Time Inc. group president: Tablets could help magazines outlive websites
Sept. 30, 2010 5:01 p.m.
By BRIAN HENDRICKSON
IU National Sports Journalism Center Graduate Fellow
Mark Ford is intimately familiar with the economic pressure that websites have placed on traditional print media in the last decade.
But the Time Inc. president of the Sports Illustrated, Time and Fortune/Money groups does not subscribe to the popular view that his products are obsolete. On the contrary, he believes the emerging tablet computer market could allow his company’s magazines to not only thrive, but even outlive many of the websites that have dramatically altered the industry.
During a conference call interview with students in the Indiana University Master’s of Sports Journalism program, Ford and Senior Vice President/News & Sports Group General Manager Andrew Blau questioned whether the business model of what they referred to as “traditional websites” could be sustained long-term, and whether the emerging tablet market could redefine the media industry.
“I think magazines will be around maybe a lot longer than actually what you view as the traditional website,” Ford said. “We think about it even with SI.com, Time.com, with the introduction of the iPad and how that’s changing and how that’s going to change the model from one of free to maybe some paid content. And the experience will be better.”
Time Group was one of the first to take advantage of the new format and potential business model offered by the tablet market. Time magazine’s application was made available for the launch of Apple’s iPad last spring, and Sports Illustrated’s app was introduced shortly afterward. That positioned Time Inc. as one of the pioneering publishers in a market that one Morgan Stanley analyst predicted could swell to 50 million tablet users by the end of next year.
That presents an enticing new opportunity for publishers who have struggled to develop a feasible economic model for their web businesses. Even at SI.com — which Blau described as “highly profitable,” though he declined to offer specific numbers — the need for a separate staff to produce content that is unique from its parent magazine, Sports Illustrated, makes the venture expensive to operate. At the same time, high advertising inventory has depressed ad rates on the web, limiting the revenue potential. Blau said SI.com’s percentage of Sports Illustrated’s total revenue remains in the “very low double-digits.”
“Is that a viable business model moving forward? I don’t know,” Ford said. “You have free content. Things are changing. You’ve got so much inventory out there, advertisers won’t pay for it.”
And now they have the tablet to consider, which Blau said offers a friendlier economic model. First, it does not require a separate staff to produce the content — the same staff that produces the magazine can crank out the tablet version “within a couple hours” without the need for extra resources.
“It is a very simple mechanism to go from print into other formats on the tablet, which makes it a really efficient process,” Blau said. “Our editors and writers are actually now also tablet writers and tablet editors without having to do a lot of different things. … They’re not a completely separate staff devoting all their efforts to a completely new set of tools that are completely different streams of editorials.”
The tablet also has a key advantage over websites: paid content. Because web users have resisted paying for content, news websites have struggled to generate profits while relying largely on a single revenue stream generated from advertisements. But Blau said tablet computing allows for a dual revenue stream model that is similar to the one driving the company’s magazines, where revenue is generated from subscription prices and advertisements. Sports Illustrated’s iPad app currently sells for $4.99 per weekly issue.
Unlike previous attempts by publishers to charge for web content, Blau said tablet users appear willing to pay for the new experience. He declined to offer the specific numbers of monthly downloads from Sports Illustrated’s app, but based on the number of iPad owners, Blau said the penetration rate is “very high, and much higher than we expected.”
If that trend holds and tablets follow their projections as a popular media consumer device, Ford and Blau said it could lead to a shift in the media economic model.
“It’s very difficult for anyone to make money as a content publisher when you’re giving away your content,” Blau said. “There are so many other kinds of impersonators out there who may believe they’re content publishers, who put out content that is entirely inaccurate or doesn’t have the quality level. And so you’re competing with this en masse. I’m competing with every blogger out there on news, and we’ve got bureaus, and we’ve got people collecting news. Why is that? I think people are starting to realize that this model doesn’t really work.
“Does the consumer still want to read an inaccurate, right-wing blogger or left-wing blogger? Maybe. But there are many who don’t. And so these new models that are emerging with the tablet, and frankly with the phones as well, consumers seem to be willing to spend money on good content coming from reliable sources. And that’s clearly kind of what content publishers like ourselves … want to hear. Because that’s the key to having sustainable, viable news organizations and newsgathering organizations. Because the web doesn’t really provide that.”
