Posted March 10th, 2011
A dozen academics and executives from New York City’s largest magazine publishers explored business models to make content delivery on tablets profitable at a NYC Media Lab conference.
As more and more people adopt iPads and other tablets and e-readers — Forrester Research estimates that consumers will buy 10 million tablets in 2011 and 82 million in 2015 — magazine publishers face the pressing need to find a business model that will make money for content on these devices.
The immediacy of the issue became apparent as one of the first conferences of the NYC Media lab, a joint project between the New York City Economic Development Corporation, Polytechnic Institute of NYU, and Columbia University, unfolded in the midtown conference room of the Hearst Building. Roger Neal, executive director of the NYC Media Lab, had invited a dozen academics and executives from New York City’s largest magazine publishers to “Tablet Magazines Business Model Lab,” an afternoon conference on February 15, only days after Sports Illustrated launched an all-access subscription policy, eliminating print-only subscriptions. The day the conference opened, Apple announced its controversial subscription policy, laying claim to 30% of all subscription revenue generated through its app store. Participants agreed that figuring out a profitable business model is imperative.
To get to that point, participants led by Mr. Neal and David Renard, principal of the consulting firm mediaIDEAS, discussed many questions, such as: What value does a publisher give to the consumer? Should (and will) content be based on what a consumer wants or what an editor assembles? If you fragment a magazine into its parts, a la carte, do you lose the idea of a magazine? Does a magazine require distinctive editorial content to attract ad revenue, or will articles end up being commissioned based on which ads are successful? Are people “brand-loyal, platform-agnostic,” as one participant insisted, or do “consumers care about access more than quality”— that is, they want the device and don’t care what content is on it? What new ways can publishers, advertisers, and marketers find to connect with audiences? Will the main revenue come from apps, content, or ads?
Some of the problems and obstacles include the expense of preparing content that works across devices and platforms, especially as manufacturers each have their own interface and navigation; the problem of periodic content when people are accustomed to streaming web updates, and privacy policies.
Business-model explorations comprised the heart of the afternoon. These included the following:
The RSS model for individual titles, in a model similar to Flipboard, which augments an RSS feed rather than reconstructing an entire print publication’s graphical packaging. “Flipboard is personal media in a way that hasn’t been seen before,” one participant commented. The business model: ads and subscriptions.
Pay per usage. Like Instapaper, content is “scraped” off web pages, put in a folder and retrieved paginated and often displayed without advertising. The business model: User pays a nominal subscription fee, which is shared among the writers that the reader has chosen.
Private label media. This would be a form of custom publishing, with the magazine co-publishing with advertisers and marketers rather than preparing the content for them. The business model: Followers are converted to buyers. Or the publisher makes money from the partner rather than from the consumer. “This model extends the time the customer has with the publication rather than getting new consumers,” explained one participant.
Popularity pricing: incremental pricing based on supply and demand, similar to the online music store Amie Street, which raised prices as a band became more popular. So an article might be 5 cents in the morning and 99 cents in the afternoon as more people read it. It could be used by a single publisher that has enough titles to make it worthwhile or by many publishers working together. The business model: Entry is free, then you pay for what you want.
Premium article aggregator. For this “me”gazine, individuals choose the content they want from around the web and edit it themselves to make their own magazine. The business model: Paid subscription and/or ad supported.
All-access plus is like being in a club. Consumers have a relationship with a brand, which includes products, communities, and more. “What distinguishes a media brand is its sensibility,” suggested one editor. “If you click with a brand, it’s because you click with their sensibility. That’s their value, to curate all the choices.” The business model: Like Disneyworld, you pay to get in, then pay for what’s there.
Game model. Editors create content that’s different across platforms. As consumers progress and engage with the content, they get credits or make in-app purchases, opening further access. The business model: It’s free to get in, but you make micropayments for each step further in.
Readers as advertisers. A magazine delivers access, like Craigslist but with more control over who sees content. The business model: Users pay to belong to and engage with an elite community.
Cable model: Flat fee plus fees for additional content, such as podcasts, interactive games, utility or custom apps, and photo galleries. The business model: A platform both to build relationships with consumers and to mediate readers’ relationship with advertisers.
The NYC Media Lab was launched in June 2010 to foster collaboration among the city’s more than 100 institutions of higher education and 10,000 media and technology companies. Based at NYU-Poly, it has begun its mission of connecting large media incumbents, start-up companies, venture investors, and university researchers, in order to drive collaborations and research within the city’s media industry. Upcoming NYC Media Lab events include: The Future of Digital Ad Effectiveness, Gamification, and Strategies for the Coming Mobile Bandwidth Crunch.