Mequoda magazine study by Condor Advertising Corp

Nicholas, Mateus

MEQUODA

DIGITAL MAGAZINE MARKET STUDY Digital Magazine Reader Habits and Digital Publishing Best Practices

Copyright © 2015 Mequoda Group LLC Report Authors: Don Nicholas Kim Mateus Terms of Use All rights reserved. No part of this report may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, faxing, emailing, posting online or by any information storage and retrieval system, without written permission from the Publisher. All trademarks and brands referred to herein are the property of their respective owners. All references to Mequoda™ and the seven Mequoda Website Publishing Models™ are trademarks of the Mequoda Group, LLC. Legal Notices While all attempts have been made to verify information provided in this publication, neither the author nor the publisher assumes any responsibility for error, omissions or contrary interpretations of the subject matter contained herein. The purchaser or reader of this publication assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, both referral and state and local, governing professional licensing, business practices, advertising and all other aspects of doing business in the United States or any other jurisdiction, is the sole responsibility of the purchaser or reader. The author and publisher assume no responsibility or liability whatsoever on the behalf of any purchaser or reader of these materials. Any perceived slights of specific people or organizations are unintentional.

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Table of Contents Introduction & Key Findings from Digital Magazine Market Study…………..4 •

More than 2/3 of US Adults Actively Read Print Magazines……………………...5

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1/3 of US Adults Read Digital Magazines ……………………….…………….....6

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Americans Will Spend More than $1.3 Billion on Digital Magazines in 2015…...…7

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Digital Magazine Readers Demand Readable, Scrollable Text…………………......8

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Digital Magazine Readers Split on Most Important Format…………………...…..9

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Immediate Delivery Tops List of Coveted Digital Magazine Attributes……..........10

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2 out of 3 Digital Magazine Readers Prefer 20 Articles or Less per Issue……...…11

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News, Food, Health & Celebrity Are Digital Magazine Reader Favorites………...12

Respondents’ Demographic Data………………………………………………...13 Introduction to Digital Magazine Best Practices…………………………...….14 •

Magazine Archetypes & Definitions…………………………………….........…..15

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What Is a Digital Replica? ……………………………………………….…...….20

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What Is a Replica Plus? …………………………………………………..…..…24

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What Is a Reflow Plus? …………………………………………………..…..…27

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What is Vertical Reflow? ………………………………………………..…..…..33

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Launching a Digital Magazine………………………………………………...…38

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Designing Your Digital Magazine……………………………………………......44

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Pricing Your Digital Magazine………………………………………………..…50

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Calculating Digital Magazine Costs……………………………………………...57

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Publishing Your Digital Magazine…………………………………………….....61

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Selling Digital Magazine Subscriptions………………………………………......65

Conclusion……………………………………………………………………….......67 Mequoda Executive Team Bios…………………………………………………..68

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Introduction to Study & Key Findings Last year Mequoda ran its first ever Digital Magazine Market Study, polling adults in the US with Internet access. We found that 20% of our US adult sample size of 1,136 people reported currently reading or subscribing to digital magazines on a tablet. One year later, in May 2015, we more than tripled our sample size from 1,136 to 3,642 US adults with Internet access and set out to learn more about these digital magazine consumers. We wanted to discover if and how digital magazine consumption had grown in the last year and wanted to learn more about their digital magazine preferences and spending habits. Our Methodology and Key Findings Ø 36.8% of the 3,642 surveyed reported having read one or more digital magazine issues in the last 30 days Ø This 36.8% reported having read an average of 2.37 digital magazine issues in the last 30 days, bringing total digital magazine issue consumption to 184 million* We also wanted to compare this to print magazine consumption. We found: Ø 69.6% of US adults reported having read one or more print magazine issues in the last 30 days Ø This 69.6% reported having read an average of 2.91 print magazine issues in the last 30 days, brining total print magazine circulation to 428 million* Digital magazine consumption has now reached 43% of print magazine consumption and is climbing rapidly.

* United States Census Bureau QuickFacts, http://quickfacts.census.gov/qfd/states/00000.html 242,753,606 persons 18+ in 2013. Pew Research Center Internet Science & Tech, http://www.pewinternet.org/data-trend/internet-use/lateststats/ - as of January 2014, 87% of American adults use the Internet.

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More than 2/3 of US Adults Actively Read Print Magazines In thinking about the last 30 days, how many PRINT magazine issues have you read?

Before quantifying the readership of digital magazines, we wanted to first understand what percent of the American adult population with Internet access reads print magazines. We also wanted to learn how many print magazines, on average, they are consuming in a 30-day period. We learned that 69.6% of adult Americans have read an average of 2.91 print magazine issues in the last 30 days. This means that 147 million adults have read an average of 428 million print magazine issues in the last 30 days.

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1/3 of US Adults Read Digital Magazines In thinking about the last 30 days, how many DIGITAL magazine issues have you read?

The primary stat we set out to understand in this study was what percent of US adults with Internet access reported reading a digital magazine issue in the last 30 days. We found that 36.8% of American adults have read an average of 2.37 digital magazine issues in the last 30 days. This means that 77 million adults have read an average of 184 million digital magazine issues in the last 30 days.

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Americans Will Spend More than $1.3 Billion on Digital Magazines in 2015 During the last 12 months, how much have you SPENT on digital magazine subscriptions and single copies?

The next thing we wanted to discover was whether these digital magazine readers had paid for their digital magazine content. We found that on average, over the last 12 months, there has been a spend from US adults on digital magazine subscriptions and single copy issues of $17.20, bringing total spending on digital magazines to more than $1.3 billion.

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Digital Magazine Readers Demand Readable, Scrollable Text In thinking about digital magazine FUNCTIONALITY, how important are each of the following to you?

Digital magazine consumers show a dramatic preference for text that is readable and scrollable, two features inherent in native editions and responsive web editions, and scant or unavailable in antiquated digital magazine versions like digital replicas or PDF style editions.

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Digital Magazine Readers Split on Most Important Format When thinking about the various magazine EDITIONS available to you, which of the following 3 options is the most important?

The data above shows that digital magazine consumers are split on their magazine format preference. The web edition showed a tiny edge over print and tablet editions, but at this stage of the game, digital magazine consumers seem relatively equal on their preference for tablet editions versus print editions versus web editions.

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Immediate Delivery Tops List of Coveted Digital Magazine Attributes How important are each of the following digital magazine ATTRIBUTES to you?

Forty two percent of American adults who read digital magazines say immediate delivery is the most important digital magazine attribute, followed closely by ‘portable and easy to carry’, ‘cheaper than print’ and ‘environmentally friendly’.

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2 Out of 3 Digital Magazine Readers Say 20 Articles or Less per Issue is Best When thinking about your favorite digital magazine, HOW MANY ARTICLES are included in your idea of the perfect issue?

Forty seven percent of American Adults who read digital magazines say that their perfect magazine issue has 11 to 20 articles, and 30% say 10 articles or less is best.

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News, Food, Health & Celebrity Top Digital Magazine Reader Favorites During the last 90 days, which TYPES of digital magazines have you read?

When it comes to favorite magazine categories, news, cooking, fitness and celebrity top the charts. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

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U.S. Respondent Demographic Data Gender • •

Male – 47% Female – 53%

Age • • • • •

< 18 – 0% 18-29 – 21% 30-44 – 26% 45-60 – 27% > 60 – 26%

Household Income • • • • •

$0 - $24,999 – 8% $25,000 - $49,999 – 17% $50,000 - $99,999 – 40% $100,000 - $149,999 – 23% $150,000+ - 11%

Education • • • • •

Less than a high school degree – 1% High school degree – 9% Some college or Associate degree – 34% Bachelor degree – 31% Graduate degree - 25%

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Introduction to Digital Magazine Best Practices It is our hope that the digital magazine stats revealed in our Digital Magazine Market Study shed light on the habits and preferences of digital magazine readers. In the pages to come, you’ll find a collection of best practice articles and tips to put you on a path to creating a digital magazine strategy that enlightens your readers and helps your multiplatform publishing company grow and profit. We’ll define the various digital edition types that exist, along with their pros and cons and will provide niche and mass media examples for you to analyze. We’ll also provide tips for creating the most coveted digital magazine editions and will give you a step-by-step process for launching a digital magazine, including a Strategic Planning Framework. Finally we’ll get into some dos and don’ts on designing, pricing, producing and selling your digital magazines.

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Magazine Archetypes and Definitions Every Publisher Should Know Do you run a magazine publishing company or work for a magazine publisher? Most Mequoda publishers, and those who read the Mequoda Daily blog, would consider themselves to be in the magazine publishing industry. But do you think of yourself as running an online magazine, or a digital magazine, or a digital magazine app, a print magazine or a magazine website? You might have said yes to two or three of those, or you might think they mean similar things. To us, they have different meanings and different business models. Let’s define each.

