Is E-Book Technology the Publishing Savior?

December 3, 2009 – 1:50 pm by Al DiGuido

I continue to read with great interest the latest awakenings by the top brass in our country’s leading publishing houses around their plight. Little doubt that we all understand the dire circumstances these businesses are facing. In just the last 12 months, over 700 magazines have shut down. The tidings of the recent decade that foretold of a shift in consumer media consumption patterns have come to fruition. Consumers and business people have found a viable platform with which to do their research, stay informed, purchase products, exchange ideas and read about the latest news, trends and opinions around an innumerable number of topics and special interests. More and more people around the globe are spending more time on the internet than ever before.

Among the major ripples felt from this sea change in media consumption habits is the dramatic shift of advertising dollars away from legacy media of all types to internet venues and communities. Sure… more absolute dollars are still being spent today in traditional channels such as television and direct mail… but these dollars are in steady to not-so-slow decline. That’s because marketers, who must remain media-agnostic about the allocation of their budget, have no choice but to base spending on clear and measurable ROI metrics. As this focus takes hold… the movement away from traditional media has become even more spectacular.

Let’s be clear. The dominant reason why most of the 700 magazines have gone out of business in the last 12 months is NOT that the subscribers and newsstand readers lost interest in the titles’ subject matter. The reason these magazines died… was that these same readers have found new and more interactive communities and locations that provide them the same and/or better content within the new interactive platform. In many cases this content can be customized, aggregated and delivered based on the reader’s desired frequency and interest. Magazines have died and will continue to die in print because the advertisers who once supported these publications with their ad dollars… have moved to position their ad units in these new venues and communities. Not being a fool… they reason that they must plant themselves at the intersection of content and customer. As such, they move out of print into the internet. As a publisher, when your print costs continue to rise, circulation begins to erode and advertising support declines; the end is near.

I know. I was there. At the height of my career in publishing, I found myself at the helm of Computer Shopper, the world’s largest print magazine. We routinely folio’d our monthly publication at nearly 1000 pages. We sold more advertising pages literally than any other magazine in the world for many years. The rise of the internet and comparison shopping engines undermined our core business and reader proposition. Consumers and business people could now find our content online in venues that allowed them to leverage this knowledge and actually purchase products. Truth be told, we saw this coming and created our own ecommerce engine, computershopper.com, which, in the end, served to accelerate our demise. Today, this once great magazine is gone.

Publishers Jump on the E-book Bandwagon
The recent announcement by a consortium of publishers to finally admit that there is a desperate need to remake themselves is a welcome signal. Like other announcements of late regarding partnerships between content providers, book and magazine retailers, and “e-book device” technology makers, there seems to be a mad dash to get “content” onto a digital reader. In fact… much of the talk about these devices now centers on the potential of creating “a new definition of magazine” to leverage this new delivery mechanism.

Based on our own data and feedback from several web-based retailers, e-books of all brands and types are in short supply this holiday season and, in many cases, sold out. Consumers have started embracing this new method of reading books and magazines on a pace that rivals the ipod. My sense is the real tipping point will occur when the device is priced under $150. Publishers and all content providers know that this day is coming very soon and are logically getting ready.

What I am not hearing as of yet is a clear strategy on how the new e-book delivery device is going to solve the real problem: the loss of advertising revenue. In their race to port today’s content to the new device… there is a big warning sign on the road ahead: “You folks have been here before.” When the internet rose to prominence, there was this mad dash to build websites and sell advertising on “box car” numbers… impressions. Marketers flocked to the web to “reach” eyeballs. Sure, there was advertising discussions around click through’s, etc… but the real focus was how “cheaply” an advertiser could purchase 100K impressions. All of our very valuable and costly editorial content was suddenly being hawked as a commodity. The brand that we publishers spent millions of dollars to create… the loyalty and involvement of your readership that took years to cultivate… was relegated to a spreadsheet analysis of audience reach… then, inevitably, marked down. Is it any wonder that our web-based revenues have never really come close to the levels experienced in selling print advertising?

