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Legacy Print Publishers Ponder the Digital Realities


The ongoing transition to digital publishing and online content distribution has created a potentially significant upside opportunity for forward-thinking publishers. But what are the key trends in this rapidly evolving marketplace?

How are electronic newspapers and magazines being monetized? What role do digital newsstands and aggregators play in marketing eNewspapers and eMagazines? And, how are publishers, advertisers and merchants addressing consumer demand for ecommerce capabilities on tablet editions? These are the questions that eMarketer considered for their latest market study of the American ePublishing sector.

Theoretically, the rising adoption of tablets, smartphones and ereaders point to a favorable business climate for publishers of digital newspapers and magazines -- as well as for other stakeholders in the publishing industry.

Despite this momentum though, the traditional publishing industry faces numerous hurdles in the quest to fully monetize its digital content. And, while some mainstream advertisers are jumping into the tablet space, eMarketer says that many are still waiting until audiences increase and common user behaviors become more apparent.

In the U.S. market, media tablet users will number 133.5 million by 2015, representing 51.9 percent of internet users and 41 percent of the total population. This is an increase from 69.6 million in 2012, a tally equivalent to 29.1 percent of internet users and 22 percent of the total population -- according to the latest eMarketer assessment.

Although newspaper and magazine publishers are encouraged by positive trends in technology adoption and consumer behavior, their biggest challenge remains monetizing tablet audiences to make up for print losses.

Clearly, they have good reason for their concern. A mid-2011 Pew study in conjunction with The Economist Group found that only 21 percent of U.S. tablet users were willing to pay up to $5 per month for news, and just 10 percent were willing to pay $10.

Advertising is by far the biggest revenue source for legacy publishing companies, and therefore a barometer of the health of the industry.

That being said, U.S. newspaper print ad revenues are expected to drop significantly in the coming years, slipping to $16.4 billion in 2016 from $19.14 billion in 2012. Digital revenues -- which include all digital platforms -- will edge up to $4 billion from $3.4 billion, so they will not cover losses from print.

The U.S. magazine industry is in better shape but still faces hurdles. Print ad revenues will drop marginally to $15.10 billion in 2016 from $15.19 billion in 2012. In the same period, digital ad revenues will grow to $4.08 billion from $3.14 billion. This means a slight net gain in total magazine ad revenue to $19.18 billion in 2016, up from $18.33 in 2012.

eMarketer says that any gain is better than a loss, but publishers would prefer to see more aggressive growth curves. Most agree that little can be done to boost print ad revenues, so their sights are trained on digital.

Both magazine and newspaper publishers believe that greater scale will help pave the way for a brighter future, but they also feel that more adventurous ads that take advantage of the media tablet format will captivate readers and generate more business. We'll have to wait and see what happens as the digital realities unfold in the coming weeks and months.

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