Print Magazine This magazine archetype goes without much explanation – it’s the traditional magazine business model. It will share many of the same features as other types of magazines, but this one is made of paper. You can flip the pages with your fingers and you’ll breathe in that freshly printed ink smell as you read it. Although non-print magazines have grown in popularity, when we ask people why they prefer one platform to the other, the ones that choose print say it’s because they like holding a magazine in their hands, and many even mention the smell. Magazines are certainly nostalgic.

Digital Magazine App Although a digital magazine could rightly refer to any magazine read digitally, most would agree that a digital magazine is a digital edition. In other words, this is the magazine that you read on your iPad, Kindle or other tablet-like device. It can still be held in your hands, but it can’t be paged through in the traditional sense. The “digital” in digital magazine also refers to the type of content offered. For example, ads may link to webpages (a great advantage to advertisers), and articles may include videos. We break the digital magazine app down further into three platforms: • • •

Apple edition Kindle edition Google edition

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The most popular digital magazines, in order of least interactive to most interactive are: digital replica, replica-plus and reflow-plus. A digital replica is typically a PDF of your magazine that has been formatted for a tablet reader, whereas a replica-plus offers much more interactivity (the videos and ads previously mentioned.) Magazine publishers who create a reflow-plus tend to add new functionality to the magazine that makes it act uniquely from any other digital magazine, and more like an app. More on these variations later.

Digital-Only Magazine App A subset of the digital magazine app is the business model that does not include a print version at all. This is what some struggling publishers have started exploring, most notably Newsweek although there are many others, both B2C and B2B. Of course, this model is also what may have lead to Newsweek being able to afford getting back into print, two years later. Golf Digest is another that went digital-only. Chairman Jerry Tarde explained, “It’s a response to the times and people’s reading habits, and the changing nature of the 24-hour news cycle. The notion of a print magazine that lands a week after the action … the perspective is really good, but it’s much better if it can be delivered immediately. That’s what our readers’ expectations are.” It’s for this reason that we don’t see the digital-only magazine app as a survival strategy, as it once was, but rather, drastic innovation and serving the needs of a beckoning digital audience.

Online/Web Magazine Online magazines are read online. They aren’t formatted for a tablet and they can’t be bought in an app store. They are available through a magazine subscription website, where the user can view an issue of a magazine—one that is linear and periodic, has pages and a regular frequency, and can be viewed in HTML on any desktop or mobile device at any time. There’s nothing to download. Publishers of online magazines usually generate their revenue through subscribers and may also take ads.

Online/Web Magazine Archive or Library Typically, when you’ve digitized your magazine into an online magazine, this makes it remarkably simple to create an online magazine archive or library. This is available through your magazine subscription website just like the original online magazine. Users have access to old articles up until whatever date you choose. The online magazine archive is typically an added value to your web magazine subscription and users can access the archived content by issue date or by topic.

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More Definitions You’ll Encounter in this Book In addition to the magazine archetypes above, there are a few industry terms you’ll run into in this book. Terminology is changing constantly, as it always does with new technology and new products, but for now we should at least attempt to clarify a few things. Some of these definitions come from outside Mequoda, but others are our own preferred definitions that serve to clarify some of the confusion in the industry. Your mileage may vary! Digital magazine The Alliance for Audited Media (formerly ABC) defines a digital edition as distribution of a magazine’s content via electronic means. The digital edition must maintain the same identity of the host publication by maintaining the same brand characteristics. Mequoda agrees with this definition. Replica At Mequoda, we consider a replica edition to be one that’s fairly simple, with print content digitized on pages exactly as the print edition does it. The user swipes right to left in order to read left to right, and the pages are exactly as they appear in the print version, only downsized to fit on a tablet screen. More on this coming up. Replica-plus We can’t find anyone using this term on the Internet the way we use it. For us, a replica-plus magazine is a simple replica, with the pages squeezed into the tablet screen, but with additional content, such as hyperlinks, videos, tappable photo galleries and other technology not available to a print publication. It’s also sometimes called a nonreplica or interactive edition. More on this coming up. Reflow A Mequoda Best Practice, reflowing your magazine so that the pages and type aren’t downsized and unreadable makes your magazine much more reader-friendly. In this version, the page is redesigned to fit the screen without shrinking the type. Additionally, it can be designed so that the page fits horizontally, but not vertically. The user swipes up to scroll through what is essentially one very long page.

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Reflow-plus This is the most advanced version of a digital magazine currently available. Now the publisher is adding the interactive bells and whistles to a nicely reflowed magazine. This gives you everything that readers are looking for in digital magazines. More on this coming up. Magazine app For the publishing industry, Mequoda considers a magazine app – or just “app” – to be the program that allows users to access their digital editions on a mobile device. Readers download the app from a digital newsstand. More creative apps, such as those of New York and Forbes, offer free content of some kind that’s updated every day, in order to keep readers coming back for more. Others at least include a free issue or free sample content, in addition to selling subscriptions. Gadget app At Mequoda we use this term to distinguish certain kinds of apps from the ones that most publishers are familiar with – the app that sells the magazine – and to avoid confusion. A gadget app doesn’t sell the magazine, but it provides some other function that’s related to the magazine’s content. For instance, Farm Progress has an app called “Growing Degree Days” for use on smartphones, which “measures the maturity of your crop by viewing current and past growing degree days data for your farm’s location.” Another example would be Martha Stewart’s “Martha’s Everyday Food: Fresh & Easy Recipes.” Tablet When writers refer to tablets, they’re often talking about mobile computers such as iPads and all competitors such as the Kindle Fire, products from Microsoft and Samsung, and the Google Nexus. Others only consider tablets to be the iPad and similar larger devices that have multiple functions, while the smaller Kindle and Nook devices are referred to as ereaders, being largely limited to reading functions.

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Magazine website A magazine subscription website archetype is set up to build subscriptions for a related print or digital magazine and to provide access to issues of the magazine online, often in an HTML format. It requires registration for full access to the site; content is offered online; and is organized by issue and by topic. A magazine website is only a magazine website if the user can view or download an issue of a magazine—one that is linear and periodic, has pages and a regular frequency, and can be viewed in HTML, downloaded as a PDF or downloaded to a mobile device. Many people refer to any website that carries a legacy magazine brand and magazine content as a magazine subscription website; however, if the content is not organized in a magazine format and issues cannot be viewed or downloaded, it doesn’t meet our basic criteria of being a magazine subscription website. It is, instead, a periodical subscription website.

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What is a Digital Replica? A replica edition is fairly simple, with print content digitized on pages exactly as the print edition does it. Usually this means simply uploading PDFs of your pages into software of some kind, or having someone else do it for you. The layout, advertising and content are exactly the same as the print version, no more or less, and each page, accessed by swiping horizontally, is identical to the print original. (Note: If you currently create your magazine pages as PNGs, please resist the temptation to upload those. The iPad’s technology makes those pages look fuzzy and pixelated. And that’s definitely a no-no.) Producing a digital replica is a fairly simple process now, with dozens of providers offering software and even hosting, marketing and analytics services. And if you’re concerned that you’ll look like a publishing dinosaur by putting out a simple replica, the answer is it depends on your audience. These days, many perfectly respectable publishers are opting for the replica because of the lower price points for design (none) and production. Publishers in the business-to-business arena, or consumer publishers with older subscribers may even prefer this version of a digital magazine, bells and whistles free. Among the simple replica brethren are the Atlantic Weekly, Black Belt and other magazines from Active Interest Media, Fine Gardening and other Taunton Press publications, Sound + Vision and other Bonnier magazines; even a digital-only science magazine called Brain Dump. So, you can create digital replica editions of your magazine, and you’d be in good company doing it, but the question still remains: should you create a digital replica edition of your magazine? Digital replica: The cons Obviously the biggest downside to creating a digital replica of your magazine is that it’s an entirely new expense, requiring more manpower and technology that you never needed before the iPad came along. More on the actual costs later. In addition, many publishers find their sales team has trouble selling advertising now that it’s so much more complicated in the digital world. The metrics are complex and not standardized, and explaining the benefits to a new advertiser may take more knowledge than your print ad salespeople have.

