Reading the E-Leaves: The future of magazines on digital devices is beginning to take shape.
Matching Revenue Models to Devices
Outsell believes transactional and subscription sales work best on e-readers, since these devices are not designed around continuous web-browsing and are used for consumption rather than communication. Smartphones, as communication devices involving frequent use of simple, interactive, location-enabled features, lend themselves well to an advertising model, May says. (Outsell surveys conducted in 2009 found that only 1.8 percent of smartphone users were willing to spend more than $5 for content on their mobile phones, and 93 percent were not willing to spend any money at all.)
With their ability to serve all forms of content, tablets lend themselves to all revenue models, he says, adding that "new, application-centric experiences combined with established purchase models on mobile phones like those via iTunes will serve paid content models well."
The Oliver Wyman report notes that younger consumers have proven willing to pay for texts, apps and other products on their mobile phones. "With 165 million and 65 million accounts, respectively, iTunes and Amazon have made consumers feel comfortable paying for quality products and services in the mobile world," the report states.
To the extent that all devices utilize some sort of advertising model, May believes e-reader devices will employ ads of the "if you liked that, you will like this" variety, as well as Google-style right-hand column links based on user preferences. Smartphones will leverage location-based and action-oriented promotions through direct marketing, while tablets will be able to utilize display advertising as well as other forms of digital advertising along with subscription models.
"We see three types of revenue models for magazine publishers on the tablet: app-based, content-based (the direct sales of content, primarily, through the tablet's main service providers), and ad-based," Renard says. "These are often intertwined (especially with advertising), but they are each going to be adopted at different times and for different reasons by publishers."