The State of the Digital Edition Industry in 2011
Publisher satisfaction grows but monetization continues to frustrate.
Weâre only about a year into the tablet age but more than a decade of using digital editions. Today, with the rise of ever increasingly sophisticated mobile devices and apps, digital editions are poised to leap to the forefront of publishersâ revenue generation plans and serve as their flagship on devices such as the iPad.
But are they able to deliver? Nxtbook Media recently wrapped its 2011 State of the Digital Edition survey, which looked at audience development and revenue growth, as well as where mobile fits in.
The good news? Publishers on both the consumer and b-to-b sides are more satisfied with their digital editions than last year when Nxtbook first conducted the survey. However, there is some growing frustration as publishers continue with how to actually monetize digital editions.
Satisfaction Up by 40 Percent
Forty-nine percent of respondents said they are satisfied with their digital edition (12 percent are âquite satisfiedâ while 37 percent are âsomewhat satisfiedâ), up 40 percent from 2010. âPublishers this year are more optimistic and theyâre also more decisive than last year,â says Nxtbook marketing director Marcus Grimm.
However, while publishers are realizing digital editions have great potential for growing audience, they arenât sure how to do so. Sixty-four percent of respondents say they are confident there are many more readers out there but they donât know how to reach them (up from 59.3 percent who said the same last year). âThat speaks to the youth of our audiences,â says Grimm. âPublishers are trying lots of things; we know readers are out there, but weâre not cracking the code. The iTunes store brought us to a totally different placeâevery time we think we have this space figured out, it changes.â
Just 21 percent of respondents said they know there are more digital magazine readers out there and they know how to reach them.
Still, Grimm advises publishers should strive for 15 percent of their readership to come from digital editions at this stage. âIf you can get to that, itâs a vibrant number,â he adds. âItâs a large enough number that your advertisers will care about.â
Publishers are less satisfied with digital editions as an advertising tool than as an audience tool. Just 29 percent of publishers say they are very or somewhat dissatisfied with the advertising revenue of their digital editions, about the same as last year.
However, the satisfaction gap between b-to-b publishers (Nxtbookâs main clientele) and consumer publishers shrank over the past year.
âThe iTunes store has helped b-to-b pubs a lot and specialty optimized magazines are helping with sponsorship,â says Grimm. âAdvertisers are getting excited about new optimized magazines.â
Still, just 12 percent of respondents say they have a firm handle on how to generate money with digital magazines. Sixty-one percent of respondents say their digital magazine can be a revenue generator but are unsure how to get to the next level.
Perhaps most troubling, the number of respondents who say theyâve tried many ways to make money with digital editions and are fairly convinced they canât nearly doubled from last year to 8 percent.
âThere are three rules of digital editions,â says Grimm. âYou will have fewer visitors than on your website. People donât go into it automatically, they look at it like print. However, when they go into a digital edition, they spend more time in it than on a website. Engagement time leads to clickthrough rates and websites typically have lower clickthrough rates than digital edition. You need to ask advertisers, do you want page views or do you want leads?â
Advertising options are growing for digital editions. Nxtbook offers several positions in the digital interface, including a marquee position that is âleft of cover.â âOne publisher years ago said that was his boardwalk space,â says Grimm. âPublishers will share simple toolbar positions. Others say donât change for ads at all but letâs put a video in there, weâll upcharge for that. A lot of publishers say you have got an ad in the print magazine, if you want to link live in a digital edition, pay an upcharge. Iâm not a fan of that but if you trying to find simple way to start digital conversation, you can start there.â
Still, publishers are undaunted about the potential. Fifty-nine percent of respondents are âaggressively moving forwardâ with mobile devices, up 25 percent from last year.
Meanwhile, 25 percent say they plan to move to these devices but feel no rush, 6 percent say theyâre uncertain if their digital magazine needs to be on these devices and 5 percent say theyâve decided to not worry about these devices at this time (up from 3 percent last year).
Thatâs actually a good sign for the industry, according to Grimm. âPublishers are now making decisionsâtwo years ago, they were saying they werenât sure what to do. Now some are saying we absolutely have to be moving in this direction.
The Rise of âDigitally-Optimized Magazinesâ
Twenty-one percent of respondents say they already offer designed-for-digital optimized magazines (which offer multimedia and no zooming) while 23 percent say itâs very likely they will do so in the coming year.
âPublishers are more bullish on optimized editions,â says Grimm. âPublishers say, âWeâre tired of PDF, we want to do something special.ââ
However, the biggest obstacle to offering an optimized digital edition remains staffing and resources. Forty-six percent of respondents say their staff is stretched too thin âto create a different looking product.â
âThe first thing it aims to do is take away zooming by using larger font sizes,â says Grimm. âOnce you do that you have optimized content, but not optimized ads. Truly optimized digital editions optimize ads as well. Generation 1 digital editions linked to video but optimized digital editions make video be part of the storytelling, not just because theyâre cool but theyâre there to tell story in richer and more elegant way.â
Grimm says publishers can have optimized digital editions without an app. âUBM does all kinds of special editions and supplements with brands like EE Times and theyâre concerned about it being optimized in in the browser,â he adds. âWe have publishers who come to us and say, âwe have a PDF, we want to make it a Nxtbook,â and they pay less than $1,000. Others come to us for layout and design and the costs are comparable for what youâd pay for. Others say we have time and talent for a digital edition, but they need a style guide, which ranges from $2,000 to $5,000 for a one-time charge.â
HTML 5: The Next Big Thing
The emergence of HTML 5 offers publishers the chance to offer a richer browser experience (and re-establish themselves as sellers of digital editions, rather than having to rely on iTunes or other third-party digital newsstands).
âSome of the online newsstands have been successful but at the end of the day, the best person to sell your magazine is you,â says Grimm. âPublishers are now addressing HTML 5 so they can sell it themselves. The Financial Times is selling an optimized browser experienceâthat gives them the ability to bypass Apple and do it themselves. If you have an audience that loves what youâre doing, donât make it harder for them to find you in something like the iTunes store. In three to five years, youâll be doing it on your own, through your own websites.â
Still, HMTL 5 remains a long-term solution. âRight now, the Internet world is app-driven,â says Grimm. âItâs a dynamic reader experience to download apps. In time, the Internet surfing experience will improve. Donât overinvest in apps development now--eight years from now weâll be saying, remember all those apps? Instead weâll be having very cool browser experiences via HTML5.â
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