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From the consumer point of view, one of the biggest complaints we hear about replicas is the page, being simply minimized to fit into a tablet screen, delivers type that’s too small for many people to read. Enlarging the view then expands the page beyond the confines of the tablet screen, so the reader has to move the page around with a finger to read all of it. In the study you just read, digital magazine readers cited readable text as one of the most important features, one that a digital replica does not provide. Another problem no one seems to be measuring is that a replica edition, if done sloppily, can generate animosity and drive consumers away from your brand – even long-time readers. In the iPad newsstand, we see dozens of complaints about the technology of every app. An example from a large news publication, which should have the money to do these things right: (1 star) No longer interested I have not been able to download the last three issues, even though they appear on the library shelf, and I have downloaded the upgrade. This is a waste of time, and I am going to write my subscription off. We guess that subscriber won’t be renewing any time soon. Digital replica: The pros So why should you trust your brand to a digital replica? Most importantly, because consumers expect and even demand a mobile version of your magazine. The longer publishers wait to jump on the bandwagon, the more they risk losing their audience to rivals who already have a mobile version. On top of that, consumers are starting to actually prefer digital magazines to print, partly because of the convenience and, especially in the case of millennials, partly because of the green factor. Last year, a full 52% of respondents to our study said digital media’s lighter environmental impact was the main reason they subscribe to digital magazines. And while our consumer research is showing that the small type on a replica can be a pain for readers, there is an alternative to the basic replica that we call the “vertical swipe reflow,” (more on that later) which allows a larger font size as each article is then reflowed into a long single page that’s accessed by swiping vertically. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

This is something most publishers could choose at a minimal expense – Mequoda, for instance, charges clients $50 per page to redesign a magazine to reflow – to overcome the replica “con” of small type. Besides, consumers are increasingly willing to spend serious cash on mobile media, unlike expectations of website content back in the early Internet days when everyone demanded that all content be free. The data in the Mequoda Digital Magazine Market Study shows that publishers are circulating more than 184 million digital magazines, even though AAM is counting only a small percentage of that, due to the challenges of measuring magazine subscriptions in a universal pricing context. You certainly want to be getting in on that action, even with a plain replica! So … is it worth your time and expense to publish a replica? While you’re weighing the above pros and cons, you’ll also need to consider cost. The best thing about the replica is that uploading PDFs is pretty much all there is to it: No need to redesign around fancy options like interactive ads, videos, or interactive content. If you want to move beyond the simple replica, most providers will happily do it for you, but let’s consider the basics of producing a plain replica. When it comes to providers in this space, Adobe’s Digital Publishing Suite (DPS) is the granddaddy of them all. However, getting into DPS Enterprise requires an upfront cost of more than $50,000, and a significant cost per download. This makes DPS best suited for large, multi-title publishers. The provider we recommend for niche publishers is Mag+. For Mag+, you’re going to pay a fraction of the cost per month to publish to all devices, and just a few pennies per download. (And unlike Adobe, Mag+ allows publishers to host their digital magazines themselves, eliminating the download cost.) This package is much friendlier to smaller publishers. How much should you charge? Pricing for digital magazines is as chaotic right now as your average Macy’s sale. No two pricing policies are alike! However, we’ve determined that the average single-copy price is $4.97, while the average 1-year subscription rate is $19.97. Some folks bundle their digital Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

subscriptions with print for an extra $5-$10. Others maintain completely separate subscription options. If you’re feeling bold you can bundle your digital subscription with your print subscription, and take that opportunity to raise your print price. Of course, the real question in pricing is how you’re going to break even and make money after investing in your digital edition. But here’s the bottom line based on Mequoda’s research so far: To launch a simple replica, you may pay about $7200 per year for Mag+, plus another $2000-$3000 in labor. If you have a $30 subscription, with the average 70% remit, you’ll need to sell 500 subscriptions to break even. And even the smallest of publishers we’ve heard from are selling that number, even as many as 10,000 or more in their first year. If that’s not enough to get you on the digital bandwagon, we don’t know what is.

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What’s a Replica-Plus Digital Magazine? A replica-plus is a replica with some extra bells and whistles added. And normally you’d think that adding things such as video, audio, HTML links and other technology-rich features would be an improvement to the simple replica. We’re not so sure that it’s a good enough upgrade, and here’s why. The problem with adding bells and whistles to a simple replica to create a replica-plus lies in one of the disadvantages of the replica that we’ve just discussed. But first, let’s look at the pros and cons of the replica plus. Replica-plus digital magazine: Pros The advantages of the replica-plus are similar to the replica, in that consumers increasingly expect digital versions of their favorite magazines, either because of convenience or because of the “green” factor. What’s more, consumers are also becoming more willing than ever to pay for digital content, though there is still some hesitation about prices that are higher than print. Also like the replica, a replica-plus edition is easier and cheaper to produce than fancier versions. This makes it a good starting point for any publishers who are late getting to the digital party because of a lack of resources. Finally, replica-plus editions create an even more audience-engaging environment for advertisers than the simple replica, with all those interactive features. Finally, renewal rates are gradually showing themselves to be higher for mobile editions. Replica-plus digital magazine: Cons You may recall that the major drawback with a replica-plus is the small type necessary to shrink a print page down to tablet size. You can pinch out to enlarge the type, but then the page no longer fits in a tablet screen. This is more than just an inconvenience; it’s a major source of complaint for many consumers we’ve talked to. And it makes your app magazine largely inaccessible to anyone over the age of 40. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

So here’s why we believe the replica-plus is not enough of an improvement over a basic replica: It doesn’t solve the type size problem. It just increases the user’s frustration by creating more things he or she can’t see. And when you’re in enlarged mode with part of each page missing, you probably overlook the links and tappable buttons that lead to the videos, audio and other fancy features anyway. In short, the replica-plus is akin to adding fancy whipped cream, chocolate syrup and cherries to a bowl of sand. It may look nice but it costs more to create and does little to make the sand more appealing. A visual difference In one replica-plus digital edition we know, there’s a sharing function called “streaming,” which is just a fancy name for social media sharing. You can tap an article title in the TOC (but not on the cover) to go directly to that article. You tap and hold to find all the available links on a page. Oh, and there’s a smooth interface that takes you to the website — from which we never did figure out how to escape. Rather maddening, that. And above all … you still have to squint to see the replica content. This is what we could call an “eye exam.” Now check out a page from I Like Crochet, a Mequoda client. Does the original page fit into the tablet screen? Nope. It fits horizontally, so there’s no need to push the content around with a finger to find the beginning and end of sentences. But vertically, the content runs off bottom of the tablet screen, and the reader simply scrolls down to read the entire piece. And, blessedly, even a 50something can read the type. If you want to improve your basic digital replica, we do not advise going with the next step that so many publishers seem to believe is logical, the replica plus.

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Instead, invest your money in a reflow. Your lovely, user-friendly mobile magazine is going to increase revenues, after all, and it wonâ&#x20AC;&#x2122;t be long before you can afford to add the bells and whistles you long for.

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What’s a Reflow-Plus Digital Magazine? Instead of dressing up a plain replica with whipped cream, for most magazines Mequoda advocates for something we call a reflow version (coming up next). The reflow allows the type to resize and reflow around ads and images in order to fit on a tablet screen while still being readable. Nothing shrinks. Your 40-something readers are happy. You might wonder how we skipped from replica plus to reflow plus, without considering the reflow by itself. That’s because we haven’t found anyone doing just a reflowed version of a magazine. Everyone who’s invested the time and money into reflowing their publication seems to have also added the bells and whistles that make their magazines “pluses.” A reflowed magazine has been designed so the text and images are enlarged but still fit onto a mobile device screen horizontally, instead of forcing a magazine page-full of content onto the smaller screen by shrinking everything, as the replica does. Content that doesn’t fit on one page is simply flowed onto the next. This means the reflowed version is vastly superior to a simple replica where a magazine page-full of content is shrunk down enough to fit as one page on a mobile device screen, especially to folks whose eyes aren’t quite what they used to be. And there are two ways to reflow your content: Keep it flowing horizontally so the reader simply reads your entire magazine horizontally from newly flowed page to newly flowed page as she would a print magazine. Then there’s the vertical reflow, also known as vertical swipe. In this version, the content in each article, if it doesn’t fit on one page, flows downward, and is accessed by swiping up. Consumer Reports’ navigation section gives us the big picture: (see next page)

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The reader swipes horizontally to navigate from article to article, and vertically to read articles longer than one tablet-sized page. Note that when you reach the bottom of a vertically swiped page, you don’t have to scroll back to the top to swipe horizontally to the next article. That can be done from anywhere within the long vertical page. Magic! Reflow-plus: Pros As we’ve been saying all along, having an app version of your magazine is a basic advantage, given the light-speed adoption of mobile devices by the reading public. And the reflow-plus is superior to both a simple replica and to the replica-plus. The most obvious benefit is, of course, readability. Increasing access to your content is always a good idea. And we’re definitely not fans of the replica-plus. Why spend your money on extras when readers have to squint to see them? A reflow is an excellent use of the technology digital natives seems to want in digital products. Users accustomed to digital media become impatient with low-tech PDF replicas. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Finally, the “plus” part of Mequoda’s name for this version tells you that the magazine uses technology to enhance the reading experience with video, additional popup content, audio and more. That means more engaged readers, happier advertisers and a more profitable magazine. Reflow-plus: Cons Yes, a reflow-plus costs more than a simple replica. We can’t share provider prices with you because they’re usually negotiated with a sales rep, but Mequoda partner Mag+ says that on average it takes about 10 minutes per page to reflow the content – five minutes for a short piece such as a letter from the editor, and a few hours for an eight-page feature. And Mag+ tells me many of their customers who start out with the simple replica move to custom design, including reflow, after only a few issues. The only other disadvantage we can come up with for the reflow is potential confusion for readers of vertical reflow magazines – but that’s easily remedied by explaining how it works in your user’s guide (which of course you have, because it’s a Mequoda Best Practice) and by including visual cues or icons, such as arrows, in vertical articles to tell readers how to find the rest of the content. Best examples of reflow-plus As mentioned above, Forbes now offers horizontal reflow. You have to guess to figure out what to do to read the next page, but since there aren’t a lot of choices, most readers will figure it out pretty quickly. And, of course, Forbes offers quite a few bells and whistles, like the ability to share and save articles.

