For publishers, much of the digital revolution has focused on adapting print content and advertising to interactive devices. But once that hurdle has been cleared, another problem looms: how to balance pricing between the two. While that might seem academic, it's revolutionary in its own right. As Monica Ray, exec VP of Conde Nast, sees it, "The whole industry has the opportunity to redefine what a subscription is ."
That's taking some trial and error. Sports Illustrated, for example, in January abandoned the price hike it instituted last year when it gave print subscribers full access to tablet editions.
Time Inc. had hoped bundling digital with print under its "All Access" strategy -- eliminating print-only subscriptions in the process -- would allow Sports Illustrated to increase its price to $48 from $39. But the magazine brand reversed course in January.
"That price, we found, was higher than the market commanded," said Steve Sachs, exec VP-consumer marketing and sales at Time Inc.
Time magazine, on the other hand, is so far sticking with its own larger increase to $30 from $20.
The biggest divide going in magazines' strategy for the iPad and other tablets is whether to bundle app editions with print subscriptions or sell each medium separately. The bundlers include Time Inc., Conde Nast and Meredith , which want to retain more print subscribers, charge more where possible and avoid making anyone feel nickel-and-dimed. The other side includes Hearst and Bonnier, who believe bundling leaves money on the table and makes digital content seem "free."
"It's such a hot topic right now," said Sharon Sennefelder, managing director for print at Horizon Media. "Nobody knows where it's going to pan out."
Hearst, whose titles include Cosmopolitan and Esquire, partly wants to avoid the errors most publishers believe the industry made when the web came along. "We gave away our content for free in a new medium," said John Loughlin, exec VP and general manager at Hearst Magazines. "We see tablets as that rare opportunity to revisit that approach and not repeat that same mistake."
Hearst, however, has been testing bundled offers -- it sometimes charges an extra dollar or more to include digital access and sometimes doesn't charge any premium, but it has found that consumers overwhelmingly prefer one format over the other, Mr. Loughlin said.
Hearst magazines have about 600,000 paid monthly digital editions, about 80% of which are part of digital-only subscriptions, and the company expects to reach 1 million by the end of the year. Many of Hearst's digital subscribers are new to its brands. And they're often paying more than $20 for digital-only subscriptions, compared with about $12 for print.
"We're very encouraged because we're seeing a meaningful increase in yield by selling this content as opposed to bundling it," Mr. Loughlin said.
But those on either side of the strategic split can point to some successes. Time Inc. execs said they believe Sports Illustrated's rollback largely indicates that it's hard to get people to pay nearly $50 for most magazines, while Time magazine's increase demonstrates that bundling digital with print can, in fact, support significant price increases.
"Based on our research among our subscribers who have tried tablet products of ours, 75% of them want print in addition to tablets," Mr. Sachs said. "They'll start an issue of Sports Illustrated in print when they have it with them, and then when they're at home at night they may pick up the tablet and have it there. That's why All Access is our main offer."
Time Inc. does sell digital-only subscriptions on Barnes & Noble's Nook, where new subscribers are in fact paying almost $48 for Sports Illustrated -- via $3.99-per-month subscriptions. Why will consumers pay roughly $48 for Nook-only access but not for print-plus -digital subscriptions? Time Inc. said it believes it's partly because they're comparing the Nook offer to other apps, where a $3.99 price looks familiar. A $48 price tag for print is unusual, however, especially among magazines as big as Sports Illustrated. Although some smaller weeklies are more expensive, only People charges more than Sports Illustrated and still maintains a larger circulation.
Other bundlers are also trying different approaches. Conde Nast is testing what happens when it charges New Yorker subscribers more to renew if they've activated their digital access. "We've been very aggressive in marketing to our print base to get them to unlock their digital, and we're increasing the price on the back end," said Ms. Ray.
But the company has a rigorous schedule of other tests this year, necessary because Ms. Ray considers it an industry imperative to get the next-generation subscription model right. "We're not going to figure that out in a month."