It’s hard to overstate the excitement felt across the magazine industry following the unveiling of Apple’s iPad on January 27th, 2010. After nearly decade of hemorrhaging revenues, indiscriminate layoffs and non-stop cutbacks, hope had finally returned. In the eyes of publishers, tablets offered not just a chance to abandon PDFs and “online editions”, but an opportunity to re-establish the magazine experience and use their extensive production capabilities to outmaneuver leaner, web-focused competitors. After four and half years, however, this hope appears to have been more mirage than miracle.
Despite volume growth of over 40% in 2013 and nearly 75% the year before, digital magazines have achieved only a 3.5% share of total consumer magazine circulation. To put this in perspective, this is less than one ninth of the penetration rate enjoyed by eBooks – and growth has already begun to plummet. In the first half of 2014, digital circulation grew by an average of 143,000 “copies” per month, nearly 50% less than a year earlier (270,000/month). Even if this rate stabilizes, digital magazines wouldn’t break 10% until 2022 – and roughly half of that accomplishment would be due to declining print circulation, rather than growth in digital readership. Furthermore, the failure of digital magazines can no longer be attributed to a lack of access: nearly one in two US adults now owns a tablet and one in three possesses an e-reader. As a result, it’s clear that industry is facing a far more fundamental problem.
Before hypothesizing, however, it’s important that we first decompose the industry average:
When one examines the largest magazines in United States (which should have had the operational scale needed to successfully develop, deploy and market digital subscriptions), the story is similarly discouraging. At best, only half of these publications have managed to beat the industry average. Not only is it hard to consider Taste of Home to be a “leader” at a mere 6.5%, the magazine has actually lost more than a quarter of its digital subscribers since mid-2013. Even ESPN, with its extensive multimedia capabilities, exclusive content rights and fanatical fan base, boasts only 5.8%.
However, that doesn’t mean that there aren’t magazines that are achieving digital success:
Looking at the largest magazines by digital circulation, it’s clear that some publications are making the form factor work. But their rarity is surprising. Only seven publications have surpassed 10% penetration with their digital editions, six of which have clearly “broken out.”
After double-clicking on top performers, two observations come to mind. First, digital penetration does appear to be inversely correlated with the number of subscribers – though this relationship may only be temporary given growth rates. More importantly, these six magazines achieved their leading digital penetration either shortly after launch, or after many months of significant and sustained growth. This point is critical, as it allows us to assess whether other major magazines are on track for similar levels of digital success over the next one-to-two years.
For the sake of analysis, I’ve limited the above to magazines with at least two years of market data (i.e. at least two subscription cycles). There’s a lot to unpack:
- Six of these fifteen magazines have seen their digital subscribers fall significantly over the past 18 months – meaning many either chose not to renew after their first year or converted back to print. What’s more, churn rates would actually be higher (i.e. worse) than is suggested above, as the magazines would have added new digital subscribers during this same period, thus offsetting some losses
- Of the remaining nine, more than half have seen their digital penetration rate stall for at least a year. Year-over-year, The Oprah Magazine is marginally down, US Weekly added only 1,140 digital subscribers and Popular Science increased its digital penetration by barely a quarter of a percent. Wired’s stall at 11% is particularly surprising, as its subscriber base likely has the highest level of digital literacy and tablet ownership. Compared to the first half of 2013, Wired is up by fewer than 3,000 digital subscribers – representing a disappointing 0.4% of print readers
- Finally, the growth trajectory of the four “growers” bears little resemblance to the aforementioned market leaders such as Men’s Fitness, OK! Weekly and Nylon. At current rates, it will take The New Yorker another 18 months just to hit 10%, with The Food Network, Men’s Health and ESPN heading towards mid-2016 at the earliest
Four and a half years after the unveiling of the iPad, the magazine industry is still struggling to adapt to the Internet era. Total circulation is down more than 6% despite population growth of 3.5%, and digital editions, for all their promise and interactivity, have been largely ignored by subscribers. Yet, the medium is still quite popular, with paid circulation of more than 250M copies in this past June1. So why, then, aren’t digital magazines working?
There are four likely explanations.
One: For magazines such as Sports Illustrated, People, Newsweek and Business Week, their primary job-to-be-done was to help a reader digest a week/month’s news or simply to entertain. Readers looking to replicate this experience in a digital environment, however, don’t need to “hire” a magazine. Flipboard, for example, can fulfill this same role – as can Twitter, NYT Now, RSS and REDEF. Furthermore, their source-agnostic approach means that these new services can often do this job better and at a fraction of the price (if not for free). As a result, many print-based publications have found themselves supplanted, disintermediated or commoditized.
Two: Though counterintuitive, magazines such as Cosmopolitan, Wired, The Atlantic, GQ and Us Weekly don’t actually sell their content to digital subscribers. After all, this content is freely available via PC, tablet or smartphone web browser – and often before the magazine (print or digital) is released. Instead, these publications try to charge consumers for the experience of reading this same content via digital editions (which are typically more user friendly, interactive and media rich, and contain fewer and less intrusive ads). As a result, the failure of digital magazines suggests that consumers either don’t value these enhancements enough to pay, or that they haven’t been convinced that they’re worth trying. Exacerbating this problem is the fact that the pressure to provide the best mobile-reading experience (which is often led by digital-only outlets) also means that the gap between browser and app-based experiences has tended to diminish over time. This doesn’t mean that digital isn’t working for these “magazines” – more than half of Wired’s revenue is from online, even though 89% of subscribers are in print – just that digital magazine editions aren’t.