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Vertical reflow is illustrated by Rolling Stone. It too is a “plus” with features such as audio for readers to sample new music.

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Now compare these reflowed pages to the eye exam that is a replica, in this case represented by Hemmings Sports & Exotic Car. The replica is still the app magazine of choice for niche magazines with smaller circulation and fewer resources than the big players.

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But there’s always someone among the bigger players who still hasn’t gotten the memo about advanced technology and reflowed text. If you thought Hemmings was hard to read, Women’s Wear Daily, used to be a replica inexplicably locked into landscape mode — so each replica page, two per screen, was even smaller than those viewed in portrait mode!

We’re happy to report that you can now view in either mode now. But it’s still a replica. Since they published their last print edition recently, we hope they focus more on upgrading the digital edition to a reflow-plus. It’s not hard to see why the reflow and reflow-plus is Mequoda’s Best Practice. We certainly believe it’s worth the extra cost if you can swing it, and certainly a better way to spend your money than tacking fancy features onto a simple replica.

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What’s a Vertical Reflow? Isn’t it fascinating to consider how the old journalism phrase “above the fold” has evolved? Once it literally meant “above the fold” of a traditional broadsheet newspaper. Editors, writers and designers battled over what, and who, would win a coveted spot above that fold, where the most reader eyeballs would land. Now, even as those broadsheets themselves are in decline, heading for dinosaur status, the phrase still lives – in tablet and web publishing. Of course tablets have no fold. But they do have a single screen, and for magazines employing the Mequoda Best Practice of vertical reflow, “above the fold” – that is, the first screen – has become once again a layout consideration. Vertical reflow, also known as vertical swipe to describe how the user accesses the content, means a layout where instead of squeezing a magazine page into the smaller tablet screen, the content is resized and reflowed on a bottomless tablet page. Users swipe up to bring up this long page as they read. The reader can swipe horizontally at any point on this page to go to the next article. Mequoda prefers this layout because it’s reader-friendly; even young folks can have trouble reading content that’s squeezed down from magazine size to tablet size if you don’t reflow your content. And the growing popularity of this layout has led to new design considerations – what should you put on that first screen, above the “fold?” Designing above the fold for the iPad When you employ vertical reflow, you don’t have to worry about responsive design, because the content’s already laid out to be easily viewed on that iPad screen. And just as in the newspaper days when editors chose content to go above the fold that would keep their readers engaged and coming back every day, iPad content designers have to consider how to do the same. You don’t want your subscribers or single-issue buyers yawning and scrolling straight through your magazine. Those readers won’t be renewing, or buying a subscription, if they’re not captivated by your content in the first few seconds on each page. And it’s certainly a waste of resources if you’re spending time and money to reflow your content without taking reader engagement into consideration. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

So how to get readers’ attention and keep it? At the moment, there are several different design options popping up out there.

1. Use a big, provocative headline This is less common at the moment than it was in the past. For example, New York magazine, one of our tablet favorites, did it for almost every feature it published in 2013. Now it’s a bit harder to find, but apparently the designers thought that screaming “FREDDY LIVES!” as the title to an article on horror movies would be even more provocative than a graphic image from said movie.

2. Feature a compelling image.

Again, fairly common. The right image can really have an impact on a reader casually scrolling through a digital magazine. In practice, an image completely alone looks like an ad, so all of the designs with prominent images we found have at least a small headline included to indicate that it’s editorial content. American History’s art director knows that having someone looking directly out of the page at the reader is absolutely arresting.

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(In an interesting enhancement, Popular Science lets you double-tap the screen to make the headline and any text disappear, and enjoy the lead image all by itself.)

3. Start with an engaging video. And speaking of our friends at Popular Science, here they are opening an article with a rather breathtaking view from the back of a high-speed train in an artistâ&#x20AC;&#x2122;s rendering video. See the motion at the top of the screen, as the train passes under a bridge?

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4. Combine a compelling image with moveable text. This is a technological offering that our partner, Mag+, was excited about long before most publishers had adopted it. Now, however, it’s becoming almost common. “Layering” allows the designer to feature a stationary image and have the corresponding text be scrollable. Mequoda client I Like Crochet offers the directions for each project as moveable text that allows the reader to keep the all-important image of the finished product in front of them all the time.

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5. Combine some or all of these techniques. Here, Popular Science, pioneering many of the emerging best practices in the tablet magazine space, combines a compelling image, startling headline (How to mine an asteroid!!!) and scrollable text.

Of course, designers being designers, we may soon see other “above the fold” offerings that haven’t yet been thought of. That’s the beautiful thing about tablet app magazine publishing!

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Launching a Digital Magazine At Mequoda, we urge our clients to begin the process of launching a digital publication yesterday, because we firmly believe that the future of our industry lies in mobile publishing. Over the next several chapters, we’re going to walk through everything you need to know in order to launch a digital magazine. To begin, we’ll outline these five steps here, and as you read on, we’ll explain more about the finer details of each. Step One: Decide on a format The very first thing a budding digital publisher must do is decide on the format of the magazine. Will the magazine be a simple replica? A replica-plus? You might also choose to reflow your print content for maximum readability. That means redesigning each page in a vertical format, so that long articles flow into bottomless pages and the reader swipes vertically to access the content. You’ll also include as many live hyperlinks as possible for additional resources – both the links included in your print product and new ones that you’ve added just for the digital product. Consumers tell us that they’re all about extra information and content that they can’t get in the print product. If you just upload PDFs of your print pages, you’re not taking advantage of the technology … why bother? Mequoda has a partnership agreement with Mag+, a company we’ve chosen because of its wide range of options for publishers and its accessibility and affordability to smaller operations like our clients. We urge you to check them out, along with other options such as Adobe and BlueToad. Step Two: Add interactive elements Adding interactive elements to your digital magazine is essential. And the thing consumers love most about tablets is video. This may sound daunting, but don’t assume this is out of your reach. Existing DVD or downloadable video content can be repurposed. You can start producing video content of your own, or at least dip your toes in the water by reaching out to bloggers and others in your niche who might have videos they’d be willing to share with you.

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One of our clients began just that way, and soon found that demand outpaced the supply of existing video content. That gave them the motivation and confidence in the market to start creating their own videos. In addition to video, you could at least deliver photo galleries of images that didn’t make it into the print product, or behind-the-scenes shots or similar material. Finally, you should be prepared to have at least one bonus article, with interactive elements, in every digital issue to enhance value. Step Three: Create a subscription website Two words: Subscription website. If you don’t have one, create one. Mequoda clients use our comprehensive subscription management program called Haven Gate to launch a premium subscription website as part of their product lineup. There are a number of advantages to having a subscription website related to your print and digital magazines. First, it helps you develop a relationship with your readers and keeps them engaged with your brand. And since you have other products to sell (you do, don’t you?) it gives you the perfect platform to do just that. Having a magazine subscription website associated with your print or digital products also allows you to sell subscriptions and back issues yourself, instead of relying on Apple and other newsstands – which in turn means you get to keep the cut you’d have to give those third parties. You also control your subscription offers, including copy, price and incentive testing, not to mention offer tracking and data harvesting. Above all, having that premium subscription website means you can bundle your products – website, digital and print – in a way that drives the average sale price from $20 closer to $30. And who among us would sneeze at an increase of 30-40% in per-customer revenue? What’s more, because the average customer stays with you for about three years, you’ll be getting $90 from that customer instead of $60 over that lifetime. We write about the advantages of operating a premium subscription website all the time, so let’s revisit our Biblical Archaeology Society (BAS) case study in Step Four.

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Step Four: Develop a pricing strategy Choose your pricing strategy. Take this example from BAS to heart: • • •

Biblical Archaeology Review digital at $19.95 BAS digital library on the premium subscription website at $29.95 BAR digital + BAS library at $34.95

More than half of BAS’ sales are for the highest priced product – $15 more than the lowest priced product. The second highest sale price point is the middle price. Few consumers bother with the cheapest product! Step Five: Integrate your marketing Determine your marketing strategy. This means establishing a schedule to integrate digital magazine promotions into daily, weekend and spotlight emails that you send out to email subscribers from your website portal. You should plan to promote your digital product once every six weeks or so. We have plenty of advice for using email to market your products, in case you’re unsure. That wasn’t so bad, was it? Mequoda has already worked out the process, so you don’t have to start from scratch. The Mequoda Multiplatform Magazine Strategic Planning Framework (SPF) In planning to launch a digital magazine or a digital edition of your magazine, there are many factors to consider. That’s why we’ve created a strategic planning framework (SPF) as a tool to help you develop and communicate your business plan within your multiplatform publishing organization. You may find there are additional factors specific to your publication or operation, but these will provide a basic data set for your planning and modeling (see next page).

