Colin's Corner

The need for a Media Publishing Association

The MPA (The Magazine Publishers of America) today is releasing an analysis that assigns a relative value to each minute consumed, and not surprisingly, consumer magazine stack up very well vs. other major consumer media on that basis, including TV, radio, the Internet, and even the other major consumer print medium, newspapers.

While laudable to show the value of magazine advertising I think the MPA has to take a real leadership in looking at the audience relationship with the brand - and stop putting the magazine at the center of the universe. Print magazines can be key product - but publishers are not in the print business - they are in the customer information business - it takes bold vision to move the conversation up a notch - which I think the MPA can do - but as long as it's just seen as a defensive trade organization, protecting print, then its long-term relevance will be questioned and it will continue to lose membership support and the dues that are necessary to fulfill a long-term mission.

I believe the industry needs an MPA - the Media Publishing Association. An organization that can get behind the value of print, online, mobile all vital but very different mass media with vastly different user experiences.

The current MPA is just not going to win a print versus other media argument but it definitely has more chance of winning an argument that values all media with magazines playing a role.

The Mobile Difference - a wake up call ?

A fascinating report from the Pew Internet & American Life Project on mobile internet usage. As an internet driven culture the US has a significant way to go to catch-up with the mobile cultures of developing countries - such as China, India and to some extent Europe. This report should be a wake up call. 

According to the analysis, 61% of the adult population do not feel the pull of mobility. That needs to change - mobile companies have to do a much better job selling the value proposition that mobile access brings. Mobile can deliver huge personal and business productivity benefits. It's the next mass media and publishers and other organizations need to be planning for the transition to mobile now. The transition from print to online is nothing compared to the disruption mobile will cause over the next few years.

Digital Collaborators: 8% of adults use information gadgets to collaborate with others and share their creativity with the world.


Ambivalent Networkers: 7% of adults heavily use mobile devices to connect with others and entertain themselves, but they don’t always like it when the cell phone rings.


Media Movers: 7% of adults use online access to seek out information nuggets, and these nuggets make their way through these users’ social networks via desktop and mobile access.


Roving Nodes: 9% of adults use their mobile devices to connect with others and share information with them.


Mobile Newbies: 8% of adults lack robust access to the internet, but they like their cell phones.


Desktop Veterans: 13% of adults are dedicated to wireline access to digital information, and like how it opens up the pipeline to information for them.


Drifting Surfers: 14% of adults are light users – despite having a lot of ICTs – and say they could do without modern gadgets and services.


Information Encumbered: 10% of adults feel overwhelmed by information and inadequate to troubleshoot modern ICTs.
The Tech Indifferent: 10% of adults are unenthusiastic about the internet and cell phone.


Off the Network: 14% of adults are neither cell phone users nor internet users.


Most “motivated by mobility” groups have positive and improving attitudes about cell phones, while remaining groups have tepid and deteriorating attitudes about them.
Deepening attachment to digital resources – wired and wireless – means connectivity is for many users now about continual information exchange.
The bar for what qualifies as high-tech among users has risen.
The “penalty” for having little or no access rises in a multi-platform world.

Apple’s iPhone 3.0 – a tipping point for a beleaguered publishing industry?

 

At a St. Patrick’s Day press event in Cupertino, Apple announced the developer beta of iPhone OS 3.0.

The implications for the publishing industry are huge but extremely welcome. Ultimately, today’s announcement will be seen as a tipping point for an industry that is facing massive economic havoc caused by the combined impact of the Internet and the current economic recession. 

The critical part of today’s announcement for publishers is the ability to leverage the purchase model of the App Store within individual apps. In-App Purchases now allow developers (and media publishers) to offer subscription content and provides the ability to sell new content and features in a simple and secure process.  Before this announcement, publishers could not easily monetize their mobile content via a paid model. Now, a paid content model on mobile has opened up for media companies. 

For the last fifteen years, publishers have watched with anguish as the free content model of the Internet wrecked havoc with their businesses. Initially, online advertising provided some economic support for the cost of content creation but analogue dollars rapidly converted to digital pennies  (it appears we've now moved up to digital dimes) The majority of online revenues have gone mainly to the search engines rather than to traditional media companies who create the original content. Lost subscription and newsstand revenues, plus reduced online advertising revenues (in overall dollar terms) cannot compensate for the collapse of print revenues. Some B2B publishers, such as my previous employer, International Data Group fared better as they focused on performance based revenue streams, especially around lead generation.

