3 keys to a successful e-reader content strategy

The future of digital distribution on electronic readers is as fuzzy as the resolution offered by first-generation devices. The success of the Kindle caused publishers to take notice of the potential of digital periodicals as a new revenue stream; now, as more new devices flood the market, the urgency of choosing the right platform and developing an actual strategy for e-readers increases.

At this point, publisher strategies are more reactionary than innovative. The first wave of e-reader periodicals offer little more than PDFs of the print product – at best. Many digital editions are missing articles, images, or other features that readers currently receive through the print edition or the publisher’s website. A quick scroll through user reviews on Amazon’s Kindle store shows the discontent among paying customers – and the poor job that Amazon and its content providers have done setting expectations about what these digital subscriptions offer.

Current digital editions tend to “combine the worst of electronic and print technology,” says Michael Mace, a principal with Rubicon Consulting. In addition, the gray-scale screens and relatively poor image resolution of current e-reader devices dilutes the appeal to advertisers, requiring subscriptions to carry a heavier revenue load.

That doesn’t mean the market lacks potential.

“You can see how the economics work,” says Mace, a longtime follower of the e-book industry. In the short term, publishers need to get to a break-even point, with subscription revenue and lower printing costs offsetting lost ad revenue. Then, he says, they can begin investing in the testing and experimentation required to develop and deliver unique products and better user experiences. “That’s where it gets really interesting,” he adds.

With a multitude of new devices launching this year, there will be plenty of experimentation going on, and plenty of uncertainty over which platform to choose. Publishers should be planning for the onslaught of new devices – and anticipating the tough choices they’ll need to make – by focusing on three key areas: distribution, design and revenue.

Distribution

A rapidly evolving technology market, as we’re seeing now with e-readers, can quickly paralyze any content provider. A lack of standards, a bevy of different formats, and a  business model that benefits device makers over content creators makes it difficult to plan a coherent strategy. Some publishers are simply putting off major investment decisions until the dust settles – or until Apple launches its rumored tablet computer, whichever comes first. 

While exclusivity deals may be appealing to some publishers, it may be wise to avoid locking into any single platform – that’s a high-risk bet that could backfire if the device is not a success. Publishers will need to be more strident about pushing for open standards that allow digital content to be shared across multiple platforms, as the consortium of Condé Nast, Hearst, Meredith, News Corporation and Time are pledging through the venture they announced. Ideally, publishers will want to drive a set of common standards that support digital distribution across multiple form factors, including e-readers, tablet PCs, and smart phones.

Publishers will also need to regain some of the ground ceded to Amazon regarding other key elements of content partnerships, such as access to subscriber data. Part of the reason tech publisher IDG chose to partner with Plastic Logic for its new Que reader was the added flexibility regarding subscriber information. "For us, that was very important in pursuing that platform,” Bob Carrigan, CEO of IDG Communications, told Ad Age.

Another element of a distribution strategy involves determining when the digital edition is actually delivered relative to the print product. Early access to content could be a big selling point for digital magazines or newspapers. “For some subscribers, getting the news before others get it holds a lot of appeal,” says Mace.

Design

Much of the hype around e-readers has been focused on the device makers, the book publishers and, more recently, periodical publishers. But what about the customers? A winning strategy for digital publications on portable devices will need a lot more input from the actual users of the product. This is why Mace recommends that publishers adopt a tactic from Internet developers.

“The electronic product doesn’t need to be fixed in stone,” he says. “Tell customers it’s a beta product, that it’s an experiment. That’s how Web companies work. Get something to market, and iterate quickly based on user feedback.”

There’s plenty of fertile ground to cultivate. Look no further than the digital version of Sports Illustrated that Time has been demonstrating to see the potential for groundbreaking design. As color e-readers emerge and ink technologies improve, publishers will have an opportunity to create highly interactive and engaging publications – if they’re willing to invest the resources into understanding how customers use e-readers and what they expect from a digital publication.

If publishers want to make a go of the e-reader market, they will have to quickly get past the current stage of delivering a poorly designed digital reproduction that offers little or no additional value – or may even be missing some elements of the print product. “If you’re telling users to accept something less while paying roughly the same,” notes Mace, “you’re in trouble.”

Revenue

Ah yes, the new dawn of the digital subscription model is finally upon us, enabled by the e-reader. There are several key issues here, ranging from the type of subscription (Daily? Monthly? Annual?) to the revenue share between distributor and content creator. Unfortunately, publishers have already ceded critical ground by giving Amazon as much as 70% of the subscription revenue coming through the Kindle store. If publishers hope to build a viable business around digital editions, that horse will need to be put back in the barn.

New competition will help level the playing field. Device makers looking to land big brands will be more open to a more balanced revenue share. Publisher-led efforts like Skiff will return even more subscription revenue into the content providers’ coffers.

While no one is ready to state publicly what the ideal revenue mix between distributor and content provider will be, publishers will need enough of a cut to compensate for any advertising dollars lost from moving to a smaller format – at least until the technology evolves to support richer graphics and interactive ads.

“You can figure out a way to monetize over time, through things like interactive advertising,” says Mace. “But you need to get it to that break-even point where you’re not going to slit your own throat.”