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Strategic Planning Framework: Multiplatform Magazines Frequency How many issues per year? # Editions • • •

Print Web (HTML) App o Apple o Amazon o Google o Other

App Editions • • • • • •

Software licensing cost $ App set up and submission management cost $ Asset creation cost $ # Issues uploaded at launch Production Price/Page $ Cost per Issue Download $

Print Issue Map • • • • •

Copies printed # Editorial pages # Ad pages # Index pages # Other #

Digital Issue Map • • • •

Editorial pages # Ad pages # Index pages # Other #

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Advertising • • • • •

Available inventory (pages) / year Fill rate % Rate Base # Average Yield / thousand subscribers $ Yield per page $

Pricing Edition App(s) Print Web Combo Weighted average price

Pricing

% of Distribution

Library of back issues – content structure By back issue Yes By topic Yes

No No

Email • • •

# of email subs # of emails sent Orders per 1,000 emails sent

Website • •

Web page views Orders per 1,000 page views

App Order Index % of App Orders Apple Amazon Google Other -‐ Must total 100%

Remit Rates

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Continuity revenues (typical rates) •

Conversions (45%) o App o Print o Web o Combo

•

Renewals (65%) o App o Print o Web o Combo

While things are still evolving, the overall trend is clear. Multiplatform publishing, including tablet-friendly digital editions, is the future of magazine publishing. Whether your revenue comes primarily from selling premium content or selling advertising and sponsorships, there are substantial and growing revenue steams to be developed. And one thing you can be certain of, if you don’t do that for your markets, someone else will.

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Designing Your Digital Magazine Now that we’re all clear what digital magazines are, let’s take a look at some of Mequoda’s favorite features in the magazine apps and digital magazines themselves that we’ve noticed. Given how rapidly the industry is changing, some of these may eventually evolve into something else or disappear completely, but it’s still worth considering these features when you’re creating or rebuilding your own apps and magazines. Best Practice #1: Updated daily content in your app Besides the fact that many users dislike free magazine apps that deliver nothing more than the opportunity to buy the magazine, an app with no there there gives users no reason to remember it, or the magazine, unless they want to buy a new single copy. Magazines like New York deliver a full-scale daily news product inside their app – where the magazine is also easily accessible – that any user would love to check every day. Publishers have been delivering free content on their websites for years now, giving them daily opportunities to make new sales, so why not put some in your app? Even if you don’t have a vast news staff like New York’s, you could post your daily blog or other content you’re already producing into your app, and include lots of ways for users to subscribe or buy single copies. It’s an opportunity for publishers to reach out to users who wouldn’t dream of sitting at their desk to read content on a website. Best Practice #2: Let ‘em save their favorites Print readers are accustomed to the ability to save something they really like by cutting it out. So they tend to miss that ability in digital editions, at least according to reviewers we’ve noticed in various magazine apps at the newsstand. So it’s a nice touch when you can add a feature such as Forbes’ clipping tool and The Atlantic’s folder feature. If you can get your readers to save and, better yet, share your content, you’ve opened up an entirely new marketing channel.

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Best Practice #3: Add value for advertisers There are many ways you can make yourself a must-have for your advertisers, some of the more obvious being to allow links to the advertiser’s website directly from ads, or from products featured in articles. Black Belt magazine has one you don’t see everywhere, though: An interactive directory of ads, including a search function. Imagine telling your potential advertisers that readers will always be able to return directly to an ad that they first noticed while reading your magazine … or look for a product they already knew they wanted and find it easily. What would that be worth to advertisers who think that digital advertising is only for game apps? Best Practice #4: PDFs, not PNGs It’s hard to believe in this advanced digital era, but some publications are still delivering blurry text and grainy images. That’s because they’re still exporting their magazine pages as PNG images, which look highly pixelated when viewed with the latest iPad’s display technology. Your magazine may take longer to load, but nothing will turn off your readers faster than a grainy-looking product, even when grainy Instagram photos are in vogue. Get with the 21st century, pronto. Best Practice #5: Two orientations Again, this one should be a no-brainer. Readers consistently say they want the option to view magazines in both landscape and portrait mode. It costs more to design, but if you can manage it, it will probably pay off in the long run. Best Practice #6: Zoom zoom Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

This is yet another feature that seems like a no-brainer, but is not always available. Please let your readers increase the size of your wonderful content and images! Not everyone is 20 years old with perfect vision, and you certainly don’t want to risk readers never returning to your magazine because you went 20th century on them.

What About Free Digital Magazine Apps? As the first wave of digital magazine apps has passed, we’ve discovered one thing: People hate apps with nothing in them. And yet, the vast majority of digital magazine apps available today are nothing more than a retail outlet for single copies and subscriptions. They are labeled as free, but have nothing to offer unless a purchase is made within the app. This practice is the reason why so many magazine apps have low ratings, as can be witnessed by reading the reviews. While we have opinions on magazine pricing (coming up), and the dire need to raise them, at the same time, magazine readers are like many other digital consumers in expecting something free on their tablets. And disappointing them right out of the gate when they first download your app is not exactly a marketing best practice. In case you hadn’t noticed, your competition and peers are starting to solve this problem. So it behooves publishers to rethink their app strategy immediately, if not sooner! But fear not, we have some solutions to the app customer service nightmare, courtesy of some very savvy publishers.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

The magalog Condé Nast, as we’ve mentioned before, is on the leading edge in digital magazine publishing. So it’s no surprise that they developed an app for SELF (Motto: Tap into your best self!) that combines free content – enhanced with videos and extra “tappable” content, with sell copy urging you to subscribe now. If that sounds vaguely familiar, it’s because it’s a lot like the magalog of old – a carefully crafted blend of free content and marketing messages. SELF does it with a back issue from 2011. On a page titled Let’s Get Physical, featuring two exercises that are illustrated with video, SELF proclaims, “Buy it now! Get the new issue of SELF and let us be your personal trainer!” There are variations of this message on every page, from beauty to fashion to healthy eating. One quibble: You can’t get to the “Subscribe” page by tapping on these messages. You have to know enough about apps to tap on the Home icon. One of them includes instructions, at least; “Go to the home screen of this app to buy the newest issue! You’ll find tons of easy ways to eat better today.” All in all, a clever approach that combines the best of free content with marketing. Watching someone actually do an exercise is roughly 2,376 times more useful than looking at a static image, and that tempted even an old marketing hand like me to hurry up and subscribe.

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The free issue Interestingly, the publisher who perfected the magalog in the olden days, Consumer Reports, doesn’t do an app magalog. Instead, it delivers free issues. This is the most common style of content-rich apps, and you can choose to offer either a free back issue, or a special issue you’ve put together for this purpose. In this example, Consumer Reports does the latter, although we suspect it’s actually an existing back issue. Why do we only “suspect?” Because there isn’t a single date in this free issue, not even in the car reviews. The reader has no idea which model year is being reviewed, and that goes for the tablet reviews, the washer and dryer reviews, and everything else in the free issue. As marketers, we love it. You get the full flavor of Consumer Reports’ rich content, yet nothing is really being given away – who would choose a car based on data that could be years old, and then decide they already got what they wanted and exit the app without subscribing? What’s more, at the end of every article is a full-page ad featuring an image of an iPad with a cover related to the content of that article – the Best Tablets, Cameras, TV, Phones, Ereaders and More issue after the tablet review, the annual auto issue after the car review, and so on. The text is the same on every ad: Enjoying your free preview issue? Subscribe today and save up to 59% off the single-issue price.

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Updated free content Instead of just offering a free issue, you can really step up your game like New York magazine. This is the most entertaining, awesome digital magazine app out there. We kid you not. New York has broken new ground. With this free app, you get daily content including news, features and columns. Pages and pages of free, new content. You could easily spend an hour or more reading it. Then, when you’re done, and you’re thoroughly dazzled, you simply tap on the magazine link at the bottom left, and you get the table of contents and the opportunity to buy. If you’re already a subscriber, you still enjoy the free content, and when you’re ready to read your issue, it’s only a seamless swipe away. Finally, for the pièce de resistance, there’s a link on the “Latest News” page – the home page for the free content – to the website. New York’s free news content and paid magazine content are both easily accessible at all times with their unique “window shade” feature – just pull the handle with a finger. And then there’s the thumbnail menu of the magazine’s pages at the bottom when you’re in that part of the app. There are just so many ways to love this app, we can’t list them all. Everything New York magazine does is readily available, free or for a price, seamlessly connected, and easy to navigate. Clearly you need a fairly large staff of journalists to make this kind of daily content happen for free, but the app is a home run.