Many publishers’ inability to adapt quickly to the changes brought about by the internet is part of the problem – but it’s hard to compete with free and it’s really difficult to break a highly profitable cash generating model for one with uncertain revenues and profits.

The transition from print to online is challenged under today’s business models. Some argue that print can be fixed by changing the business model. However, I don’t subscribe to that view. Print is not “dead” but is much less relevant as a medium for the consumption and creation of content.

Today, nearly all publishing is digital publishing and nearly all writing is for digital media. Publishers have to adapt to the realities around them, not cling unrealistically to a previous era.

Now, we’re about to go into another media transition. Online is now fairly well established but mobile is about to surge.

Mobile is the 7th of the Mass Media , and it offers publishers the opportunity to redefine their businesses and to really learn from some of the mistakes during the era of print to online transition.

The good news is that users’ psychology around mobile is very different to how they view online – they are actually willing (or have been conditioned) to pay for stuff – for SMS, for ringtones, for music, for games, for content – either via the carriers or as Apple’s iTunes has shown, via a convenient online storefront that is completely separate from the carriers.

Through the iTunes store, users can purchase music, movies, audio books, and iPhone applications. It’s a breeze to use and integrated well with both your computer and iPhone.

Today there are approximately 28,000 apps of which around 75% are paid apps. Excluding the free apps, the average price of paid apps is a little under $4. According to Apple, 800,000,000 apps have been downloaded and while the majority of downloads are for free, if even 10% of these downloads are paid, assuming an average of $4, that represents approximately gross revenues of $320MM. Apple takes 30%. It’s not hard to see this growing to a multi-billion dollar business over the next few years.

As the number of apps grows rapidly there is increasing concern over discovery. If you are selling a game app for $0.99 you are competing with another 6,000. So unless you get on the top 25 list or are a featured app it’s extremely hard to get noticed.  The Apps Store is not currently searchable by the various search engines, so the concept of Apps Store Optimization (ASO) is not developed – yet.

Apple’s taxonomy and sub-categorization leaves much to be desired and the interface is based more around a browse than a search metaphor. But, despite these and other go-to-market challenges currently facing developers, the Apps Store, coupled with 30 million iPhones and iPod Touch devices is a huge addressable market and growing rapidly. It can’t be ignored.

Today’s announcement, plus an expected upgrade to the iPhone in the summer will ensure solid momentum for the product with the other handset manufacturers scrambling to play catch-up.

For publishers, the subscription model available with the Apps Store helps answer the question of whether to mobilize a web page or develop an app. While my recommendation is that publishers need to develop a very comprehensive mobile strategy, the revenue streams are more likely to be from a paid app that from advertising off a mobilized web page.

Mobile digital content is really starting to take off. Over the last several weeks, there has been a lot of activity in the e-book market. It’s largely driven by the publicity around the release of Amazon’s Kindle 2 and the accompanying iPhone application but other news includes the acquisition of Fictionwise and e-reader by Barnes and Noble. Google marches ahead with their digital book archive project and digital book search but it’s still unclear if their motivation is to be an online e-book retailer or it's perhaps more likely that they are using digitalization of books to improve their search algorithms.

While e-book industry is still struggling with format and DRM issues these are gradually getting resolved. The ePub format is fast becoming the general standard – adopted by the International Digital Publishing Forum and The Association of American Publishers. Various other formats such as pdf, Adobe Digital Edition, MobiPocket and Microsoft Reader continue exist because of DRM issues but publishers will who write to the ePub standard first using programs such as Adobe’s Creative Studio can fairly easily convert to the other formats or go through a service such as LibreDigital  who will manage conversion and distribution on publishers’ behalf.

While Amazon has a proprietary format and is enforcing DRM, to the point that it’s not possible to transfer books purchased in other formats to the Kindle, many hope that eventually users’ interests will prevail over corporate shortsightedness.

