Tuesday, August 17, 2010

Will Tablets Save the Magazine Industry?

The buzz continues to swirl around iPads and other Tablet devices. While they have yet to go beyond the early adopter, the interest is there and I suspect most are waiting for 2nd and 3rd generation devices at lower price points before finally making their first purchase. But the desire remains to buy one. Perhaps too, they are waiting for that one App that will be the straw needed for purchase. Are digital magazines that straw?

For the magazine industry, the hope is that consumers will buy digital subscriptions; but if they have been comfortable reading articles for free online, why would they buy. "It says iPad magazines and similar stuff will generate $3 billion in advertising and circulation revenue in 2014, assuming that the market expands beyond Apple (AAPL) to include Google (GOOG) and other competitors. But after you account for print dollars the digital versions will cannibalize, that nets out to $1.3 billion in incremental revenue." But in the magazine industry that amount is not really that much.

I have definitely cut back on my magazine subscriptions. Perhaps it is a function of a bad economy and the need to cut costs or the fact that most stories are accessible online. More is needed to preserve the editorial exclusiveness as well as the leadership positioning to be sought after. For example, a bakery is a bakery; they all serve cakes, cookies, etc. I recently took the family to visit Carlos Bakery in Hoboken, the site for its TLC series. The line to get in on Sunday was 2 hours long and continued like that all day. Each group that entered got a ticket and purchased something. Was their food that much better than any other bakery, probably not. But they successfully positioned themselves as unique and famous and a leader. Customers chose to want to visit them. Their multi-platform marketing strategy turned them from simply a bakery into "the" bakery. They differentiated themselves from every other bakery and added a new dimension to marketing.

I believe that the magazine industry can prosper thanks to digital media. They have to find their "multi-platform" strategy to make their brand unique. Those magazines that adapt will survive; unfortunately, those that don't will follow Darwin's law.

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