iPad: Can it save the magazine industry?

IPad, other tablet computers, and e-readers will create a 'reading revolution.' But publishers' revenues may lag.

When the Consumer Electronics Show kicks off its annual event in Las Vegas next week, it will bask in the glow of more than 50 models of tablet computers either on display or announced. The new must-have gadget will warm the hearts of manufacturers, high-tech consumers, and – an unlikely group – magazine publishers.

The masters of ink and glossy photo see in the Apple iPad and its competitors a way to rejuvenate their slumping industry. With more than 100 million tablets and e-readers forecast to be in Americans' hands by 2013, publishers foresee a reading boom.

As a result, readers can expect digital magazines that are more up-to-the-minute, more interactive, and more eye-catching. The big unknown is how much these new readers will be willing to pay.

"I don't think that [the computer tablet] is the savior that some people have made it out to be, but it's an interesting opportunity," says Jeff Price, president and publisher of The Sporting News. In April, the New York-based biweekly began selling a daily digital edition for $2.99 a month. Since then, advertising is up 17 percent compared with a year ago. Mr. Price expects the new digital daily to turn profitable next year: "We're bullish in terms of 2011."

Reading time soars

One of the most encouraging signs for publishers is that tablets and e-readers boost reading time. Users of e-readers are 11 percent more likely than theaverage adult to have read a print or online newspaper in the past week, says Scarborough Research, a New York consumer and media research firm. Of 1,600 iPad owners interviewed by the Reynolds Journalism Institute in the fall, 79 percent reported using it at least 30 minutes a day to read news. Only slightly more than half spent that much time getting news from the TV or a PC.

"We are calling this a reading revolution," says Jim Taylor, vice chairman of Harrison Group, a market research and strategy firm in Waterbury, Conn. The time people spend reading goes up 50 percent once they buy a tablet or e-reader, according to a Harrison Group survey of 1,800 consumers, which is due to be released at the Consumer Electronics Show Jan. 4. By 2013, Mr. Taylor forecasts, more than 100 million tablets and e-readers will be in the hands of US consumers, luring them to the printed word.

As a result of such forecasts, magazine publishers are experimenting with digital content specially formatted for the tablets. In May, Wired Magazine unveiled an iPad edition that sold 24,000 copies in 24 hours. In a recent digital edition, National Geographic not only ran an article on aardvarks but also included video of the photographers capturing the animals on camera. Marie Claire's December issue displayed a "living cover" of actress Emma Watson, who moved when viewed on its iPad app.

"You're going to start to see magazines leading the march forward," says Jeanniey Mullen, executive vice president and marketing offiicer of Zinio. The San Francisco-based digital newsstand and bookstore works with publishers to create digital editions that readers can buy once and have access to on a variety of e-readers and computers.

Skipping the print

Some new magazines skip print entirely to engage their readers digitally. In October, digital-only women's magazine VIVmag launched an iPad app from Zinio that uses in-line videos, mix-and-match elements, quizzes, and one-click shopping from moving ads. On Nov. 30, billionaire Richard Branson launched Project magazine, a $2.99 per month iPad-only publication whose first issue showed actor Jeff Bridges walking across his cover story. The editors promise to update copy during the month.

One of the more cutting-edge magazine experiments is Flipboard, an iPad application that gathers content that one's Twitter and Facebook friends like and displays in a magazinelike format. The application has changed the 40-year reading habits of Bob Sacks, president and publisher of "Heard on the Web," which he bills as the world's oldest electronic newsletter. "My morning reading habits have changed," says the magazine veteran. Instead of first turning to The New York Times in the morning, "I go to my Flipboard."

What's not so clear is the revenue outlook for this digital content. Although publishers can shed the cost of printing and mailing paper editions, the enhanced digital editions with video and other features require intensive editorial effort and resources, says Ms. Mullen of Zinio. Furthermore, digital readers have balked at paying the same rate online that they pay for print.

Apps for sale

By selling online versions and apps that allow specific tablets, e-readers, and smart phones to display the content, publishers expect to boost their digital revenues. (The Monitor, which is available in e-reader editions at Barnes & Noble and Amazon, is looking into apps for tablets like the iPad.) Last year, digital content brought in about 10 percent of magazine revenues, according to mediaIDEAS, a global research and advisory firm with offices in New York and London. By 2020, digital content will account for 58 percent.

But the rise in digital revenues won't begin to offset the fall in print sales until 2015, mediaIDEAS forecasts. By 2020, revenues will be rising but still remain below last year's level. "It's still a very early market," says Mullen. "It's going to take a good bit of time, testing, and innovation for publishers."