We do love our new toys. They are shiny and fun, and it's cool when strangers approach us in restaurants to ask if they can see them. But for whom are they actually making money?
Newspapers and magazines are in such desperate straits that any lifeline looks good. The iPad gives them a new platform, gives them the reflected glory of being associated with a hot new technology and might be generating some new customers. Emphasize that word 'might.' The problem seems to be that at least so far, the numbers of new subscribers are not covering the costs of technology conversion and marketing. By a long shot. Now a cynic, or investment banker might say, "So what?" You connect your languishing publication to the techno-social media rocketship and some greater fool will come along to start a bidding war but he or she will also think that association is worth something to advertisers or maybe even big-money Chinese or Arab investors who want to buy into the hip A-list business elite. And maybe that could happen to a lucky few. But for most, grinding it out by adding subscribers and advertisers, who are getting more and more manic about measuring sell-through, is still the long road to the future.
Nat Ives of Ad Age interviews Rolling Stone founder Jann Wenner. He is a skeptic on iPads and what they do for the magazine publishing industry. Since he has both ridden and survived a few trend waves in his time, his thoughts are worth considering. JL:
"Ad Age: What's your take on selling magazines on the iPad and other tablets?
Mr. Wenner: It's the same pretty much as I've said about the web. The tablet itself is a really fun device. Some people are going to enjoy it a lot and use it. Some people aren't. On this plane one person's traveling with a tablet, one's not. There's a certain trendiness to the thing. And it's a great thing. But is it a good magazine thing? From the publisher's point of view I would think they're crazy to encourage it. They're going to get less money for it from advertisers. Right now it costs a fortune to convert your magazine, to program it, to get all the things you have to do on there. And they're not selling. You know, 5,000 copies there, 3,000 copies here, it's not worth it. You haven't put a dent in your R&D costs.
So I think that they're prematurely rushing and showing little confidence and faith in what they've really got, their real asset, which is the magazine itself, which is still a great commodity. It's a small additive; it's not the new business It's a good magazine reading device, absolutely. And where it becomes more convenient to read the magazine on that, that's got the advantage. But that's more convenient only if you're traveling, if you're away from home. Otherwise it's still easier to read the physical magazine, which is widely available on newsstands, at airports, and everywhere. You can still subscribe to get it and get it on time. You still get all the value of the magazine.
I don't think that gives you much advantage as a magazine reader to read it on the tablet -- in fact less so. It's a little more difficult.
Ad Age: Well, you think for now, or you think forever?
Mr. Wenner: Oh I think down the road. Who knows how far down the road -- years though and possibly decades.
Ad Age: Not months.
Mr. Wenner: Not months. Decades, probably. People's habits will shift, they'll make improvements in the delivery system, the screen will change, it will get lighter, whatever, and new people growing up will find that as a habit. But you're talking about a generation at least, maybe two generations, before the shift is decisive.
Look at the music industry as an example. I think it's split about 50-50 between CDs and digital delivery. There is a place where there are extraordinary advantages in the distribution delivery system. Otherwise the products are indistinguishable; there's no difference in the physical products as there is here.
And yet it's still a generational shift going on. And we're far away from that. We have a much different and more unique product than just the CD.
Ad Age: I was talking to the publisher of Popular Science, which has sold more than 16,000 iPad subscriptions, so he's happy. But that's a small proportion for now of 1.2 million print subscriptions, and he also said if digital grew enough he was less likely to increase his overall circulation than to cut back the print component, because paper, postage and printing cost so much. Do you think you would embrace that strategy?
Mr. Wenner: No, I don't. First of all Popular Science is probably a magazine that's more suitable for the iPad, because of the audience it represents, the more techie thing and all that. And as you point out if it's selling 16,000 on a million-plus rate base, it's like nothing.
And I just don't think the shift will happen that way. While paper, printing and all that are expensive, we still get a nice profit margin, far larger than anything I can contemplate that's in the foreseeable future by using the iPad as a substitute. As long as people want the magazine product we'll deliver it. I think that's going to be for a long time to come.
People cherish it. There's something to hold onto. It's everything that I said or we said in that ad campaign for magazines.
The strategy we're going to announce is that we're just going to give free access to the current issue on the web or the iPad, and our archives, to anyone who's already a subscriber. So if you're a paid subscriber to Rolling Stone you can get it on any platform you want.
Ad Age: Will there be a Rolling Stone edition for the iPad?
Mr. Wenner: You can get it through Zinio or through our website and our archives are available on the website. At some point I'm sure it will be on the iPad but I'm not in any rush to break what I consider fundamental principles of what the magazine industry has to have and make a deal with Apple that will mortgage me into the future on the basis of getting 2,000 copies sold a month.
I think that rush is so premature. I've sat down and talked with the assembled heads of the industry about the whole thing and everybody has misgivings but some are, you know, more insecure than others.
Ad Age: Have you talked to Apple about this?
Mr. Wenner: I have not had a direct conversation with Apple. Their story is simple. They want to go knock off the weakest of the big guys and then use that as a lever. They were having no success with Time Inc., because they weren't going to give, so they went to Hearst. And really Hearst has just given them a couple of titles.
Ad Age: It sounds like Hearst and Conde Nast are pretty fully signed up for the Apple terms if I understand correctly.
Mr. Wenner: It's hard to know between what they won't disclose and what they're afraid to disclose and what they're embarrassed to disclose. We'll see.
Ad Age: Music obviously went through a lot in terms of the transition to digital and there's this conventional narrative now about how they got screwed by Apple. What do you think Apple meant for the music business, and what are the lessons for magazines as they get involved in iTunes and Apple?
Mr. Wenner: The music business more screwed itself than Apple screwed it. The music business refused to embrace internet technology when it first was introduced just as they first tried to fight and stop CDs, just as they used to fight and try to stop home taping, all of which was known to spread it. So now you have an ironic situation where music is more ubiquitous than ever -- everybody in the world has access to everything -- my kids can listen to the Beatles because they don't have to pay $15 to buy an album, they can either get it free or buy a Beatles song for a buck if they want.
So it's the music business's fault more than anything else. And then their failure to develop what Apple did develop, which was a good convenient easy delivery system. They fell on their own sword, you know?
I think Apple's within its rights to do what they decided to do. They wanted to control pricing. The music business failed to do those things.
But the lesson for magazine publishing business is not to rush like the music business should have done, because it's a different product. Music is really easily reducible to digital. There's a different beat to it.
Be attuned. Get ready to make the moves. Be adept at moving quickly to the changes. But to rush to throw away your magazine business and move it on the iPad is just sheer insanity and insecurity and fear. And because it coincided with the ad recession, they conflated the two events until they themselves believed that magazines are dead. Part of what we did in this ad campaign was partially to address the magazine business itself, to say hey boys, girls, you've got great values, you should learn about them yourself -- as well as tell advertisers.
Because up until that point they'd been rushing out to sell the iPad, a nonexistent business, and saying we admit it, we're dead. So hopefully that is all turning around. People have dialed back considerably.
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