Growth of digital pubs accelerates

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As part of its recent Tablet PC rollout, Microsoft Corp. said it is working with several publications, including Forbes and the Financial Times, to develop tools for publishing electronic magazines. The software developer said the tools will be available some time in 2003.

Microsoft is taking advantage of what has become a hot trend in publishing. Digital publications—online replicas of magazines—have proliferated rapidly in recent years, offering b-to-b publishers an inexpensive alternative in an era of rising paper and postal costs. Right now, they’re seen as an extension to print. But as digital products grow more sophisticated—and their ads are able to integrate multimedia to provide better links to products and services—they may ultimately force publishers to decide between digital versions of magazines and their Web counterparts and, possibly, even print.

"Digital products give media owners the chance to get it right where they got it wrong with the Web," said Glenn Hansen, president-CEO of BPA International, a New York-based organization that audits publication and Web site readership. "With the Web, everyone was reaching for page views and page requests, which missed the boat. With digital, we know who the [opt-in] subscribers are, and therefore advertisers know how to market to them better."

BPA started to count digital products as circulation in 2001. Through the third quarter of this year, digital products accounted for approximately 15% of the total circulation tracked by BPA for those publications using digital. That figure is expected to increase to 20% in the next few years. Digital products "are a potential gold mine," Hansen said, "but media owners need to do a better job of engaging advertisers."

Divided opinion

Opinion is divided among b-to-b media buyers about the impact that the growth of digital publishing will have on business publishers.

"I don’t think digital pubs command the authority of print products," said Rick Segal, CEO of HSR Business to Business Inc., a Cincinnati-based ad agency. "We lathered up in the hopes that the digital millennium would fundamentally change things, but have since calibrated that while they [digital products] can do exciting things, they will never replace Web sites, but rather be an extension."

Other media buyers say that for many b-to-b publishing companies, and IT publishers in particular, digital publishing products will eventually eclipse their Web sites. In some cases, they may replace their print forebears.

"The problem with Web sites is they’re like the Wild Wild West," said Mike Hiatt, VP-media services at Blain/Olsen/White/Gurr, a Salt Lake City-based agency specializing in b-to-b, and head of BPA’s digital version task force. "But with digital you are marrying the size and stature of a print ad with the flexibility and immediacy of banner ads. Except in a digital format it could work even better because you’ll be able to add depth and interaction to the ad. Hiatt added: "Once publishers start making good money on digital, they’ll kill paper."

Mike Edelhart, president-CEO of Zinio Inc., said: "You’re dealing with a readership that has asked for it, as opposed to a Web site." Zinio provides digital versions of publications for IDG Corp., CMP Media L.L.C., the McGraw-Hill Cos. and Ziff Davis Media. It started distributing digital products in April, and Edelhart expects the company to deliver a total of 2.6 million digital products by the end of this year.

"There’s been an extreme acceleration in test programs in ’02," Edelhart said. "It’s about to take off."

An executive with one major b-to-b advertiser said it’s too early to gauge the benefits of digital publishing. "It’s one thing to sign up for something, but it’s another to sustain it," said Jim Speros, chief marketing officer, U.S., Ernst & Yong L.L.P. "If [digital publications] are done right, there’s definitely an added value, but you’re still going to have people who are not customers who will go to the dot-coms. You can’t underestimate that."

IDG recently rolled out digital versions of several of its publications, including InfoWorld and Network World. Although the IT publisher will continue to test other properties for digital distribution, Jeff DeBalko, president of IDG Global, said he doesn’t envision digital products in every segment.

Hiatt said the arrival of the Tablet PC could fuel the development of digital products. "It’s one step closer to using digital in a real way," he said. "But it’s still not there yet. How many people are going to take a $1,000 laptop into the bathroom?"

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