UK magazine publisher Mark Wood knew what everyone was thinking: "The iPad is not the saviour of magazines". But the calm-down words came just as it looked as if Steve Jobs' last great creation was, indeed, coming to the rescue of the gasping magazine industry.
It all happened in October. 18 months after the launch of iPad, Apple introduced its Newsstand app. Meanwhile, 5,000 miles away from California, the UK hobby-tech magazine publisher Future Plc was rocked by another of its periodic crises: profits down, share price slides, CEO quits.
Former ITN chief executive Wood took the helm as Future flooded the new iTunes Newsstand with 65 titles. The fragile but funky Future characteristically bounced back from the 2011 profit warnings to report iPad Newsstand sales of 12 million apps, 500,000 'magazines', and digital growth compensating for hard copy losses.
US and UK magazines are positively purring about a device that meets the needs of... "magazine journalism that is all about packaging information beautifully and usefully. Digital magazines look simply gorgeous on a glass iPad screen". Hearst is celebrating its race to 600,000 iPad edition sales. The Economist predicts that 70% of its subscriptions will be digital within two years. The reviving Reader's Digest sees 400,000 digital sales exceeding print in 2012.
What's more, the iTunes Newsstand has given publishers a dramatic boost in international revenues especially for specialist magazines. Future's T3 gadget monthly's 270,000 downloads in February, produced sales of 25,500 monthly iPad editions - 48% from outside the UK.
The Newsstand is clearly set to have a similar impact on magazines as the launch of iTunes itself had on music. It's already changed the face of the iPad app economy and transformed the rank and visibility of magazine brands, which now comprise nine of the 10 highest grossing iPad apps in the US. Of these, eight are digital editions of magazines. No fewer than 34 of the top 50 iPad apps now are magazine editions. The second biggest grossing lifestyle app is Hearst's Cosmopolitan, the world's largest selling magazine. As if to reinforce the perfect 'fit', a recent US study showed that owners of tablets and e-readers spend 50% more time reading magazines than the general population.
The iPad Newsstand fever follows a tormenting period during which magazine publishers feared all but oblivion due to falling copy sales, cover prices and advertising yields. Celebrity coverage which turbocharged sales of weekly magazines and profits across the whole market has now been eclipsed by Twitter. If you're interested in this celeb, why not follow her/him yourself - fast and for free? Most other magazine sectors also suffered heavy losses of readers and advertising.
Suddenly, the clouds have lifted. But these are still early digital days for magazines, which face some major challenges, viz:
Content. Most current iPad editions are (more or less) facsimiles of the printed magazines. Hearst's international magazines chief Duncan Edwards told a recent London conference that what is now the world's largest women's magazine publisher has no plans to include interactive content in digital editions, and that readers will pay more for digital editions: "People thought we'd re-imagine the magazine to take advantage of the technology behind the device but consumers prefer the replica version and, in reality, we're much better at doing this." It actually seems a safe bet that these iPad magazines will become more adventurous and increasingly push the technical boundaries. That will involve video, 'rich media', and smart ways to improve navigation.
Advertising will become more (not less) of a challenge for magazines right across the world. You can start with the warning enshrined in a recent piece of US research which showed that print media gets 25% of all adspend but accounts for only 7% of consumer time spent on media. It highlighted the extent to which the fast-growing areas of mobile and internet advertising have yet to reach anything like their potential; and digital audiences are still growing, at the expense of print. This advertising 'gap' may have a dramatic on digital editions and the bundled price of digital/hard copy advertising.
Ecommerce. Magazine publishers are convinced of their need to develop ecommerce operations to help retailing substitute for lost advertising. And the magazine-like digital successes of Net a Porter and ASOS are stark reminders of the urgency of the task. It is clear that magazine brands, loyal audiences, and genuinely deep levels of engagement can help build highly-profitable ecommerce operations. The trouble is that many of the most desirable, high-income consumers simply do not want to 'click through' to make online purchases when reading. Publishers must develop imaginative ecommerce models able to use their best brands and address audiences in distinctive ways. Logically, these should be in partnership with 'bricks and clicks' retailers. Although US department store chain J.C.Penney recently closed its "CLAD" ecommerce partnership with Esquire magazine (having "invested" a cool $38m), the same group has just announced a new in-store, hard-copy, digital deal with Martha Stewart Living. Way to go.
Platforms. So, Apple's Newsstand has been transformational and at a time when iPad has seemed to wipe the floor with its rivals: its share of the global tablet/ ereader market jumped from 55% to 68% in the first quarter of 2012, while Amazon's Kindle fell from 17% to 4%. But the market will not remain this simple. The approaching rush of new Android tablets may radically change the market for selling digital editions, and the expectations of consumers and advertisers. Will consumers want to buy individual magazine articles like they buy single tracks on itunes? How far will digital aggregators like Flipbook, Zite, and Hitpad - or even Twitter and Facebook - become competitive with digital magazines?
Profits. Magazine and newspaper publishers once believed that the digitalisation of the production of their hard copy businesses would (one day) make web operations more profitable - without the cost of print, paper and distribution. Now, they know better. And, try as they will to limit the "new" costs of technological improvement, digital editions will require development far beyond that necessary for hard copy editions - continuously. And so many of these magazine businesses, even if/when they reach the promised land of digital viability, will never match halcyon days. That is why publishers must find new ways of using their famous magazine brands to develop partnerships. They will have to learn to share.
Media Fortune, Fame & Folly