COLUMBIA — If publishers want to easily develop an e-reader business model, there’s not an app for that.
Despite the promise the Apple iPad has provided some in the publishing industry, developing a profitable business model for digital publications appears to be an issue for publishers.
Roger Fidler, program director for digital publishing at the Reynolds Journalism Institute, said e-readers and tablets present a good opportunity for publishers if they can capitalize on the platform.
“Everything depends on developing a business model for e-reader and tablet editions that would be profitable for newspapers and news organizations,” Fidler said.
Developing a profitable business model was one of the topics at MU this past week at the 2010 E-Reader Symposium, a meeting of the Digital Publishing Alliance, which Fidler founded in 2007. The alliance includes members from media organizations across the country.
During the symposium, Sean Reily, a Reynolds fellow, said there are questions that need to be answered:
- Are there economics to support a profitable e-reader/tablet edition?
- Does a newspaper e-reader/tablet edition fill a consumer content need?
- Who controls the product, the advertising, the customer relationship and the e-store?
- Is consortium-like thinking necessary?
In addition to answering these questions, newspapers would have to produce content for their print, online and e-reader editions, with different editions needed for each device.
Fidler said that while publications such as The New York Times and the Wall Street Journal have the resources to develop digital editions for e-readers and tablets, most metropolitan newspapers don’t have the ability.
“Larger newspapers are going to try the editions first, but most metropolitan papers will wait to see the financial benefits before devoting resources,” Fidler said.
If a business model can be put into place, developing e-reader editions of newspapers could prove to be financially beneficial as the e-reader market is expected to grow exponentially in the next few years. “My guess is it’ll take two to three years to have a critical mass of devices necessary to make e-reader editions profitable,” Fidler said.
Other than the potential audience currently being limited by the lack of devices in the market, Fidler said the major roadblock to a profitable business is advertising. Newspapers won't be able to make e-reader editions profitable without it, he said.
Stephanie Padgett, a Reynolds Institute fellow, said creativity is key when dealing with a different medium. “I’m advocating we don’t assume what worked in print will work with the e-reader because you’re limiting the capability of these devices,” she said.
Padgett, who is studying strategies to leverage online revenue in small- to mid-sized news markets, said a consumer might be willing to pay more for e-reader versions of the news that cater to an exclusive audience.
For example, in addition to a full e-reader newspaper, the Missourian could produce Missouri Tigers or Jefferson City versions for those who would buy that particular section daily, but not the whole paper.
Padgett said active collaboration between publishers, advertisers and device creators could help provide a solution that benefits all. “If we can all come together to talk about needs," she said, "we can create a win-win situation.”
It is important to work with advertisers because advertising provides the great majority of revenue for newspapers. In recent years, advertising revenue and circulation has dropped for newspapers, causing financial problems in the industry.
Fidler said digital content drastically reduces circulation costs, which includes the cost of the printing process. However, the cost of producing the content will still need to be covered by advertising revenue.
“Even though there’s significant savings with electronic editions, newspapers still have to pay the cost for wireless distribution and production,” Fidler said.
Fidler said the Digital Publishing Alliance came to a consensus to take a more proactive role in the development of tablet and e-reader editions. “We will form working groups to deal with standards for publishing to e-readers and the iPad, and identify and share the best practices of newspapers developing editions for these devices,” he said.
Padgett said that when developing e-reader devices, the publishing community shouldn’t create in a vacuum, but work together.
“If we all work together," she said, "we can all be far smarter and more efficient.”