Do Digital Magazines Have a Future?

Some successes suggest they do, but disparate platforms and pricing models make that future challenging

   

The list of publications that have gone digital is big and growing. Most popular magazines are available in digital form — as individual issues or a subscription — for the device of your choice. But are publishers actually succeeding in the digital world?

Milestones have been passed. Hearst publication Cosmopolitan hit 100,000 paid subscribers in March 2012, with paid subscribers for all Hearst digital magazines surpassing 500,000. The Daily, a Rupert Murdoch (News Corp., NASDAQ:NWS) tablet-only “newspaper” has hit 100,000 subscriptions at $39.99 a year, but according to The Guardian, that’s a fifth of the number of subscribers Murdoch originally expected to see, and at this rate profitability is likely five to seven years away. Conde Nast hit the 500,000 digital subscription mark (split among eight publications) in October 2011.

One of the challenges for publishers is that different devices require different formats. Cosmopolitan, for example, is available for devices offered through Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Barnes & Noble (NYSE:BKS), plus through Zinio (which offers its own digital version of the magazines, viewable through an app made for each mobile platform). A 2010 PBS analysis of the iPad magazine industry estimated that it could take between 30,000 and 120,000 copies of a $4.99 iPad magazine app to break even, based on production costs at the time.

A baffling assortment of subscription options

Then there’s the wonky pricing models. Some publishers offer a free digital subscription along with a paid print subscription, but this can confuse (and anger) customers. For example, National Geographic charges $5.99 for a print issue of its magazine and $4.99 for a digital copy for iPad through the iTunes store. Here’s where things get confusing, though. Through the iTunes store, a $1.99-per-month subscription is offered (renewed monthly until cancelled) as well as a one-year subscription for $19.99. Or, you can order a one-year subscription to the print magazine for $15.00 on Amazon and receive free access to the iPad editions as well.

For those trying to keep track, that means paying as little as $1.25 per issue — with both print and digital included — so long as you buy the print magazine. The best, cheapest price option offered for digital only works out to $1.67 per issue.

National Geographic isn’t the only publisher that uses these print subscription/digital pricing schemes. Wired, another iTunes top seller, uses a similar model.

The only way this seems to make sense is as part of a drive to keep traditional print subscription numbers up, presumably because print advertising is more profitable.

‘Instant,’ loosely defined

New York Times blogger Nick Bilton tried an experiment last year. He started downloading Conde Nast’s Wired magazine app on his iPad, then drove to a store to buy a print copy of Wired. When he returned, the digital copy still hadn’t finished downloading in what he described as an “epic fail” of the promise of tablets and digital publishing to provide instant access to content.

The new Apple iPad and its high-resolution “retina display” could further complicate the digital publishing world. Stuntbox has an analysis of the impact that the leap in screen resolution could have on digital magazines. The technology used to create most iPad-version magazines consists of pictures of a page saved as PDF or jPG files. This has the advantage of being much faster than producing customized layouts for the iPad, but generates very large digital magazines. According to Stuntbox, when the same method is applied to produce files sized for a new iPad, the already large files become huge — 2MB per page.

While the visual results would be impressive, a digital magazine that currently runs at 300MB per issue could potentially run 3GB or more in size. That’s a problem, in part because of the download bandwidth consumed and the time required to download, but also because of the space needed to store it on an iPad, which maxes out at 64GB.

Accommodating a variety of tablet platforms

It’s clear that digital magazine subscriptions have a future, and the increased adoption of tablets is going to continue to drive demand. What is less clear is whether digital publishers are going to be able to overcome hurdles like app stores taking a chunk of subscription sales, unmanageably large file sizes, and multiplatform authoring in order to make the ventures profitable.

In many ways, making digital content available online instead makes more sense. By using standard HTML5 coding, the content can be authored once to look consistent on all platforms via a Web browser, there are no worries about Apple or others wanting a cut of subscription or ad revenues, content would be accessed on demand instead of in full-issue chunks, and when a mobile browser is detected, smaller graphic files could be automatically substituted. But Web-based content versus app-based sounds like a step backward, and selling the approach to consumers would be tricky.

Expect publishers to hope for a happy convergence — improved authoring tools from the likes of Adobe (NASDAQ:ADBE), faster networks, consumer demand thanks to increased tablet sales, and competition between Apple and Amazon over subscription policies — to keep the market for magazine apps afloat in the short term, while they figure out a long-term strategy that works.

As of this writing, Brad Moon did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/is-there-a-future-in-publishing-digital-magazines-aapl-amzn-nws/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.