The current crop of e-readers, using e-ink technology offers a reasonable experience for trade book reading – as only text display is necessary. However, the current grayscale displays offer less than optimal experience for those wanting to view digital copies of reference books, textbooks, Science, Technical and Medical (STM) books and newspapers and magazines with images. 

Existing large format devices such as the iRex iLiad and upcoming readers from PlasticLogic,  Hearst’s FirstPaper Device are trying to appeal to the business market, especially those requiring a larger reading screen. 

The ability to transfer a pdf to the Kindle via Amazon’s free service negates a lot of their advertised advantages. Transferring and reading pdfs on a Kindle is a perfectly acceptable experience for now.

I don’t think the Kindle or the current crop of e-readers is the white knight for publishers but Apple and the iPhone 3.0 could be the necessary catalyst.

For those interested in trends in the e-book industry see the following presentations from the International Digital Publishing Forum and BookNet Canada.

The mobile Internet device (MIDs) market is evolving rapidly although the limitations of the current crop of black-and-white e-readers have many yearning for a tablet or netbook device from Apple – an iPod Touch on steroids.

Although Apple’s CEO, Steve Jobs has been disdainful of the e-book market in the past – most understand that Apple will carefully analyze the market and if it believes the market is significant the organization will come in with a vastly improved solution. However,  a combination of technology issues, component pricing plus the economy could delay what many believe is an inevitable move by Apple.

There is a collision going on in the market – the carriers, especially in Europe, are looking to subsidized netbooks to drive data revenue streams. Netbooks, spurred on by the One Laptop Per Child (OLPC) program are generally dumbed down but inexpensive Internet access devices, (price points around are  $299). They have basic communications and Internet access but with limited storage and processing power. 

Most major PC companies are producing small laptops – called by a variety of names – UltraMobilePCs (UMPCs), “Litebooks”, “PocketBooks“ or mini notebooks, which while more expensive than Netbooks, have the functionality expected of laptops/ notebooks.

For the PC companies it’s a balancing act – these mini-notebooks have lower prices and margins than their standard laptop offerings so while consumer demand appears to be strong, the PC companies have to manage their bottom line.

The success of Apple’s iPhone plus their Apps store, the impact on other handset manufacturers, the growth of e-ink readers, the consumer demand for Netbooks and Mini-notebooks all adds up to the increased consumption of content via mobile devices.

Only a fool would try and accurately predict the future but the trends we see today are going to shape the media industry over the next 5-10 years.

Mobile is a game changer. Mobile devices (and there will be many varieties) benefit from being personal, always-on, always carried, and location aware. They can act as a mobile wallet and they allow you create and upload content to your social and business networks.

Mobile will redefine our understanding of the Internet and personal communications.

Publishers need to start really thinking through their mobile strategies.

Media companies need to plan how they can best serve their audiences via mobile access. The user interface and user experience will be critical. Many publishers learned the hard way that online is not taking a print magazine or newspaper and making it digital. Online, thanks to search and interactivity, is a different medium and content has to address the user experience. Mobile is not an online site mobilized. The medium is different yet again and a lot of research has to be spent understanding the needs of mobile users.

The industry’s key organizations, the Newspaper Association of America, the Magazine Publishers of Amerce (MPA), the American Business Media, the Interactive Advertising Bureau and the Mobile Marketing Association and others can and should take a leadership position helping to guide their members through this exciting period in our industry.

Goodbye, Colorado, Philadelphia, San Francisco, Seattle …… Tucson…..

After nearly 150 years in business, on Friday 27th February 2009, the Rocky Mountain News published its final edition. Philadelphia Newspapers have filed for bankruptcy and Hearst is threatening to close the San Francisco Chronicle if it cannot get agreement on massive, wide ranging cuts or a buyer. The Seattle Post-Intelligencer could be next. 

 

The closures are blamed both on a bad economy and also the rise of the Internet. A drastic drop in print classified advertising fueled by online services such as Craigslist alongside the increased consumption of information in digital formats especially by the younger readers has resulted in secular changes in the industry.

While the significant human impact on those who have dedicated their lives to producing quality products is summed up well in the video  - Final Edition it also showcases people’s desire to retain the status quo. In today’s environment, that’s not a realistic option.