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Pricing Your Digital Magazine Magazine pricing strategy has certainly evolved over the past couple of years. As recently as 2013, we still believed that universal pricing was the best way to handle print, website and tablet products. Today, we’ve evolved our own thinking and our new Best Practice is decoy pricing or contrast pricing, which requires different prices for different products. Universal pricing: Universal Digital Access, as a policy, creates an environment where subscribers can safely sample different platforms without fear of being left behind. From the publishers point of view, a subscriber is a horrible thing to waste, and anyone who subscribes to content on any platform, in any edition, is given premium access to their subscription website. Contrast/decoy pricing: Contrast pricing takes advantage of the psychological phenomenon in which human beings, when asked to make a choice, tend to rely on the relative value of things compared and contrasted to other similar things. Bundle that digital magazine with at least one other product, and make sure you have three offers to drive more buyers to the highest price point. Interestingly, an article in PCWorld published just weeks before the iPad’s debut in 2010 speculated that publishers would continue their traditional pricing models of $10 to $20 per year … and “I hope that’s the model iPad magazines go with,” added the writer. Of course you would. You’ve been getting thick, glossy, content-rich magazines for pennies since the beginning of time. Why would you want to pay more? One of our biggest pet peeves is the decades-long policy that magazine publishers pursued – to maintain rate base – pricing their publications dirt-cheap. $9.99 was indeed a common price for 12 full issues of a consumer magazine. That policy trained generations of consumers to believe that magazines are cheap, throwaway products. This seems to have been restricted to the U.S. When we taught our Digital Publishing Course in London to global publishers a few years ago, eyebrows in the room rose collectively to the ceiling when we mentioned the prices of some well-known American magazines. They were astonished that any industry would shoot itself in the foot in that way. Our angst over this issue made us practically float out of our chairs with happiness at the MPA Swipe 2.0 conference where Hearst Executive Vice President John Loughlin declared war on cheap magazine pricing now that digital editions – or as we call them at Mequoda, app editions – are so popular. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

What did Loughlin think is a fair price? “19.99 is the start of fair value,” he said, adding that nearly 900,000 Hearst subscribers have already agreed with him. Loughlin isn’t shy about his position: He also sounded this theme when talking to the Wall Street Journal. “I hope that this is the demise of $6 and $7 and $8 and $9 print subscriptions,” he said at the time. It was a great sound bite, but Hearst still charges $8-10 for most of its print products, and $12 for most of its tablet editions – sold, for reasons we’re unaware of but which we hope they tested – in six-month increments of $6. The company has also recently entered the ranks of decoy pricing publishers, and again, we hope they test this! Subscribers can get both print and tablet editions in an annual bundle for $13, just $1 more than the app edition. Thus Cosmopolitan, for example, offers these packages in a decoy pricing arrangement: • • •

Print: $12 Tablet: $12 Print + tablet: $13

Yes, our models tell us that they’ll probably drive more sales for the $13 option and will also generate more sales overall. But the increase in revenue is minimal, compared to other bundle prices. The $1 increase from print or tablet to the combo package certainly delivers what we call the “no-choice choice,” which is a polite way of saying “no brainer.” But our research shows that a $5 increase delivers the same impact, and you get more money! Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

As the model shows, our testing says you can still get more orders and more buyers for the highest-priced offer, even when it’s $5 more than the next price. But as always, test your own offers to find out what works best for your audience. Meanwhile, as we always like to point out, one of our clients, the Biblical Archaeology Society, happily allows us to use their data to point out the benefits of Mequoda’s Best Practice bundle pricing: • • •

$19.95: Biblical Archaeology Review app magazine $29.95: The Biblical Archaeology Society digital library (BAR archives plus 20 years’ worth of Bible Review and eight years of Archaeology Odyssey) $34.95: BAR app edition + BAS library

When BAR launched this pricing structure in 2013, BAS earned $97,000 from the combo offer, the most expensive option. Everything else combined totaled $58,678: $38,322 less than sales from the combo offer all by itself. As we’ll see in a moment, that kind of success is not pursued by larger publishers. Meanwhile, another trend showing up among those big players is illustrated by The New Yorker: the three-month offer. The theory behind this strategy is that it lowers resistance to buying by making the commitment smaller. And in the digital era, the costs to renew four times a year rather than once are minimal, so it’s worth testing.

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Or, incentivizing digital subscriptions, like this example at Bloomberg BusinessWeek which leaves no room for deliberation. The whole package for only $5 more, and a $5 gift card to seal the deal.

App magazine publishing as camouflage As the WSJ noted, Hearst was joined in this campaign by publishers such as Bonnier, owner of Popular Science and Field & Stream, and by CondĂŠ Nast, publisher of Vogue and The New Yorker. In fact, The New Yorker has not only raised its prices, it did so in a somewhat surreptitious way by simply attaching a $20 higher price to the magazine, print or app, when it launched its app edition in 2011. Thus the old $39.99 price for print rose to $59.99, and the tablet edition was priced at $69.99. Nowhere did The New Yorker actually announce a price increase, thus completely camouflaging that extra $20 behind the dazzling debut of its app. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

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However, The New Yorker has stepped backward with its current offer, which is one price for all three offers – print, app, or the combo package. In essence, this is still universal pricing. Not only that, but those $59.99 and $69.99 prices are gone – at $12 for 12 weeks, as we noted above, the new annual price is $48. The Economist also joined in this sleight-of-hand. When they abandoned universal pricing in 2012, they took the opportunity to bump the price from $127 to $160 for the bundle, while leaving the $127 price in place for app-only or printonly. Those prices are still in place today. What makes app magazine publishing worth more? Higher prices for both print and app magazines are being accepted by the consumer, and it’s encouraging that consumers are willing to pay more for an app product that, from the outside, looks much less expensive than print to produce. But are app magazines really worth more than the old print magazines? At Mequoda, we really do believe that higher prices for app subscriptions are about more than just correcting decades of underpricing. App magazines, as Hearst’s Loughlin points out, offer extra value, including instant delivery, enhanced and extra content, and interactivity, not to mention being easily archivable and searchable without taking up space. It also appears to be important that app magazines are green. Then there’s the data starting to trickle in showing that tablet owners hit two of marketing’s most desirable demographics: They’re young, and they’re affluent. It’s not often you can get both of those demographics in one product. This two-fer means that the target audience for app subscriptions is more willing to spend money because they have more to spend – and on top of that, they haven’t been trained to think that print magazines are birdcage liners. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

How often do you get a win-win situation like that? Oh by the way … Condé Nast has data showing that its tablet subscribers are renewing their subscriptions at a higher rate than print-only subscribers – and they’re also paying higher prices for their renewal subscriptions. By my count, we’re now up to a win-win-win. Walking the walk So if Hearst isn’t following its own advice, Condé Nast has lowered its app price, and The Economist is at least holding its price ground, what’s really going on around the industry? We’ve done some price studies and the bottom line was that magazine pricing is as varied as snowflakes, even inside one publishing company. Some publishers charge more for print than tablets, and some do the opposite. Most don’t offer bundles, but at least the three who do make an effort to maximize their pricing policy. Two of them, National Geographic and Maxim, offer a $5 “no-choice choice” leap to the bundle. Rare is Loughlin’s “fair value” price of $19.99. Meredith is stubbornly sticking to its rockbottom print price of $5.99. Perhaps that’s one of the unspoken reasons for the death of Ladies Home Journal, which ceased publication. The only bundle was National Geographic. Hearst, despite its bundle offered for Cosmopolitan, offers no bundle for its two largest magazines, and is only slightly more ambitious with its largest magazines than Meredith is, with a print price of $7.99. Bonnier’s Working Mother costs the same for print and tablet, as does Maxim. GQ, inexplicably, doesn’t offer a separate tablet subscription at all. Their app is available only as a bundle with print. Some of these publishers have actually begun raising their prices, which observers believe is part of a trend in the industry. We’ll all get to see if that’s true the next time we update this study! Finally, we went to the magazines which presumably are doing everything right, because they’re the top 10 in tablet circulation improvement. But there’s no magic answer here for those of us studying the best pricing practices – prices are once again all over the place, and we’d guess that the reason these publications are doing so well with tablet circulation is because of the on-the-go nature of their readers, not because they’ve carefully thought out their pricing policies. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

