines. But Cosmo was not one of the first magazines to launch an iPad edition – it's first app did not appear until March of last year (11 months after the launch of the original iPad), though the app did migrate into Newsstand almost immediately.

But Hearst continues to risk negative App Store reviews by locking out its print subscribers, making them pay for a digital subscription, despite having already ponied up for print. This is one of the three approaches a publisher can take inside the App Store.
  • Make everyone pay: it cost you money to create that app, better charge for it
  • Make new subscribers pay, give away digital to your print subscriber
  • Give it away to every, hey, it's only money
The last option is, it should be noted, reserved for free publications, and those publications where the web team is controlling things (I suppose the Washington Post is a good example of this).

The second option – give digital away to print subscribers – is the one most publishers are using. It makes sense to many because distribution costs for digital do not escalate in the same way print does. Delivering 100K digital copies of your magazine is not significantly higher a cost than 50K (unless you are using a vendor that charges for delivery, in which case you should be asked "are you crazy?").

For veteran print publishers, rising circulation always puts additional pressure on the ad teams to justify the increase since both printing and distribution costs often rise much faster than subscription revenue. But with digital rising subscription revenue should more than make up for any additional costs encountered.

One of the first discussions found online among publishers was whether apps should be free or paid for – that argument was very quickly settled (give away the app, charge for the content). Only a few replica editions, created by third party vendors have the nerve to charge for the app, then again for additional content (often the first issue inside the app is free).

But by charging everyone for digital, including your print subscribers, Hearst is selling digital with one arm tied around its back. It is also risking alienating print subscribers (especially young ones).

But I also see this approach's advantages. For one thing, as financial matter, it forces the digital teams to perform. Having worked at Hearst myself, I imagine the NYC execs wagging their fingers at the digital guys demanding that they prove there is a future in tablets. After all, they're not exactly getting rich off the web, are they?

It also forces print subscribers to eventually make a choice. You are a reader that has invested in an iPad, or even a Kindle or NOOK, now you want something to read on it. While it may annoy you that you now have to pay yet again for content, you also know that the same thing also applies to television (which may explain why so many young viewers are eager to ditch their cable companies).
But pity the print circ pros who know their print levels will be sliding as many of their readers migrate to the tablet editions. I'm sure many are, or will be, arguing that the cost of maintaining print circulation is increasing where readers are forced to choose between print and digital.

"Make 'em pay!" sounds good to the ears of media executives that have had to deal with the consequences of free web access all these years – who wants to make the same mistake twice? But for some publishers, who are strong advocates of tablet editions, they want to see those numbers rise, and so giving away digital to print subscribers makes a lot of sense.

To the ad people, this second strategy is the way to go. The biggest single obstacle to tablet advertising – other than the agencies – is reach. Many publishers have had to go with a single sponsor approach to their initial tablet efforts, or else pull the ads, or give them away (not that!). A magazine that can present a decent looking circulation number has a chance.

On April 3 we will hit the two year anniversary of the launch of the first iPad, and while the digital subscription numbers may seem still small, one has to have a little perspective. While some media consultants were complete dismissive of the iPad at launch ("I simply don’t see a good use for the machine and don’t want to spend $500 on something I’m not going to use," one media consultant wrote on April 10, 2010), tablet sales have exploded. At this pace of sales we may be at the point where we will begin to hear of more publishers reaching the 100K milestone.

A little more perspective: the first television sets were produced for consumer purchase in 1947. In 1949, the third year, total television sets produced (not sold, produced) hit 3 million (PDF). Apple reached this level of sales in the first quarter the iPad was available.