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Essential Digital Media Business Models for Publishers


To date, the traditional publishing industry has been negatively impacted by the shift from print to online distribution -- it's a disruptive market transition that has been very challenging for the majority of legacy print media companies.

Moreover, consumers have resisted paying for most content on the web, and the soft economy has taken a toll on the online advertising-based models that many publishers embraced -- in the hope that it would become a replacement for their declining print revenue.

The arrival of eReaders and media tablets comes at an opportune time for publishers. But there's a key question, yet to be answered. Are they fully prepared to embrace the apparent trends in the marketplace and adapt their business models?

An accelerated plan of action is essential, not optional. The Amazon Kindle and Apple iPad clearly established new device categories and the customers for these products have responded by buying more digital content.

eMarketer estimates the U.S. installed base of eReaders will be nearly 21 million by the end of 2011 -- a 62.3 percent increase over last year. Further double-digit growth in eReader penetration is expected in 2012.

"There has been enthusiastic device adoption at both the high and low end of the eReader price spectrum and strong momentum in ebook sales," said Paul Verna, senior analyst at eMarketer.

As new device prices continue to decline, there will be increasing opportunities for both publishers and retail marketers to address an even greater market.

The installed base for media tablets, despite the device's higher price point and shorter time on the market, is even larger. eMarketer expects 24 million U.S. consumers to have an Apple iPad or similar media tablet by the end of 2011.

"These devices have opened a market for electronic books and periodicals," said Verna. "For that market to reach its full potential, the publishing industry will need to reverse negative trends in magazine and newspaper readership and overcome consumer resistance to paying for digital content."

Ebook revenues are rising quickly, currently at 6 percent of total U.S. book publishing revenues, according to IHS iSuppli -- that's double their 2010 share of 3 percent.

"Publishers and retailers need to find the right mix of ebook pricing, enewspaper paywalls and emagazine subscriptions to grow their digital customer bases -- without alienating their print readers," said Verna.

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