IU National Sports Journalism Center Graduate Fellow
Mark Ford is intimately familiar with the economic pressure that websites have placed on traditional print media in the last decade.
But the Time Inc. president of the Sports Illustrated, Time and Fortune/Money groups does not subscribe to the popular view that his products are obsolete. On the contrary, he believes the emerging tablet computer market could allow his company’s magazines to not only thrive, but even outlive many of the websites that have dramatically altered the industry.
During a conference call interview with students in the Indiana University Master’s of Sports Journalism program, Ford and Senior Vice President/News & Sports Group General Manager Andrew Blau questioned whether the business model of what they referred to as “traditional websites” could be sustained long-term, and whether the emerging tablet market could redefine the media industry.
“I think magazines will be around maybe a lot longer than actually what you view as the traditional website,” Ford said. “We think about it even with SI.com, Time.com, with the introduction of the iPad and how that’s changing and how that’s going to change the model from one of free to maybe some paid content. And the experience will be better.”
Time Group was one of the first to take advantage of the new format and potential business model offered by the tablet market. Time magazine’s application was made available for the launch of Apple’s iPad last spring, and Sports Illustrated’s app was introduced shortly afterward. That positioned Time Inc. as one of the pioneering publishers in a market that one Morgan Stanley analyst predicted could swell to 50 million tablet users by the end of next year.
That presents an enticing new opportunity for publishers who have struggled to develop a feasible economic model for their web businesses. Even at SI.com — which Blau described as “highly profitable,” though he declined to offer specific numbers — the need for a separate staff to produce content that is unique from its parent magazine, Sports Illustrated, makes the venture expensive to operate. At the same time, high advertising inventory has depressed ad rates on the web, limiting the revenue potential. Blau said SI.com’s percentage of Sports Illustrated’s total revenue remains in the “very low double-digits.”
“Is that a viable business model moving forward? I don’t know,” Ford said. “You have free content. Things are changing. You’ve got so much inventory out there, advertisers won’t pay for it.”
And now they have the tablet to consider, which Blau said offers a friendlier economic model. First, it does not require a separate staff to produce the content — the same staff that produces the magazine can crank out the tablet version “within a couple hours” without the need for extra resources.
“It is a very simple mechanism to go from print into other formats on the tablet, which makes it a really efficient process,” Blau said. “Our editors and writers are actually now also tablet writers and tablet editors without having to do a lot of different things. … They’re not a completely separate staff devoting all their efforts to a completely new set of tools that are completely different streams of editorials.”
The tablet also has a key advantage over websites: paid content. Because web users have resisted paying for content, news websites have struggled to generate profits while relying largely on a single revenue stream generated from advertisements. But Blau said tablet computing allows for a dual revenue stream model that is similar to the one driving the company’s magazines, where revenue is generated from subscription prices and advertisements. Sports Illustrated’s iPad app currently sells for $4.99 per weekly issue.
Unlike previous attempts by publishers to charge for web content, Blau said tablet users appear willing to pay for the new experience. He declined to offer the specific numbers of monthly downloads from Sports Illustrated’s app, but based on the number of iPad owners, Blau said the penetration rate is “very high, and much higher than we expected.”
If that trend holds and tablets follow their projections as a popular media consumer device, Ford and Blau said it could lead to a shift in the media economic model.
“It’s very difficult for anyone to make money as a content publisher when you’re giving away your content,” Blau said. “There are so many other kinds of impersonators out there who may believe they’re content publishers, who put out content that is entirely inaccurate or doesn’t have the quality level. And so you’re competing with this en masse. I’m competing with every blogger out there on news, and we’ve got bureaus, and we’ve got people collecting news. Why is that? I think people are starting to realize that this model doesn’t really work.
“Does the consumer still want to read an inaccurate, right-wing blogger or left-wing blogger? Maybe. But there are many who don’t. And so these new models that are emerging with the tablet, and frankly with the phones as well, consumers seem to be willing to spend money on good content coming from reliable sources. And that’s clearly kind of what content publishers like ourselves … want to hear. Because that’s the key to having sustainable, viable news organizations and newsgathering organizations. Because the web doesn’t really provide that.”
