The Publishing Industry: Just Waiting to be Rescued

I am growing tired of pundits speculating on whether or not the iPad, or any other digital medium for that matter, can “save” publishers (e.g. The New York Times, Wired). It is naive to assume that any one device, or any singular medium, can save these publishing titans when it is so very obvious that…

I am growing tired of pundits speculating on whether or not the iPad, or any other digital medium for that matter, can “save” publishers (e.g. The New York Times, Wired). It is naive to assume that any one device, or any singular medium, can save these publishing titans when it is so very obvious that most all of these publishers only care about being rescued. There exists an important difference between being saved by something and having something rescue you.

Remember the financial meltdown and how the U.S. government swooped in to keep AIG from going under? That was a rescue situation, AIG had only one solution and that solution was to die a painful death – that is, until the U.S. tax payers stepped in and rescued them with a boat load of hard earned tax payer cash.

This is not the same idea as being saved by something. People talk about the iPad as saving the publishing industry, because the fact that the iPad exists does not solve the problems that the publishing industry is having. No, the fact that the iPad exists does nothing for the publishing industry all by its lonesome. The publishers must choose to use the iPad to save themselves. ((I am not saying that this is possible.)) We have seen some publishers take steps to try and save themselves by publishing iBook and Kindle versions of things, this is choosing to try and save yourself rather than waiting to be rescued.

The problem though is that it sure as hell feels like what most publishers are doing is standing around waiting for someone to come by and rescue them. They seem incapable of saving themselves by leveraging new tablets and eReaders or the Internet for that matter.

Rescue them from what you may ask?

For starters their declining revenues, more importantly though, publishers need rescue from their own stupidity. I don’t say this to be dramatic or overly mean – how can any person look at what these publishers are doing these days and think anything but: “wow these guys don’t have a clue.”

Think about Wired for a minute, they have a very pretty iPad magazine app and robust online offerings. They give away the online stuff for free and they sell a printed copy of their publication each month. Now the printed copy used to be their cash cow, the advertising paid for them all to get very fat – still pays for quite a bit I would imagine. These advertising revenues have started to drop off precipitously and publishers like Wired are scrambling to find a new income stream.

This is the point when people really start talking about new devices and mediums as potential saviors for the publishers. Keep in mind though, that these things could save them if they properly leverage them. What these devices won’t do is rescue them, meaning the publishers have to actively engage, they can’t sit idly by and wait, they need to immerse themselves are really fight for survival.

That is where the iPad comes in, Wired launched their iPad app for $4.99 per issue of the magazine. That sounds like a pretty decent business model, but the more you think about it, the more it begins to look pretty stupid. For starters you are tying the success of your company to the iPad and its success. Further you are massively limiting your customer base to just iPad owners. ((Though the number continues to grow it will never out number the amount of people online, let alone the amount of people with mailboxes.)) You can further reduce that number by the amount of people that will not download Wired for a fee, instead of just reading it online. A recent report said that on average people only buy 6 iOS apps a year – essentially you would be competing with games; and magazines don’t necessarily stand up well against games. To recap then you have a very small sliver of the iPad market for paid apps, this sliver is highly competitive so people will tend not to keep paying for continued use of the app.

The real bone head move of this whole thing though: ads. Wired’s iPad app costs you money and has advertising in it. Information Architects recently took a look at this and determined that Wired would be better off from a revenue stand point giving away the app and only charging for the advertising space.

Oliver Reichenstein on Wired’s app:

But one thing is clear: The app store pay wall is not a great source of income for a publication of that dimension.

I can’t say I disagree with that analysis, but to further drive home the point that a paid app containing ads is a stupid idea you need to think about it from the users perspective. Most users see the iPad as a web based platform – that is, apps seem to function much like websites. There is a great number of apps that are free, but ad supported. These apps typically have a paid version that turns off the ads. The precedent for web based “apps” seems to be that if you are using it for free you can expect to see advertising; while if you are paying to use it, you can expect to see no advertising.

This is not the model that Wired has chosen, they seem greedy in the eyes of a typical web enabled consumer – forcing users to pay to read Wired AND still collecting money from lucrative advertising deals that are plastered in the app’s content. This pisses off a very important group of people: the people that are adopting these new technologies that publishers are hoping save them.

It will take a lot more than being greedy to lose your loyal readers, those will always be there (unless you do something really stupid, which frankly doesn’t seem out of the question). The readers that you lose are all the people that were previously on the fence, you have decided for them: this magazine isn’t for them. Can you really afford to lose those readers when iOS users are only willing to pay for 6 apps a year and you are asking them to pay 12 times for one app (you must by each issue on a monthly basis)?

Subscriptions on devices like the iPad will solve some of these problems, but why are you charging for the app when you are also providing advertising in-app? Does it really cost that much for Wired to use Adobe’s InDesign CS5 and their new translator to make the app? Certainly it costs money to do this, but surely the cost is far less on an issue by issue basis than the entire printing and distribution model Wired uses for the print magazine. A magazine, I remind you, that costs the same amount on the newsstand and next to nothing for a subscription.

Wired and the rest of the publishing industry really needs to think rationally here. There is one reason, and only one reason people read your publication: because the content adds value to the readers life.

Now, if you are asking them to put up with distracting ads next to the content that adds value, then you are slightly devaluing your content. Ask those readers to then pay for the content AND be faced with the ads and you start to really devalue your content.

So I ask this of all publications: just how valuable do you think your content really is?

Wired it would seem thinks they have some of the most valuable content out there, but only when it is read through their iPad app. Apparently that SAME content is not as valuable on the web because they only plaster ads around it, and only slightly more valuable in print because you have to pay a marginal cost to get it and be faced with some ads. No, the iPad content is clearly much better (even though it is the same content) because you must buy a $500 device, then pay $5 an issue, while being forced to see ads – all while trying to read the damn content in an app that was hardly optimized for reading on the iPad.

Wired: producing the most valuable content in the world (at least according to how they value their content). ((Honorable mentions for The Wall Street Journal and The Financial Times.))

Now it is important to note that I am only picking on Wired because they have had the most written about them, and they also seem very willing to try and save themselves. The rest of the industry though is acting just as dumb. The New York Times will be soon putting up a pay wall, the Financial Times already has, and the Wall Street Journal always has. I don’t think pay walls are necessarily a bad thing, but I do think that if you ask your reader to pay for something, then the content must add more value to the reader then the sum they paid to get that content. I think I am just as well informed not reading the Financial Times or the WSJ.

Another way to look at this is to think about ads and content in terms of value. If say I pay $5 to buy an issue of Wired and would be willing to pay another $2 to remove the ads from the app, then I am saying that I expect to gain more than $7 in value from reading Wired’s content. The problem though is that what I am really saying is that I expect to get $5 more in value out of Wired’s iPad content then I am out of Wired’s web content (the same content).

I just don’t think that is possible.

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