The financial issues are complex but a lot of the problems have been caused by legacy media companies failing to quickly and boldly address the fundamental question – “what industry are we in”. The need for transformative action has been obvious for many years but the industry, for various reasons, has been unable or unwilling to make radical changes. 

“No Iceberg” from Eric Wilkinson, the CEO of the International NewsMedia Marketing Association (INMA) is a good overview of the issues facing the newspaper industry but it probably does not go far enough to address the changes needed.

The correct answer for media companies is to understand they are in the Information business and that the medium – print, online or mobile is secondary.

Delivery of information should be tailored to the needs of target audiences. The laid back, rich visual experience of print, the lean forward search environment of online or the immediate access to targeted local content via mobile devices offer different and complementary experiences – each has its place.

An unhealthy, over-reliance on advertising is the root cause of the problems facing print newspapers in the US. For decades, readers have been trained to receive content that is heavily subsidized by marketers and advertisers. There is a completely different psychology and appreciation of value when someone has to pay. Good content costs a lot of money to produce and if quality products are to survive, both consumers and advertisers have to pay a reasonable share.

Hearst’s president Steven Swartz is halfway through “a 100 days of change” and a memo that is contained in a recent Wall Street Journal blog is well worth a read.  But as argued by Jeff Jarvis, it is probably to too late for the evolutionary changes proposed when a more radical approach is still required.

However, I’m extremely interested to learn more about Hearst’s decision to develop an e-reader and to charge for content consumed via mobile devices. While Hearst has not indicated which technology it will use, it could be the reader from Plastic Logic or from their investment FirstPaper. Hearst is also an investor in e-ink.

Plastic Logic's electronic reader is about the size of an 8.5 x 11 inch pad of paper and weighs less than many print magazines and should be available late 2009.

The reader has the potential for widespread use as an alternative to printed publications. But it faces competition from Amazon's new Kindle 2 e-book reader, Sony’s touch screen reader PRS-700, the iRex iLiad and the increasing use of devices such as the iPhone and the iPod Touch to consume digital contact. Reader’s such as ScrollMotion’s Iceberg and LexCycle’s Stanza also put well formatted content in the palm of your hand. Netbooks, mininotebooks, UMPCs all are driving mobile information consumption. Flexible touch screen technology is sure to revolutionize the mobile market over the next few years. 

But, there is no easy panacea to the woes of the print industry. The disruption is wrenching in human and economic terms as the world rapidly shifts to the consumption of content via digital mediums.

However, even as distribution mediums and business models face pressure, publishers should take heart that their audiences still seek quality news and information. The addressable audiences is actually expanding, publishers can reach more people in a targeted way than ever before. Despite some fears, democracy is not going to collapse just because some newspapers fail. In fact, greater audience participation, especially at a local and community level is likely to improve government.

New business models are required for publishers to succeed. Users have to pay a fair amount for access to quality content just as advertiser should pay for access to targeted audiences. Perhaps books on demand production using the Expresso Book Machine or magazine on demand from MagCloud will help change the economics. 

Mobile offers publishers some light at the end of a long tunnel. It’s still at early stage of deployment but mobile data usage will grow exponentially over the next 5-years. According to a recently released report by the Kelsey Group, mobile advertising in the US will balloon for $3.1 billion by 2013 from $160 million last year.

While the business models for mobile remain under developed, the trends are obvious. Smart publishers will be investing now and preparing their organizations to understand what news and information needs to be delivered via mobile devices in a manner that can economically cover creation costs.

Maybe in 5-years time as mobile becomes a dominant platform for the consumption of content – it will be online businesses that will be lamenting their final editions. Check out the Charlie Rose interview with Marc Andreessen for a great perspective.

The Ongoing Digital Publishing Revolution

This is a repost of my recent Minsider Column check out more from my other colleagues at Minsider Perspectives

Approximately 15 years ago, the World Wide Web burst onto the scene, forever altering the world of publishing. Over the next decade and a half, publishing transformed from a one-way medium in which content was created and distributed by publishers to captive audiences, to an environment in which virtually anyone could become a creator, aggregator or distributor.