The top nine offered no bundles. Some at least have healthy prices for print – no $5.99 prices here. Most price print higher than tablets, but Rider and Natural Health price their two editions the same. And Outside goes with universal pricing. It would appear that there’s no one answer for optimal pricing policies among these successful publishers. But at Mequoda we’re still sticking with our belief in fair value of print magazines and in our Best Practice of decoy or contrast pricing. These practices succeed for our niche publishing clients like the Biblical Archaeology Society. They’re content to drive ever-higher revenues for themselves and quietly succeed inside their specific niches with Mequoda’s pricing policies.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Calculating Digital Magazine Costs There’s no doubt that publishing your digital magazine on a tablet, so that it can be downloaded in some of the world’s largest newsstands, is a good idea. 20% of your subscriptions will come directly from this huge marketplace. It benefits your content too. Many people read from back to front in print magazines. But in a digital magazine, 95% will read front to back. They’ll see more pages (and ads for that matter). Or, they’ll pick an article are start there. With an online/web magazine the reading dynamics are similar but different. It’s a fascinating thing to master if you’re a magazine editor in the 21st century. The web magazine is significantly different, and both are very different from the print magazine. Newsstand remit rate costs Just a few short years ago, magazine publishers were thrilled down to their toes to keep 1840% of sales from news agencies. When Don ran an online newsstand, 18% was the average new remit order for the 1,400 titles there. And some publishers earned absolutely nothing from sales from the agencies they dealt with. But all these years later, the same publishers complain bitterly about earning … 70% of sales from Apple. Some people just don’t know when they’ve got it good. The cost of digital newsstand publishing is pretty fair. If you plan to launch a reflow-plus digital magazine—the type of edition we suggest because it’s most desired and readable—you’re going to incur more costs than if you launch a digital replica. Of course, the cost of using the top digital newsstands is technically free. Apple, Amazon and Google don’t charge you to publish your magazines. The cost is incurred on those platforms are 30% to Apple, 35% to Amazon and 40% to Google whenever you sell a copy or subscription. Amazon and Google’s rates are negotiable. A lot of folks in the industry consider Apple to be taking a 30% commission, and that number is the focus of their ire. Yet, as we’ve noted, Apple is actually sending publishers 70% of every sale. No publisher pays any newsstand a 30% commission. So we prefer to call it a 70% remit rate – to describe the action that occurs when Apple sends your cut to you. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Which digital newsstand should you use? Two of these newsstands will negotiate their remit rates. For these, we’re reporting on the best remit rates we’ve seen around the industry. Apple • • • •

Remit rate: 70% Negotiable: No Device: iPad Number of titles: 14,536

Notes: Apple allows publishers to sell subscriptions on their own websites, even if Apple is also selling those subscriptions, and takes no cut – as long as the website contains content, and isn’t a rival commercial website. Amazon Newsstand • • • •

Remit rate: 65% Negotiable: Yes Device: Kindle Number of titles: 853

Google Play Newsstand • • • •

Remit rate: 60% Negotiable: Yes Device: Android smartphones & tablets, Google TV Number of titles: “Hundreds”

Notes: No one but Google knows how many titles Google Play offers. A search doesn’t reveal the number of results, and their sales copy only calls it “hundreds.” One review comparing Google with Amazon listed numbers for all kinds of apps … except Google magazine titles. Zinio • • • •

Remit rate: 85%/35% Negotiable: Yes Device: All major ones Number of titles: 5,500

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Notes: Zinio, the oldest digital newsstand operation, handles all conversions to digital format for publishers. It also has the most complicated arrangements, and will even handle fulfillment for publishers who want to sell their digital magazines from their own website. It has the best remit rate if you sell your magazine through your own site (85%) but drops to 35% when sold through their platform. Zinio also launched its Netflix-style program, Z-Pass, which costs $5 per month for six magazines, which the user can swap out as desired. It hasn’t been around long enough to have generated any meaningful data for interested publishers, but I’d love to hear from you in the comments if you’re part of the program. Design and publication costs Of course, there are other costs involved, including design and publication. In terms of design, you may need: • • •

A new hire - If you decide to hire a new designer specifically for your digital issues. Magazine software - If your existing designers are ready and willing (more on that below). A partner - You may choose to outsource everything to a company (like Mequoda) that does it all for you, usually for a per-page rate.

Software costs One thing most publishers will need, if they intend to publish on the big platforms, is digital magazine publishing software. When perusing digital publishing software rates, you may come across these fees: • • • • • •

Initial software fee – the charge to use their software Startup fees – typically from companies who help you set up / design your digital magazine Per download fee – the flat rate or percent you pay per sale Per published magazine – the flat rate or percent you pay every time a new issue comes out Monthly fees – a flat rate you pay monthly to use the software / service Hosting fees – the cost to host your files

The next chapter will focus on several different software options you can choose.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

We don’t normally advise publishing a digital replica, however many publishers with smaller budgets, or those who haven’t decided to invest in their digital magazine yet, choose to start with a digital replica. In this case, the production costs above would be less, because you’re not truly digitizing the content. A temporary thing, we hope.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Publishing Your Digital Magazine Publishers have been trying digital magazine publishing software during the last few years in hopes of creating the best digital products for their audiences. And like everything else in digital magazine land, digital magazine software has evolved at light speed. And so has its pricing. Major digital magazine publishing software options Adobe Digital Publishing Suite: The Adobe Publishing Suite is one digital magazine publishing software option that offers a complete digital publishing solution. It allows users to publish for print, web, and tablets seamlessly. As the company notes, the tools for creating your app are free to use if you already have InDesign CS6 or later, and you only sign a license with them when you’re ready to actually publish. However, DPS is aimed at multi-title publishers, even more so now than before the March 2014 price changes. A Professional license allows the very smallest publishers to publish one title only. If you want additional platforms, the license cost goes up to $6,000 a year. There’s also a fee of $.35 per download. This is a switch from earlier pricing which allowed multiple titles in the Pro option. Adobe now encourages publishers with three or more titles to move up to its pricey Enterprise option, which is priced individually for each customer. “We look at the overall organization, how much they might be saving in print costs, and other business considerations before we can tell you what the costs will be,” a senior Adobe rep told OmniStudio. While once you could actually get an Enterprise license for a mere $50,000 up front, Enterprise prices can now be in five figures per month. And few niche publishers can afford that for digital magazine publishing software. And since at Mequoda, we’re all about the little guy, we have a partnership with… Mag+: A spinout company derived from Bonnier Corp.’s very early Popular Science app, Mag+ is our go-to provider. We generally direct our niche clients their way. We find that Mag+’s digital magazine publishing software feature set and functionality are similar to Adobe, and also support our best practices such as content reflow and including HTML links and other interactive features. But Mag+ is simply more affordable for small Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

publishers, both the base price and the entitlement price for downloading issues to clients’ subscribers. The cost is $8,388 per year ($699 per month) for enterprise features most publishers need, including adding a login to your app to gate your content. It allows you to publish one title to all devices, (multiple issues), similar to the DPS price, but with Mag+ you get 1 terabyte of downloads per month included, more than enough data for 99% of apps. Unlike Adobe, who charges a fixed fee per download and files must be hosted with Adobe, Mag+ allows publishers – including our clients who use Haven Gate, our comprehensive premium subscription management module – to host their digital magazines themselves. So you don’t even have to pay that entitlement cost. This also allows you to eliminate the newsstand middleman and keep the cut you’d normally owe them for each issue sold. Another benefit: You also control your own subscription offers, including copy, price and incentive testing, not to mention offer tracking and data harvesting. Another benefit of Mag+, in our experience, is that the culture there is more compatible with ours as champions of the independent publisher. Their executive team is open and honest, and very willing to answer questions and work with small publishers. At Adobe, not surprisingly, you’ll find a closed culture where you’re routed to resellers who often know less than you do about digital magazine publishing, and little if any support comes from Adobe itself. Frankly, we still expect that Mag+ will eventually pass Adobe and take over the #1 slot, because there are simply more independent small titles than there are companies like Hearst, Meredith and Time Inc.

Other digital magazine software options to consider YUDU: This company offers digital magazine publishing software in a full range. You can start with simple PDF uploads and turn them into browser-based editions and apps. YUDU has a vast range of impressive names on its client list, so it must be doing something right. The first thing we noticed, though, was that it’s the only digital magazine publishing software company we checked out that follows our own Best Practice of offering a free white paper in exchange for an email address. Well done!

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

YUDU offers an option for a web-based magazine with “excellent performance on all devices” via PageTiler technology. This is a browser-based newsstand, allowing consumers to flip through pages of a magazine without installing an app. GTxcel: Texterity and Godengo merged to create this digital magazine publishing software company which provides not just app publishing, but websites as well. With the Unified Publishing Platform, you create the content and Godengo translates it for every platform you need. Clearly this is more costly than just paying a company for the tools to publish an app, but its one-and-done approach might be a good fit if you haven’t gone digital yet because you’re reluctant to hire a staff to do it. BlueToad: Similar to GTxcel’s offerings, BlueToad provides digital magazine publishing software for digital editions and mobile apps. BlueToad takes PDFs and turns them into viewable formats online. We have some clients – small niche publishers, naturally – who jumped into digital publishing before Mag+ arrived and found BlueToad fit their needs satisfactorily. Another of their customers says, “They have been essential in developing our digital audience, by allowing us to focus strictly on content, while they focus on delivering our content platform independently. Since we first began using digital editions and apps with BlueToad - reader page views have grown ten-fold.” Ten-fold is a very good thing! PressPad: The pricing model on PressPad is tempting; it’s free to publish enhanced versions of your PDF magazine, and PressPad keeps the first $299 your app earns each month. They claim to have produced 3% of all the magazines in the newsstand. One feature of particular note: PressPad automatically generates a free sample issue of your magazine when you upload an issue (or you can choose to create your own). A free sample issue is one of Mequoda’s app magazine best practices, but far too many publishers ignore it. Issuu: As a reader notes in the comments below, you can test the digital waters for free with this company. Issuu provides a digital reader to embed on your website that allows readers to access a simple version of your magazine. Issuu makes its money by selling advertising on the readers, or from the small fee ($312-$420 a year, depending on extra features you want) you can opt to pay to get an ad-free reader. All magazines on Issuu are free, but some publishers have found a work-around that allows them to sell subscriptions. Mequoda has its own solution, too, partnering with Mag+. We’ve already helped several Gold Members develop what we believe are the first-ever responsive web magazines, delivering a full, page-by-page, rich-media experience in a web browser, making it accessible on any device. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

