Reading the E-Leaves: The future of magazines on digital devices is beginning to take shape.
A lot depends on the price of development coming down, which Norris expects to see soon, anticipating a "WordPress equivalent for the tablet mags." He points to Hewlett-Packard's MagCloud as a print template for the kind of one-stop self-publishing service we should expect to see for digital products. "If there is a huge explosion of mags on tablets," he says, "then I think we will see web-like CPM figures for these sites."
Anderson says the iPad offers an opportunity to experiment with prices. (For example, Wired debuted its app in June at $4.99, dropping the price to $3.99 a month later.) While he thinks lowered distribution costs argue for a lower price compared to single-issue print editions, he notes that enhanced features and the potential for building rich media (such as archives) into digital products mean consumers need to "reset their presumption of what they're buying."
On the other hand, increased engagement times on smartphones and tablets—Anderson said engagement rates for Condé Nast titles on these devices are, and will remain, as high or higher than print—may form the basis of a future discounted-price, mostly ad-based model.
The Oliver Wyman report states that current subscribers "value their existing relationships with magazine and newspaper brands and ... interactive publications are a powerful way to extend those relationships." The study finds that among device-owning subscribers, having digital versions of publications drives a 9-percent increase in overall subscription renewals compared to print, and therefore argues that already heavily discounted per-issue print subscription rates should not need to be discounted further in the digital realm.
The study also finds that periodical subscribers see print and digital as complementary, with 30 percent of renewing subscribers choosing to bundle print and interactive editions. If, as the study finds, bundled subscriptions can bring a price premium (a 33-percent premium to the stand-alone price of either); automatic renewal on digital platforms reduces churn; and cross-sell opportunities increase with interactive formats, circulation revenues from tablet, smartphone and netbook subscribers could increase dramatically, "by more than 50 percent relative to today's print-only world."