SAN FRANCISCO -- Offering full, digital copies of magazines on tablets for free to existing print subscribers is a critical misstep, basically destroying economic model for publishing, according to John Loughlin, executive vice president and general manager of Hearst Magazines.
"We are at a critical juncture for magazine publishers to reassert value of content, and that value needs to be paid for," argued Loughlin, while speaking during a panel discussion about the future of publishing at the Open Mobile Summit on Thursday.
The debate stemmed from two different models for promoting magazines on tablets. On the one side, there is Hearst, which charges for digital and print copies separately.
On the other side, you have major publishing houses like Conde Nast and Time Inc., which are offering digital copies of their magazines on the iPad for free to print subscribers.
Time Inc.'s senior vice president for consumer marketing, Nate Simmons, posited that the concept is similar to Time Warner's TV Everywhere platform, but that this is just "magazines everywhere."
"If you're a print subscriber, you've paid for it once," remarked Simmons, "You shouldn't have to pay for it again."
David Payne, senior vice president and chief digital officer for Gannet Co., debated that this model is really just about supporting and keeping the core properties (i.e. circulation revenue strong).
But Loughlin didn't buy it, arguing that consumers are willing to pay if the value is there. He offered several examples to parallels in other digital content industies, such as if you buy a movie ticket, that doesn't mean you get the privilege of streaming it a few days later, or if you buy the hardcover version of Steve Jobs' biography, you don't automatically get a digital copy for free.
"At this juncture, we're not allowing accessing of content electronically just because you paid for print yet," said Loughlin, adding that the model is "definitely working" for Hearst, and that he would be surprised if the monthly digital circulation rate didn't reach 500,000 by the end of the year.
Nevertheless, there is room for potential branding and attracting customers by offering content -- even snippets -- for free.
Scribd CEO and co-founder Trip Adler noted that sometimes publishers will put a book up on Scribd, the content will go viral, and then people who like it can easily purchase the book from e-sellers like Amazon.
"It's just a way for users to benefit from having a better consumption experience for that content and make it more social," said Adler, adding that this is the first step in something much larger as mobile advertising has still not evolved enough yet.
He also argued that it's important for users to pay, but that when it comes to magazines, the user experience hasn't evolved enough yet. Compare that to music, where Adler picked out Apple's iTunes and even newer subcription-based services like Spotify that have changed that industry.
Loughlin conceded that a one-price-for-all-you-can-read model is an interesting concept, but he worried that it's hard to get the numbers to add up.
Using the example of two differently priced, digital versions of the Good Housekeeping Cookbook, the more expensive version that incorporates video is selling two to one.
"It supports your assertion that in certain categories and certain experiences, if you can demonstrate substantially more value, you can command it," Loughlin asserted.
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