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Digital editions turn a page

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In the fledgling world of digital magazines, a funny thing happened on the way to market: Publishers found many, and in some instances unexpected, uses for the technology, which some worried might be "page-flipping" cool but lacking a practical business application.

At its core, digital edition technology lets publishers deliver digital equivalents of their print publications, right down to the nifty graphical trick of simulating page turns on a computer screen.

The largest publishers are only now beginning to test the technology, choose their vendors and deliver their first test issues. But digital magazine publishing pioneers-many with several years' experience under their belts and 10% or more of their circulation now digital-are already reporting interesting benefits.

The verdict? Digital editions can play an important role in any number of publishing goals, from expanding a publication's circulation base to lowering international distribution costs to enabling low-cost market sampling.

"The overriding thing is that this is about publishing, not technology," said Dan Schwartz, publisher of Digital Magazine News, which closely tracks this new market. In the end, the true value of digital editions is as a tool to achieve specific business goals, he said.

Organic growth

For VNU's IT publications in the U.K.-including Computing (115,000 circulation, including 15,000 digital), IT Week (52,000, including 8,000 digital) and Computer Reseller News (12,500, including 2,500 digital)-digital editions have enabled the company to expand both its market share and ad yield, even during a tough time for tech titles, said John Barnes, publishing director of VNU Business Publications-London.

"Our goal [with digital editions] is to find the best, optimum selection of platforms to reach our market," said Barnes, who uses Zinio as his digital vendor (see "Digital editions vendors," p. 15). "We've come to accept the fact that many of the readers of our titles are part of a very senior-level audience,"Barnes said. "They are traveling a lot. A paper copy of a publication that lands on their desk when they are only in the office one or two days per week is a very crazy, 19th century proposition."

Barnes estimates the added circulation from digital titles has helped the group's IT publications gain about 2% to 3% market share. That growth, plus the ability to entice large advertisers like IBM Corp., Sun Microsystems and Cisco Systems to "bolt new products onto our electronic copies"-including video ads and upcoming plans to sell digital-only split runs-has helped the publications grow overall ad revenue as well. In the future, Barnes said, VNU will also look at rate increases, reflecting its new, broader reach.

Even more important, digital editions gave the VNU sales staff something new to talk about with advertisers during an excruciating down cycle in traditional print advertising. "So many publications have been cutting issue sizes. We've been able to go out with an investment story and explain how we are improving the publication," Barnes said. "It's opened loads of doors."

Another trade publication looking to digital as fuel for growth is Machine Design (168,000 circulation, including 12,000 digital). The magazine, as well as sibling publications Hydraulics & Pneumatics (50,000 circ., including 1,365 digital) and Motion Systems Design (58,000 circ., including 2,548 digital), has "pent-up demand beyond our controlled subscriber targets," said Group Publisher Rob Dorfmeyer.

While surveys indicate that 93% of its current readers prefer a print copy to a digital edition, Machine Design has used new digital editions produced with vendor partner Texterity to target new readers in places such as universities and company libraries. Another target is foreign subscribers who are hard to reach affordably.

"In the past few years, lots of people did [digital editions] as a way to stay the course or as a smoke screen to cut costs," Dorfmeyer said. "I don't think that's the right way to look at it. We view it as a way to expand our readership."

Like VNU, Machine Design has used its early start to test new ad opportunities around digital editions, including an opportunity to buy placement in the e-mail telling readers that a new edition has arrived and a cover ad on the digital issue. "We brainstormed that very quickly and it took off right away," said Jane Cooper, Machine Design's marketing director.

For insurance industry publisher A.M. Best Co., digital editions have offered an avenue to new subscribers and circulation growth. A.M. Best is well known for its insurance company ratings; it also publishes daily, weekly and monthly online and print products in support of that business. After a minor success using NewsStand as a marketing vehicle to sell new subscriptions, the company decided in July 2004 to produce and market its own PDF-based digital edition, said Marilyn Ostermiller, A.M. Best's assistant VP-news.

But there was a twist. While A.M. Best's 40,000-plus subscribers pay $40 per year for the print version, the company decided to offer the digital edition as a nonpaid, qualified subscription. To generate demand, it used e-mail campaigns to the circulation list of its free, daily newsletter. In short order, A.M. Best qualified an additional 10,000 readers for the digital version of its mainstay print product. "We're thrilled with the additional qualified subscribers," Ostermiller said.

A.M. Best is working closely with its advertisers as it expands and changes the make-up of its circulation base, Ostermiller said. It is currently in pre-audit with the Business Publishers Association (BPA) but said it believes it has fulfilled all the requirements to have its digital readers counted as part of its overall circulation. Yet Ostermiller admitted some advertisers "have not yet embraced or seen the value of our digital subscribers."

As the technology matures and industry standards shake out, Ostermiller said, publisher measurement and reporting of downloads, opens and "eyes on copy" will alleviate any advertiser concerns.

