Wednesday, June 5, 2013

While Apple seeks to create its own streaming service, one wonders when the rent-it rather than buy-it model will take over magazine publishing, as well

It is a wonder that there are not more stories such as this one: a UK publisher, Archant Life, will shutter its regional titles for the communities of Shropshire, Worcestershire, Warwickshire, Herefordshire & Wye Valley, Wiltshire and the North East

“In the current economic climate and looking at the performance of these titles, we have concluded the best option for us is to suspend publishing in print until the economy picks back up and the local economies in each of the publishing areas can sustain the re-launch of these titles to the quality we desire." So says Miller Hogg, Archant Lifestyle managing director in the original story from HoldTheFrontPage, a UK media news site.

For the most part magazine and newspaper titles fade away without much fanfare, with barely a small mention in the local press – unless the title is something like Newsweek, when its death (at least in print) gets a thorough, though superficial review from the usual media gurus.

Those of us heavily involved in digital media can take the wrong approach on all this, though, wrongly assuming that the daily launches of new digital magazines somehow can compensate for the decline of print titles. But that would be looking at the situation with rose colored glasses.

For every new digital magazine employing one or two self-publishers, the death of a print publication takes with it a roomful of journalists, advertising and production personnel. For every title leaving the small, but crowded print newsstand, where magazines are easily discovered, a dozen new ones enter an overcrowded, poorly designed Apple Newsstand where discoverability has been (apparently) intentionally limited.

For every report that shows more ad dollars going to digital, and more readers flocking to tablet editions comes personal conversations with digital magazine publishers lamenting the low number of downloads and the poor subscription sales of their magazine launches.

If that isn't a depressing assessment hold on to your hats, it may get much worse in the years to come.

One of the big news items many expect to come out of next week's Apple WWDC conference is the introduction of a Pandora-like radio streaming service. Just about every day now comes another story of Apple's apparently desperate negotiations with music companies trying to lock in streaming rights.

Why are they seemingly so desperate to launch a streaming service? Isn't the market already being served?

The reason for the need for Apple to move in this direction is that suddenly it finds itself in the same bad position that the record labels found themselves in when the MP3 arrived – now Apple is the one that has to wonder whether their iTunes sales will decrease if everyone starts to rent their music rather than own it.

But we in publishing shouldn't sit back and feel like the same forces shaping the music industry are not effecting publishing. The rise of the subscription service for magazines is upon us now, and its effects are likely to be similar to what is happening to many record companies – commoditization of the product, downward price pressure, and discoverability issues.

The most public example of the subscription model is Next Issue, the digital newsstand start-up launched by a consortium of major publishers (Condé Nast, Hearst, Meredith, News Corp., and Time Inc.) Next Issue offers readers access to their titles, 93 right now, for a monthly cost of $9.99 per month ($14.99 if you want access to the handful of titles deemed premium).

The system works for the publishers because the titles are limited. 93 magazines may strike readers as a lot of choice the first time they are presented with Next Issue, but in reality the entire catalog of titles would fit easily onto one shelf of a Barnes & Noble magazine stand.

The system works for the big publishers because they are there and you're not. Want to get your new niche into the Next Issue catalog? Good luck with that.

But Next Issue does not have a monopoly on the subscription newsstand. Recently Zinio, a pioneer in the area of the digital newsstand, introduced Z-Pass, a sort of mini subscription service. For only five bucks a month you get three magazines.

Now sit back and imagine for a moment a situation where Apple, or Amazon or Google begins to offer a magazine subscription service. It is hard today for a digital magazine start-up to earn back the revenue via reader sales to pay Adobe, Mag+, or Quark for the cost of designing, building and streaming their new titles. What happens in a world where one is forced to be simply one of many titles available for monthly renting? That $1.99 a month you've from a new reader could easily become less than a dime.

While one can easily see the downside of subscription publishing one also can see an upside. One of the biggest issues facing publishers of new digital magazine today is advertising. Few ad networks have been established to support the efforts of indy publishers. But the rise of a subscription model could solve that – and, ironically enough, could possibly solve Apple's iAds problem.

While one can't feel very comfortable with the idea of a typical irrelevant web ad suddenly showing up in your digital magazine, the fact is that this is happening now with mobile advertising.

Unfortunately, I see less good things happening in the way of tablet advertising than I do bad things happening with pricing of subscriptions. Until this trend reverses publishers will continue to feel very squeezed.