USAToday.com and other news sources report that Conde Nast, Hearst, Meredith, News Corp, and Time Inc. are the founders of this yet unnamed venture, which will be led by interim director John Squires of Time Inc. Squires has also served in leadership capacities for both Audit Board of Circulation (ABC) and Magazine Publishers of America (two influential and standards-setting organizations within the print industry).
It seems that the joint venture will serve to establish standards for digital magazines and newspapers, in the way of pricing, marketing and technical standards. For an industry that competes on editorial differentiation, an alliance like this is a deviation from the norm.
That's a good thing. Such action is long overdue.
What went wrong.
The industry was slow to realize the importance of digital content and how best to monetize it. Consider this 2004 report from MPA which details digital edition subscriptions for ABC-certified magazines. Only 20 publications were listed, with PC World, Seventeen and (the now discontinued) Cosmo Girl leading the way. Notably absent in 2004 were any Conde Nast, Meredith and Time Inc. titles. By the end of 2007, 110 titles were available digitally, generating 1 million total subscriptions. Improvement, yes, but compare that against a 2005 report that there were 2,000 U.S. magazine titles with significant circulation.
The industry also failed to establish common pricing and content distribution practices early on. Instead publishers treated these things not as standards, but strategies. They tried to compete with one another by either restricting access to a fewer number of readers and making money on content, or opening content to all readers and making money on advertising.
Sometimes newspaper publishers changed strategies in the middle of the game, further tripping them up. NYTimes.com provides a good example of this. It began publishing content to the web in the mid-1990s, requiring registration to access certain articles. Then it pursued an "open-but-closed" type of policy, introducing a subscription service for certain editorial columns, before reopening the entire site in 2007. In the meantime, bloggers and online readers found ways around walls, accessing RSS feeds for content, or seeking out third-party sites for cut-and-paste content.
As a consequence, we are left with confusion about the value of content.... at least I am.
How the alliance can help.
In May 2009 The Wall Street Journal's new owner, Rupert Murdoch, announced his intention to move all News Corp. digital properties to subscription models, and went so far as to declare "The current days of the internet will soon be over." It sounded audacious, but he has stuck to his guns, restating this opinion today in an editorial for WSJ. "Some newspapers and news organizations will not adapt to the digital realities of our day," he wrote, "and they will fail. We should not blame technology for these failures. The future of journalism belongs to the bold."
So is the newfound alliance bold? It is if you consider that these publishers are willing to swallow their pride and work together; not so much if the other option is failure.
That's a real possibility. Consider that in 2008, 525 magazines ceased publication. The remaining titles scrambled to get lean and to put their online platforms in order. These online platforms included websites and/or digital subscriptions, like this fancy one from my former employer, Paste.
Coming together and establishing best practices, as well as a common storefront for digital content, will ultimately benefit both publishers and consumers. We could have an iTunes or Hulu for magazines and newspapers, with common formats, quality standards and pricing schemes. Perhaps we will even have one place to manage all of our newspaper and magazines subscriptions so that, when you change addresses, you don't have to send notice to each publication.
Still to be resolved is what role advertisers will play in digital subscriptions. Over the summer the media director of a major advertising agency told me that digital subscriptions are worth nothing, and shouldn't be counted towards circulation. Though his is only one opinion, it is an opinion that publishers will surely hear again and again. All the more reason paid digital subscriptions -- where revenue comes from consumers, not advertisers -- will be important in the future.
But will all this muscle power attract cries of collusion? Perhaps not, if the joint venture is truly independent. After all, ABC has long set standards for the industry (and is funded by dues paid by advertisers, agencies and publishers). Besides, if not the publishers themselves, players like Amazon (with its Kindle) and Apple (with the iPhone and rumored tablet) will be left to set the rules.
We're not talking about survival of the fittest anymore. Unless the industry answers the question of "How valuable is content?" it will remain fragmented and weakened.
We've come to a time when publishers can either live together or die alone. They are choosing wisely.
3 comments:
Great post -- I wonder if this is more of a reactive "hail mary pass" type of move though... it seems like it, right? And I guess if the analogy holds, that means there will be a very low chance of success.
Yes indeed, "hail mary pass" is a great way of thinking of it. That gets to the point of whether or not this is a "bold" move or just a necessary one.
Your comment actually made me think about my current research on the evolution of digital music. In this research I found an interesting statistic that we might consider against this publishing example:
In October 2000, 75% of consumers who downloaded music reported that they would be unlikely to pay to download music in the future (Forrester Research). Yet by 2008, digital music accounted for $3.7b in revenues. The issue of piracy has not gone away (in fact, IFPI estimates 40 billion files were illegally shared in 2008) but the music industry was able to change buying behavior such that 20% of recorded music sales now come from digital sources.
If publishers can change consumer behavior and attitudes like the music industry did, maybe they will have a fighting chance.
Insightful post. I agree there's big upside, but shared platforms are notoriously difficult to manage. Media industry has a mixed track record to date with shared platforms, and more are on the drawing boards:
- Hulu, so far, has been a success
- The newspaper industry failed badly 15 years ago with New Century Network, an online local ad network
- Cable industry is developing shared platforms around TV Everywhere (streaming access for cable subscribers) and Canoe Ventures (addressable ads)
Management of shared platforms is a big deal -- and a very challenging task -- for media companies. For more on this topic, see an article I wrote in California Management Review, Summer 2008, "Managing Proprietary and Shared Platforms." Stop by and I'll give you a copy.
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