Armed with easy-to-use publishing and communication tools, the audiences changed from passive recipients of information to active conversationalists. Efficient search tools helped people filter and reach content of interest from multiple sources.

This new world of search, distributed content and social and business networks placed enormous pressure on traditional publishers, many of whom focused on protecting their rapidly eroding traditional brands and business models rather than embracing change.

The old CPM media model assumed that everyone who received a publication read every advertisement. In times of economic prosperity, the ads kept coming in and the average revenue per user rose, producing handsome profits for publishers.

However, with audiences spending more time online, advertisers and marketers are now increasingly focused on direct response and measuring audience engagement.

Mass reach is now much less important that targeted and engaged audiences. The result for many media companies, as famously noted by Jeff Zucker, the CEO of NCB Universal, resulted in analog dollars being converted into digital pennies. With pressure from advertisers and reducing circulation revenues, now publishers are forced to question the cost of creating original differentiated content and having to blend in content from sources that are a lot less expensive.

Marketing spend continues to shift rapidly to online. Even in these tough economic times, overall online revenues are expected to grow by around 10% in 2009, and online’s share of media will continue to increase. However, the marketers’ spend, rather than going to traditional publishers, is being allocated to the search companies, putting even more pressure on publishers.

Advertisers and marketers are intensely focused on audience quality, their engagement and the overall ROMI performance. While many question advertisers’ overreliance on PPC advertising online at the expense of awareness and brand building, performance-based advertising is likely to be a major beneficiary in these recessionary times.

A major test facing publishers is to prove the effectiveness of general CPM brand- and awareness-building ads online, where the environment is more about the engagement of the audience with relevant, targeted information.

Transforming a traditional company to being online focused is not easy. The successful ones have realized that relying on just online advertising is a recipe for disaster. By developing additional revenue streams such as lead generation, e-commerce and even online subscriptions, b2b publishers have found online businesses that are closer to the old print models of advertising, subscriptions and newsstand sales.

Today, online publishers are focused relentlessly on overall RPM (revenues per thousand pages) and its component revenues streams, trying to reduce over-reliance on any single revenue stream. Recognizing that a rigid adherence to premium pricing while protecting the brand value is causing marketers to seek out similar online audiences from third-party networks, the more innovative publishers, such as my former employer IDG, have developed their own vertical networks (the IDG Technology Network) that are closely aligned with their core properties, but at the same time provide marketers with low-cost extended reach outside the branded environment.

The delicate balance of protecting core profitable print brands while dealing with the changing dynamics of digital is exceptionally challenging, and the bad news is that there are even greater challenges on the horizon.

If the transition from print to online was hard enough, the disruptive impact of mobile is several magnitudes greater.

Small Screen, Big 

Opportunity

Mobile

 is the new mass media. It can do everything that can be done by all previous mass media, plus a lot more.

Mobile

 is nearly always on, always carried (or close by) and it’s highly personal. It operates as the remote to your physical and digital life.

With over 4 billion mobile connections in the world, compared to around 1.1 billion fixed Internet connections, the scale and potential opportunity of mobile is huge but incredibly challenging.

Print is a lean-back environment and online a lean-forward one. 

Mobile

 is all about immediacy. Instant communication, instant information related to your location, instant consumption and creation of content—all in a small-screen environment.

It’s a world of digital snacking, not the leisurely consumption of long-form content. That’s likely to change as different mobile Internet devices appear with larger screens. The Kindle offers a glimpse of what possible for the consumption of e-books, digital magazines and newspapers—maintaining the familiar format of print but in an enhanced interactive, digital environment. The iPhone has revolutionized the smartphone market, delivering a powerful computer in your hand.

In addition to the phone features, you now have easy access to the mobile Internet plus the choice of more than 20,000 phone applications covering the gamut of entertainment and gaming to high-end business productivity.

With the other handset manufacturers developing their own mobile application stores, the consumer is going to be faced with bewildering choices.

For publishers, it’s potentially a highly rewarding environment. The challenge is to determine what content to deliver, what customer data to collect, how to design great user interfaces and experiences while finding ways to drive revenue.

Over the next few months I’ll identify those publishers who are the most innovative and successful, so hopefully all media companies will be encouraged to grasp the mobile opportunity that lies ahead.