PUBLISHERS PINE FOR CYBER-PROFITS PACESETTING MAGAZINE ARE SHIFTING STRATEGIES FOR THE SECOND PHASE

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For print publishers who have been new-media pioneers, the lessons learned so far are simple: Success is hard won, and strong advertising support could be several years away.

What's more difficult is taking the next step: Turning early learning experiences into revenue-generating products.

"We're all still looking for the correct business model in online to see whether this new medium will be driven by circulation or advertising," said James Guthrie, exec VP-marketing development, Magazine Publishers of America.

Most publishers aren't sitting back and waiting for the debate to be decided. The MPA estimates more than 200 magazines are already involved with new-media distribution platforms.

Even cautious publishers like Conde Nast Publications and Hearst Magazines are finally jumping into cyberspace, joining pioneers such as Newsweek, Time Inc., Rodale Press and Hachette Filipacchi Magazines.

Conde Nast is believed to be developing two online products, including Epicurious, a service based on its Bon Appetit and Gourmet. Hearst in January opened the Multimedia Newsstand, a magazine subscription service on the Internet's World Wide Web (http://mmnewsstand.com).

The latecomers can learn a lot from the early adopters, many of whom have already scrapped or shifted their products and strategies based on their first experiences.

Early content-is-king thinking is giving way to the recognition that magazines have to do more than re-purpose existing material for new pipelines. Many are including chat and bulletin board functions and offering information not found in their print brands.

Newsweek, one of the first to enter new media, found limited consumer support when it started marketing CD-ROMs based on the general magazine in 1993. Now it distributes occasional single-topic discs.

Newsweek focuses much of its efforts on a multimedia online service on Prodigy that's among the most ambitious ventures by a publisher on a commercial service.

While marketers like AT&T and Ford Motor Co. signed on with the early Newsweek CD-ROMs, the ads weren't interactive. Since moving to Prodigy, Newsweek has attracted interactive ads from American Honda Motor Co., Chrysler Corp., Fidelity Investments and others.

"Advertisers and agencies have to figure out how to make the ads compelling enough to draw people in. Because the format is so new, most of the marketers still regard it as an experiment," said Joanne Hindman, VP-finance for Newsweek and general manager of new media.

Time also has come a long way since its first venture into cyberspace. The Time Inc. newsweekly made its debut on America Online in late 1993 offering mostly a chance to read text from each week's issue on a computer screen. It has since added a daily news feed to the AOL service and developed a Web site that, among other things, lets users type in their ZIP code to find out how their representatives voted in Congress on key issues.

PC Magazine found a ready market for its quarterly CD-ROM providing a multimedia review of new software. The disc is expected to hit 100,000 subscribers by yearend, each paying $49.95 a year.

Ad prices are still evolving, said Steve Robinson, client services manager for the CD-ROM. A fairly simple ad on the screen costs about $7,500. Recent advertisers include IBM Corp., Digital Equipment Corp. and Adobe Systems.

Some agency executives think print publishers are still moving too slowly in new media. Said Roland Sharette, VP-director of interactive resources at J. Walter Thompson Co., Detroit, "Most publishers don't want to face up to the fact that they are going to have to change the way they look at things. Too many of them are still thinking along the lines of selling space."

Others recognize the difficulties.

"I really have to applaud anyone who is doing anything," said Geoff Katz, VP-director of interactive production at Foote, Cone & Belding, San Francisco. "It takes time and money, and there is no one to copy from."

Enter the market too late, however, and there's a good chance someone else-likely smaller-will have gotten there first.

Among potential competitors of this ilk is Launch, a CD-ROM music magazine making its debut next month.

Music reviews contain about 20 songs and can offer three 30-second clips from each album as well as full-motion-video interviews with band members. Movie reviews can show 3-minute film trailers.

Launch has succeeded in attracting advertising from several major marketers, including Janus Funds, Reebok International, Cadbury Schweppes and Sony Electronics. Each is paying about $12,000 per issue.

"We're trying to expose people to new things and give them something in new media that they can't get in traditional print," said David B. Goldberg, the 27-year-old chief executive of 2Way Media, the Santa Monica, Calif., company behind Launch.

Launch is guaranteeing a rate base of 150,000 for its first issue. The disc will be sold at retail stores, including Tower Records, for $8.99, comparable to the price of music CDs and far cheaper than other CD-ROM products.

Some magazines are increasingly trying to develop new-media ads in conjunction with more traditional print campaigns. Time, for example, will publish a special issue today dedicated to cyberspace, with AT&T as the single sponsor. Young & Rubicam, New York, developed original creative for the issue and will also tie it in to Time Inc.'s site on the World Wide Web, known as Pathfinder (http://www.timeinc.com).

Those who have plunged deeper into interactive media say a few basic rules have emerged.

"What makes sense on CD-ROM may not make sense online," cautioned PC Magazine Editor in Chief Mike Miller. "And one of the most important things to remember is to stay true to the mission of the magazine.

"At PC Magazine, we're not trying to be a news service like Time or put out the latest music video. In the new media, we give our readers more detailed information. But it is information that they have already come to expect from us in print."

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