I made some informal remarks at the IMAG Magazine Leadership Conference in Atlanta, Georgia recently; the theme of my speech was the growth and significance of electronic media. The purpose of my remarks was to educate an audience of print publishers about newer media technologies. I talked about vanilla-flavored Web publishing, but I also chatted about social computing and continuous computing. Like many who follow such technologies, I believe they have irreversibly changed how publishers do business. Sure, readers are beginning to consume media very differently: egocasting is increasingly popular. But more complicatedly, the electronic media undermine the justifications for print advertising. This is a problem because revenues from print advertising have been the foundation of publishing for more than a century.
In truth, many publishers are struggling to understand how their businesses will be structured in the future. The subject is being debated within every publishing company - and, in general, youth and blind optimism seem to be the best antidotes to panic and despair.
Predictably, perhaps, my speech became a story: Another ‘Death to Print’ Prediction—This Time, From Technology Mag Editor by Bill Mickey of Folio Magazine.
I won’t accuse Mr. Mickey of misquoting me. I was possibly unclear. The tone of my speech was also a little “cheeky,” as the Brits say: I was the last speaker of the conference, and I was trying to shake up the audience. I wanted folks to understand that the sea-change in media was real and imminent. But I feel I should correct the record. My views are more nuanced than Mr. Mickey suggested.
1. Print editorial has strong demand from readers. Indeed, readers still love to read longer-format, well-researched, and well-written stories in established brands like The New Yorker, Vanity Fair, and (dare I say it) Technology Review. Readers also like to read stories where the “form factor” of portable, colorful, printed pages is important: I am thinking of celebrity and fashion publishing. But, as is reasonably well known, readers - particularly younger readers - prefer to read their news and timely research online.
Here’s what’s less well understood: the last advantages of print’s form factor will vanish with the advent of electronic ink, a technology developed at MIT’s Media Lab. Electronic ink will produce a page of flexible “paper” that will be colorful and portable - but, like the screen of your laptop, it will also be a wireless, digital platform that will be able to access everything that has been indexed and archived. With the arrival of Google Print, that could be pretty much everything. How far away are electronic ink tablets? They’re coming, and soon. The remaining problem is the powersource for electronic ink: it’s still too heavy, hot, and expensive.
2. Print advertising, however, is more troubled. Readers still want to read magazines, at least for now. But outside of fashion and some consumer advertising, advertisers are more and more attracted to various forms of online advertising. I shan’t tire the reader by enumerating how bad the market for print advertising is; do a Google search. The most radically discomforting of these new ads are the various online advertising auctions like Google AdSense and Google AdWords. These auctions have combined to make Google the largest single “media buyer” in the world (to use the jargon of the publishing industry). The advantages for advertisers from online advertising can be quickly summarized: online ads are efficient, they are accountable, they are targeted. In short, for most advertisers, online ads offer a superior return on investment - and ROI is what matters to rational media buyers.
The conclusion to be drawn from points 1 and 2 is that while there may still be demand for print publications from readers (at least until electronic ink is practical), publishers will have to find a much larger proportion of their revenues from online advertising and subscriptions.
Think about it this way: for 100 years print advertisers subsidized print magazines and newspapers. Readers got a very expensive product for almost nothing. That’s going to change. Publishers will receive the larger portion of their advertising revenues from online. Print will be supported by subscriptions: if readers want a print product, they’ll have to pay for it. To spell it out: all this will mean more online publishing, and fewer print publications.
And in the long term, the sole advantages of print will be nostalgia, or fanciness: some publishers will want printed publications because such things will be rare and expensive. When electronic ink becomes cheap and ubiquitous, print properties will (in the developed world at least) be as fabulous as phoenixes.
UPDATE: 7.13.2005. And old friend wrote to mildly upbraid me for failing to note the following:
“Print is still MUCH bigger than online. Online is growing faster but I can’t think of a major integrated media business for which their print business isn’t an order of magnitude larger than their online effort. Online media advertising is in the single digit billions and print advertising is in the tens of billions–probably more than an order of magnitude larger. I agree with the CONCEPT that online targeting is better, but print advertising is still huge. Also, you didn’t note that USAGE trends are what’s staggering. Online READERSHIP is growing by 10-20%, and blogs are fastest/biggest growing segment, and many newspaper circulation efforts are in decline–losing readers. So focusing on advertising decline is actually in error. Eyeballs are moving online FASTER than advertising is chasing those eyeballs–mostly because there is a transition cost as advertisers figure out how to set budgets and strategies against new forms of media. of course, the MAJOR area that is shifting in advertising is not display, but classified, which really IS moving online at a rapid pace, and is devastating to publishers. But you seem to be talking about display advertisers, and there the record is mixed–they are moving online more slowly than readers.”
The old friend is completely right: Online advertising is still a fraction of print advertising; and readers are moving to electronic media more quickly than advertisers.
That said, the important point is that print advertising budgets of media buyers are stagnant or in decline; but online budgets are growing between 20 to 100 percent a year. This means that at most publishing companies, the online property is the only platform that enjoys vigorous revenue growth. The lag between the growth in online audience and the growth in online advertising, while real, I attribute to the same cause as my old friend: the transition costs for media buyers and advertisers.
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