A.M. Best is still almost alone in taking on the task of producing and delivering digital editions in-house. The task has not been overly time-consuming, Ostermiller said. "Quite frankly, we're already creating a print edition electronically to send to the printer," she said. "Preparing it for NewsStand took another day; now, preparing our own digital PDF requires about two days."

Going global

Perhaps the most clear-cut business case for digital editions is helping cut printing and delivery costs to hard-to-reach readers-particularly ones in international markets. Cygnus' Advanced Imaging (40,000 circulation, plus an additional 6,000 digital subscribers not included in that total) had stopped printing a European version of its publication altogether due to costs, said Group Publisher Dave Brambert.

Working with vendor Ebook Systems, Advanced Imaging developed a digital product that keeps the publisher in an important market, Brambert said. "Right now, we've kept it separate [from our main product]," he said. "It's another vehicle for us into Europe."

The European digital edition of Advanced Imaging represents about 4% of the brand's total overall revenue. While that isn't a lot, it is "good revenue, on a lower cost structure," Brambert said. "I'll take that 4%."

Beginning at the end of last year, Brambert began offering a digital edition for a second title, Supply & Demand Chain Executive. While the Advanced Imaging digital launch was guided by geographic concerns, this digital edition offers a technically savvy audience a new way to engage with a key industry publication, he said.

By cautiously rolling out new digital titles, Brambert and his team have had a chance to work this new product into the way they do business. "I think one of the challenges for people-and it took us a while to get it right-is how do you add this as part of your production processes," he said. "Is it IT's responsibility? Is it production's? Is it circulation's? This thing does touch on a lot of departments. Getting those issues ironed out is important."

Institutional Investor has spent the past six months testing 10 new digital titles with vendor Zinio.

"There was no particular problem or opportunity driving this," said Institutional Investor Marketing Director Nick Ferris. "We wanted to make sure we are as technologically advanced as possible and give our readers as much choice as possible. I'd also say that we were definitely influenced by the stories of other companies realizing significant cost savings on print and distribution bills by converting to digital."

To date, Institutional Investor has converted 1%-or about 1,000 readers-to a digital edition. More marketing, including print cover wraps, online request forms and more aggressive "re-qual" marketing -is planned, with the goal of driving that number to about 5,000 in the next few months, Ferris said.

"We're selling it on time of delivery and convenience, particularly for international readers," he said. "If you are in Asia, you don't have to wait three weeks, you can have your issue the day it reaches the printer."

Ferris said digital editions also offer a platform for more cost-effective trial marketing. For instance, Institutional Investor is offering free digital trials on its Web site as well as testing sending out CD-ROMs with digital samples. Tying a digital edition to an e-mail marketing campaign takes much of the cost and pain out of trial marketing, Ferris said.

According to Ferris, Institutional Investor is already at a break-even point, since additional technology costs are covered by lower production costs. "For any additional controlled subscriber we bring on today with a digital edition, we're saving money," he said. For its digital edition offers, Ferris said, Institutional Investor is seeing a 5% uptake for print re-quals and a 12% uptake for new prospects.

Audit skepticism

One company noted for its skeptical view of digital editions, particularly of the idea of including digital edition subscribers with a print rate base, is International Data Group. While IDG publishers have successfully created one-off products based on digital edition technology, they are sharply critical of other publishers-namely, archrival Ziff Davis Media-that they believe have taken advantage of BPA Worldwide rules around digital circ audits.

"I wouldn't want to be positioned as negative [on digital editions]. We would just put a higher hurdle on it," said Bob Carrigan, CEO-president-publisher of IDG's Computerworld. In particular, Carrigan said BPA rules that allow publishers to count an e-mail notification of the availability of a digital edition as proof of delivery are too lenient.

"Our belief is that the reporting on actual downloads [not just notifications] should be mandatory. The technology exists for publishers to measure those downloads," he said. "If we set that as the hurdle, I think that would change the views about digital delivery for a lot of people."

Computerworld has tested digital editions, but hasn't been comfortable with the download rates it is seeing to take them to advertisers, Carrigan said.

Sibling IDG publication, PCWorld, does offer digital editions to its readers, but it does so with a soft-sell approach, said Jeff Edman, president-CEO of PCWorld. For its last Audit Bureau of Circulations (ABC) audit, PCWorld had a print circulation of just about 1 million readers, including 3,607 digital subscribers. Although it is not forced to by ABC rules, PCWorld reports its download rate, which it said was 81.4% for its December issue. "We believe in full disclosure," Edman said.

Carrigan stressed that his publication has invested heavily in electronic products, including its Web site. He expressed interest in browser-based digital edition technology that makes it possible to integrate digital products more closely with a Web presence.

"I would love the opportunity to serve less expensive digital copies," Carrigan said. "But I won't do so until I'm absolutely sure the reader experience is terrific and the advertiser is getting the audience that we are in fact charging them for." M

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