Publishers left it to Google and other search engines to build a model that grabs content and assembles a gargantuan number of advertisers that are willing to stand in line to bid up positioning within search results of your content. Then, after billions have been drained out of our marketplace… we stand and applaud the success of the model. It is truly mind-boggling that the content providers in our world have allowed this to happen. Are we really waiting for Google to figure out the advertising model for the e-book revolution? Let’s stop obsessing about the creative and graphic challenges of porting editorial content to the 6 inch screen or about whether it should be in black and white or color. The real solution for the publishing model is all about reader engagement and analytics.

The Missing Link: Analytics
As we build out the e-book platform…it is critical that deep reader engagement analytics be resident in every device partnership. As CEO of an organization that has just built our own digital publishing solution, we made sure to incorporate both email and Google analytics reporting into the back end from the start. In order to save the publishing industry… we must not only prove that we can create new content and design for this new platform… we MUST prove that we can once again engage the reader. That “proof” lives in our ability to demonstrate that old and new readers are not only purchasing these new devices… they are actually spending time with the content in a meaningful way. Reader engagement data is essential to proving to advertisers that a new publishing platform has been created where it is more than worth their dollars to position their ads adjacent to congregation points. That e-book readers are actually flipping through their magazines on this new device and spending time with the content. We need to clearly demonstrate that “full page” digital advertising units opposite digital magazine content are getting readership and response.

The deeper we can document reader engagement in this new publishing paradigm… the better chance we have to arm the sales team of the future with the tools to establish rates and programs that are commensurate to this level of reader engagement. We have a chance to reestablish the power of quality editorial content to draw quality readers to a venue that can provide meaningful data about this intersection. We can once again prove that readers who spend time with content are more likely to not only observe advertising… in fact they are more likely to take action on those ads. When we prove all of this… the value of advertising within these editorial environments will grow in price and start a new profitable era within the publishing industry.

There is much work ahead. I, for one, don’t believe any of the book merchants selling Kindles, Nooks, etc., care a bit about reader engagement. They want to sell books into this new platform and their devices reflect that. Let us not be deluded into believing that these devices solve the publishing problem. Circulation and newsstand revenue had always been a nice revenue stream… but on-page advertising is truly where profits are made. None of the devices on the market provide the analytics necessary to win this battle.

What we don’t need today is a simple conversion of print to digital… we need a solution that provides the tools to make the case for why digital publishing is the new advertising platform for your publication and/or your company. Thus, be wary of the quick-fix digital publishing solutions being marketed by your ink-on-paper printer. Kinda like having the fox watch the hen house. Printers have the most to lose in this shift to digital e-readers. They will NEVER provide the level of tools and insight to help you win.

There is work in developing content that is engaging to the reader on this new platform. This will not be easy. We must recruit a new class of writer and designer that understands the consumption patterns of consumers and digital content. These new staffers must understand the editorial franchise, the glue that binds your publication and its readers, and be able to bring it to life in an engaging way via this new device and delivery mechanism. Your marketing dept may need to be overhauled. The new team must be focused on designing innovative ways to move your current readership to embrace the new digital content. Marketing folks need to earn their keep by understanding the inflection points amongst readers that will incent them to move to this new platform. They must also be aggressive in terms of creating new sales tools for your team to sell the reader engagement proof of this new connection. You may need to fire your head of sales and a good portion of your sales team who have made money selling box cars and reach; the folks who have presided over the systemic degradation of the advertising value of your brand. We need a new class of sellers who, armed with a deep war chest of reader engagement proofs, have the guts to sell the value of the connection between digital content, readers, and new advertising units. Professionals who will stand up to the current “negotiate everything” mentality that has gripped our industry. We need new leaders at the top that aren’t trying to wait out this current “downturn cycle.” Leaders who don’t really have the chutzpa or desire to make the hard decisions required to transform their business to leverage the new reality. The shareholders of these companies need to be quick and decisive in showing this group the door.

Despite the excitement and mania around today’s e-book releases and announcements, these devices will not solve the publishing problem. Left alone… we will watch the demise of many major legacy companies in the years ahead. The time is now to wake up and put our own house in order and get our priorities straight in order to survive. E-book technology is this generation’s newsstand and subscription delivery system—and it is exciting. But the true winners will look past distribution strategies to the place where real money can and should be made. Let’s not wait for the search engine behemoths to once again take the lead and all of the new advertising dollars. This is our only opportunity to regain the foothold on readers and advertisers that we once enjoyed.

There is some time… just not a lot to get this done.

Al D