As the magazine and newsletter industries continue down the path of digital evolution, new product solutions will continue to reach the market.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

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Selling Digital Magazine Subscriptions It’s amazing to look back to when digital magazines were still something of a novelty. Today, it’s a given that print publishers will soon create a digital version of their product if they haven’t already. In fact, publishing entrepreneurs who have launched from scratch with print, digital and website simultaneously, and even established websites with no magazine at all are beginning to create their own magazines – multiplatform publishing run backward, so to speak. But even as they become part of the norm, everyone is still trying to figure out how to sell digital magazines in this brave new world of ours. Sometimes the newest and hottest ideas are just that – ideas. We’re focused on strategies that have actually been executed and demonstrated to work. So here are 8 strategies we’ve compiled for selling digital magazines. 1. Track device users: If you’re making even the smallest effort at online audience development, you’re getting a sizable number of unique visitors to your website. You should always identify those visitors who arrive on a mobile device, and deliver a floater with a digital subscription offer they can’t refuse. 2. Keep the whole pie: At Mequoda we always build a subscription website as a companion to our clients’ magazines. Beside the obvious benefits of audience development, subscription websites are vital in selling digital magazines, because you can sell directly from your website. Take the money yourself, send them to Apple for fulfillment, and you don’t owe Apple a dime. Why? Because Apple’s primary interest is selling iPads, and as long as your subscription website isn’t a competitor retail site, the company is happy. Bonus: You get to gather the customer’s data, which Apple doesn’t willingly share and is a sore point for many publishers. 3. Leverage your back issues: There’s gold in them thar archives! One of the product bundles offered by Scientific American includes print, digital and the incredible archive that SA fully digitized – a whopping 150,000 articles, dating back to the magazine’s first issue in August 1845 and including contributors such as Albert Einstein and Thomas Edison. Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

And while few publishers have an archive as old and rich as SA’s, most legacy publishers have older content that their subscribers would love to access. 4. Sell on Apple: Having discussed selling digital magazines on your own subscription website, we certainly don’t mean to imply that you should bypass Apple altogether. It’s by far the best deal you’ll ever get in a newsstand or agency, brick-and-mortar or virtual: Every sale Apple makes for you means 70% of that price in your pocket. Remember, in the old days, the average remit from a newsstand for your print sales was 1840%. And this is beside the fact that Apple is one of the most beloved brands of all time, resides on the best-selling tablet of all, and has far more magazines available, making it the most widely-shopped digital newsstand available to you. 5. Get noticed: While it’s unclear anymore how much influence smaller niche publishers can have on getting themselves featured on mighty Apple, there’s still hope for standing out on other newsstands. Google Play, for instance, enhances its customer experience by providing free content supplied by publishers. It might not be Apple in scale, and for that reason you might make this lower priority, but Google Play continues to grow, perhaps because of the lower cost of Android devices. Its revenue growth, though below Apple’s, is tracking similarly to Apple –up. 6. Sample issue: Some publishers give away sample issues in their app to entice customers to buy something. Self offers an actual archive issue; Consumer Reports offers what looks like an old issue, but could be an issue compiled specifically for the purpose. A case study noted that for Popular Science, when they tested a specifically designed sample issue against a free trial, the sample issue, showing off the best of the digital edition, easily bested the free trial offer. (Don’t hesitate to run your own similar test, though. Free trials are classic marketing techniques for a reason!) 7. Low-tech paper: There’s no excuse not to market to your existing print subscribers. Include a special offer for them when you have to send a renewal or billing notice anyway, and the cost is minimal. 8. Promote them: This may seem like a no-brainer, but it’s shocking to us how many publishers (and we’re talking big players) have elaborate websites hosting subscription pages to build print circulation … but their digital products go unmentioned. On the platform where they’re most likely to find their tech-savvy readers! For heck sake, sell your digital magazine on your website! Don’t hide your digital editions under a barrel!

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Conclusion While things are still evolving, the overall trend is clear. Multiplatform publishing, including native tablet editions and responsive web editions, is the future of magazine publishing. Whether your revenue comes primarily from selling subscriptions to premium content or selling advertising and sponsorships, there are substantial and growing revenue steams to be developed. And one thing you can be certain of, if you donâ&#x20AC;&#x2122;t offer a compelling multiplatform media experience for your markets, your competitors will.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

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Executive Team Bios Don Nicholas, CEO, Founder & Lead Instructor As Mequoda Group’s CEO, Don Nicholas guides the company’s 35 person team’s interaction with all Mequoda Gold Member Organizations to explore, set and reach their multiplatform publishing and marketing goals. Over the past three decades, Don has worked with more than 700 B2C and B2B magazine and newsletter media brands. As Lead Instructor, he works closely with Mequoda’s research, analytics, consulting and systems teams to produce Mequoda’s daily newsletter, handbooks, online courses and the quarterly Digital Publishing & Marketing Intensive. In his spare time, Don is an avid sailor, reader and novelist. Don and his wife Gail have three adult children, three grandchildren and a fiveyear-old pug named Parker. Kim Mateus, Executive Vice President & Planning Team Leader Kim Mateus, EVP & Planning Team Leader at Mequoda, is the founder of the Mequoda Research Team and has documented and taught the best practices followed in the marketplace and by our publishers for more than a decade. She is Publisher of Mequoda Daily and in 2015 will do more than 20 strategic business plans for a select group of niche media publishing companies. Her business plans empower multiplatform publishers to leverage Mequoda’s CAROTME methodology for increased profits and success. Kim teaches the power of attraction, conversion, engagement and monetization at Mequoda’s events, along with website technology and business planning strategies. Ed Coburn, Senior Vice President & Lead Consultant As Alpha Client Team Leader, Ed leads a varied group of B2B and B2C clients through the process of building and monetizing their multiplatform publishing business. Over the past 30 years, Ed has become expert in content marketing, new product development and multiplatform publishing, while working for Mequoda and Harvard Medical School where he served as Publishing Director. Ed teaches courses in content creation, revenue generation and organizational structure at Mequoda’s quarterly Digital Publishing & Marketing Intensive. Ed lives in Massachusetts and when not working is likely to be cycling, running, swimming, playing hockey, hiking or various other outdoor activities.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

Luis Hernandez, Senior Vice President & Lead Consultant As Bravo Client Team Leader, Luis guides a diverse list of B2B and B2C clients through the process of growing and monetizing their multiplatform audience. Over the past 25 years, Luis has acquired an in-depth knowledge of content creation, audience development and multiplatform marketing, while working for Mequoda, SIPA and Thompson Publishing Group where he served as Director of Publishing. Luis teaches courses in content management, sponsorship development and organizational management at Mequoda’s quarterly Digital Publishing & Marketing Intensive. Luis holds a BA in Journalism from St. Mary’s University in San Antonio, Texas — where he was born and raised — and an MA in English from Georgetown. Luis resides in Washington, DC with his wife and two daughters. Aimee Graeber, Chief Technology Officer & Lead Architect Aimee Graeber is Mequoda’s CTO and Lead Architect. She is the architect of the Haven Nexus System and manages all system consulting, design, development, maintenance, training and support for clients. She sets and oversees the implementation of Mequoda Best Practices for all hosted systems. Aimee and her team also work with Mequoda Gold Member Clients to set and oversee the implementation of Mequoda System Best Practices for all systems hosted in the Haven Nexus Data Center. Aimee also works with clients who build and manage their own systems, advising them in how to maximize their existing environments. Laura Pittman, Chief Operating Officer & Analytics Team Leader Laura Pittman, Mequoda’s Chief Operating Officer is responsible for modeling, budgeting, reporting and analyzing data for Gold Member Clients. She works directly with Gold Members to help them understand the impact of the Mequoda System on their media businesses. This year, Laura will create and deliver more than 20 in-depth proxy metric models for Mequoda’s Strategic Planning Services clients. Laura is formally trained as an accountant, and is an expert in computer modeling, reporting and business analysis. She is a specialist in project management, fulfillment system reporting and direct marketing.

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

For more free white papers and handbooks on multiplatform publishing, digital magazines, audience development, and subscription websites, visit: http://www.MequodaFree.com

Mequoda Digital Magazine Market Study For more free white papers, visit http://www.MequodaFree.com

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