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Forecasting the Impact of the Digital Content Joint Venture

Publishers like the concept, but take wait-and-see approach.



By Bill Mickey
12/22/2009

Next Issue Media, the joint venture between Time Inc., Conde Nast, Hearst, Meredith and The News Corporation to create a common digital content format and storefront to distribute it, has attracted heavy media attention. However, beyond the five companies investing in the venture, little is known about how this will impact the industry in general, and smaller publishers in particular.

It’s one of those events where the speculation has far surpassed the subject itself. No product or business model has been revealed, and we’ve only seen glimpses of content formats in demo or high-concept form. Yet such is the situation for publishers. Print revenues have collapsed and reproducing the magazine experience in a highly interactive, fee-based digital format has emerged as a hopeful solution to fill the gap.

So far, no brand identity has been given to the product platform or storefront, said a spokesperson representing the company. In the meantime, John Squires, formerly executive vice president at Time Inc. and current acting managing director of Next Issue Media, is setting up meetings in early 2010 with a range of publishers to generate interest and form partnerships.

“We will welcome content providers of all types to offer their paid content via this new platform,” said Squires. “It will be an attractive, cost-efficient, consumer-focused digital reading environment that will enable publishers to derive revenue from content and advertising sales as well as from print subscriptions.”

Squires added that, in addition to magazines and newspapers, Next Issue Media will also offer content from books, comic books and blogs. “We’ll also develop easy ways for publishers to utilize our software to allow sales of paid content on their own Web sites,” he said. “And finally, we’ll provide ways for publishers to bundle electronic reading access with their existing print subscription business so that customers can be encouraged to read in any form they wish.”

Squires is interested in making Next Issue Media a platform that benefits more than mass-media brands—“Special interest magazines are very important to us”—and the smaller publishers have taken notice.

“We are in touch with John Squires and plan to meet with him early in 2010,” said Andy Cohn, publisher of the music magazine The FADER. “We are very interested in being a part of this emerging technology and business plan, and have kept a close watch on all these technologies as they emerge—working to identify the right play for The FADER when it comes to our audience and our brand.”

Still, Cohn said details are thin at this point, but added the venture is interested in working with his magazine. “It’s all questions, there’s nothing specific and not much detail. I’d want to see the interface, user experience and revenue model.”

Will Customers Pay?


While demonstration videos of full-issue digital magazines on a tablet platform from Time Inc. (Sports Illustrated), Conde Nast (Wired) and Bonnier have been circulating online, a specific business model has yet to emerge. This will be a key point of scrutiny for publishers.

“We’re excited about everything we’ve seen and heard so far,” said New York Media’s general manager of online Michael Silberman. “We believe that the question at this point is not whether exciting and portable digital versions of magazines of all sizes can and should be produced and sold, but where and how consumers will purchase and interact with these products.”

In the meantime, smaller publishers are encouraged by the market-making efforts of the big guys. “As an independent, one-title publisher we’re not necessarily niche, but we’re also not US Weekly,” said Henry Donahue, CEO of Discover Media, publisher of Discover. “We don’t have the resources to invest in these big, game-changing technology projects. I’m all for it. I really hope what these guys come up with is successful and provides a template for how we get the magazine content online in a way that people will pay for.”

Rex Hammock, CEO of custom publisher Hammock Inc. and a widely-read blogger on media technology, is optimistic about the platform the joint venture is developing, but tempers the hype. “The notion that the best use of this device will be to read magazines is a bit amusing to me,” he said. “People in these large companies are attempting to recreate an experience for what will be a tiny bit of what people will use these devices for. This is not just a platform to read magazines, it’s also a platform to run businesses, watch movies and listen to music.”

Nevertheless, Hammock is encouraged by the investment being made in the technology and hopes the knowledge works its way through the entire industry, especially to enthusiast publications. “There’s more opportunity for the niche market than the mass titles. The Web has taught us over the last ten years that people with passion center on niche content. We build community around small and narrow passions, not mass passions. I hope there’s an agreement among those who produce this that the standards and best practices will be exposed to the market. Small publishers can learn from the successes and mistakes of the large publishers and vice versa.”

And the smaller publishers are very curious about what Next Issue Media is finding out. “For companies with strong paper magazines and robust Web sites and mobile products, what is the incremental consumer appetite for e-magazines?” asked Silberman. “To create something as robust as the demos floating around the Internet, will magazine companies have to hire significant numbers of additional staff? The more the early versions of these e-magazines can be produced with the help of technology, the easier it will be to create—and test—the appeal of these products.”

By Bill Mickey
12/22/2009







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