Three: Magazines today compete with an unprecedented amount of content that’s both created and distributed outside of the publishing industry. Without the Internet, many of these writers would never have found a public voice – let alone an audience – but they often generate content as good as or even better than that developed by leading outlets. What’s more, most of these authors don’t even charge for their content; their goal is to build a brand or just to participate in the industry conversation. Not only do magazines already struggle to finance highly specialized original content, their journalists now need to compete with industry insiders and luminaries who happily give it away for free. Since these authors only publish digitally, they inevitably cannibalize the time their readers might otherwise give to digital magazines.
Four: Unfortunately, the industry’s most significant barrier may be its most intractable: perhaps magazine subscribers simply prefer reading their magazines in print. The success of eBooks shows that readers aren’t opposed to digital reading (keep in mind, most magazines are available in e-ink, too). What’s more, magazines should theoretically offer a far more enhanced digital experience than their more text-focused cousins. As a result, it appears that consumers consider the two products very differently – even if they cover the same subject or share an author. Here, a great piece by Nicholas Carr is instructive:
“To the human mind, a sequence of pages bound together into a physical object is very different from a flat screen that displays only a single “page” of information at a time. The physical presence of the printed pages, and the ability to flip back and forth through them, turns out to be important to the mind’s ability to navigate written works, particularly lengthy and complicated ones. We quickly develop a mental map of the contents of a printed text… If you’ve ever picked up a book that you read long ago and discovered that your hands were able to locate a particular passage quickly, you’ve experienced this phenomenon… [These] spatial memories seem to translate into more immersive reading and stronger comprehension.”
This observation could explain the anemic digital penetration of many magazines, such as Vanity Fair (7.0%), The New Yorker (8.5%) and National Geographic (4.6%). Unlike books, which have up to several hundred pages to explain an idea, long-form articles are limited only a few thousand words. Focused readers may find the distraction of rich media – not to mention email access and incessant push notifications – and loss of spatial tactility results in significantly reduced digestion and retention, thus prompting a reversion to print subscriptions. This doesn’t explain the lagging digital adoption at magazines such as Cosmopolitan or Us Weekly, but these publications face another tactility problem: there’s no digital equivalent of check out line newsstands.
With these obstacles in mind, what can the industry do? It seems logical to reduce prices, as this would improve the value imbalance and encourage more readers to try out digital editions. At the same time, publishers will need to embrace the fact that these prices are likely fixed in the medium term, rather than introductory. Many of the subscriber losses detailed above were prompted by exactly this type of teaser pricing strategy. More critically, however, the industry needs to accept that digital magazines don’t offer the hope they once believed. Consumers have not bought into this vision.
The idea behind digital replica editions is fundamentally anachronistic. Not only are weekly publishing times holdovers of the logistical and financial limitations of print production and distribution, they conflict with the cycle times and schedule pursued by these same outlets online. Consider this terrific graphic from Enders Analysis:
Why does The New Yorker, which recently unlocked its online content and will soon deploy a metered/porous paywall, limit its rich app experience to weekly, magazine-arranged editions? The company posts 15 stories a day, but this content doesn’t hit their Apple Newsstand app for up to six days later – at which point a marquee piece may have already exited the national conversation.
If a publication’s digital monetization strategy hinges upon experience, their digital edition must be more than a digital facsimile of their print issues. What opportunities are there to enhance digital content retention beyond gimmicky quizzes? Why can’t readers annotate stories they read? Why must they take a screenshot of a page (or story) to keep it after deleting the issue? Why must they view an article online in order to post or read a comment? If a digital subscriber decides to read an interview with Robert Downey Jr. in this month’s Vanity Fair, why can’t s/he access an interactive timeline that contains all of the stories on or photo-shoots with the actor? This view could even transcend the individual magazine brands and link to other Condé Nast content, such as Downey Jr.’s cover story in the April 2013 issue of GQ. This type of experience would significantly enhance the value proposition of a digital subscription and leverage content and capabilities that most bloggers lack.
In February 2013, Mary Berner (President and CEO of the magazine industry’s trade group, MPA – the Association of Magazine Media) told AdWeek “I think you’ll see tablet adoption snowballing… The data hasn’t actually caught up to what’s happening.” Publishers need to disabuse themselves of this optimism. Over the year and a half since Berner made this prediction, digital penetration has grown by only an estimated 1.1% (~2.8M copies), versus 1.3% (~3.3M) over the preceding 18 months.
The iPad inspired hope because it offered publishers the opportunity to recreate the magazine, but this same excitement led them to ignore what had made Apple’s tablet so successful. Rather than replicate the PC experience, as Microsoft attempted a decade earlier, Apple saw an opportunity to re-envision it. The magazine industry, too, should try to Think Different.
Matthew Ball is a Director of Strategy & Business Development at Otter Media and leads Strategy & Originals at REDEF.
 In the interest of analyzing the commercial success of digital magazines, I’ve excluded those bundled with a broader membership program where the magazine is not the driving choice behind the purchase. This includes publications such as AARP Magazine and AARP Bulletin, as well as GameStop’s Game Informer, which is sold for $19.99 a year, but free with $14.99 Power Up Rewards Pro membership
 For reference, I would consider myself one of these readers. While I rarely consume newspapers in print, I receive all of my magazines in hardcopy. I find it much easier to keep track of my “queue” and progression through individual copies
 To improve comparability, these percentages are based on Q2 2014 total circulation, as this overall figure has oscillated significantly since September 2011