A New Digital Future for Publishers?

The publishing industry is looking for new sources of growth through product and business model innovation. One of the main avenues to achieve that growth may be in the digital realm, with the advent of interactive periodicals.

According to an Oliver Wyman study, e-readers and tablets like the iPad are helping to create demand for new, interactive products that offer a unique, immersive experience for readers. The study, conducted for Next Issue Media—the digital consortium of Condé Nast, Hearst, Meredith, News Corporation, and Time, Inc.—projects the potential for $3 billion in revenues from interactive periodicals by 2014. After accounting for potential cannibalization of some print products, the industry could realize $1.3 billion in incremental revenue.

Interactive periodicals can combine the best of the print and online worlds. More importantly for media companies, consumers are willing to pay for the experience.

Source: Consumer demand market simulation, NIM / Oliver Wyman analysis; revenue based on illustrative subscription prices of print, $1.49; digital, $1.49; print + digital, $1.99. NIM expects individual publishers will determine the price of their titles.

The study, based on a market simulation involving 1,800 respondents, found that among subscribers who expect to own tablets, smartphones, or netbooks, the availability of interactive editions at the point of renewal, at the same price-point as today's print editions, drives a 9 point increase in the overall subscription rate, from today's 55% industry average to 64%. And 30% of renewing subscribers choose a bundled print and interactive edition, at a 33% premium to the stand-alone price of either.

Equally encouraging for publishers is the finding that among device owners who aren't currently subscribers, the introduction of interactive editions in an online store setting, at the same price as today's print editions, triples uptake rates, from 5% to 15%. (See related chart, above.)

The study revealed that both men and women find interactive publications appealing. And while the 18-24 year-old range is expected to have the highest adoption rates, all age groups showed a net increase in circulation revenue in the study, even those aged 65 and above. These findings point to the growing comfort of consumers with digital content, mobile services, and auto-renewal billing models.

To capitalize on the interactive publishing opportunity, publishers will need to create new products, offer a large assortment of cross-sold interactive titles, develop innovative subscription packages, carefully define future advertising standards and metrics, and rethink internal workflows and capabilities.

A New Digital Future for Publishers?