If You Can’t Beat ‘Em: Publishers Team Up For Digital Venture

Dec 15, 2009

Representatives of four major publishing houses and international media conglomerate News Corporation announced last Tuesday, Dec. 8, that they will launch a joint venture to develop a digital storefront and a set of standards for the sale and distribution of media content. Condè Nast Publications, Hearst Communications, Meredith Corporation, Time, Inc., and News Corp. were rumored to be preparing such a venture since November, when early reports of the collaborative effort first surfaced.

Details about the venture remain relatively scarce, but a press release issued jointly by the companies laid out four distinct creative goals for the project: a "common reading application" that would maintain the look and feel of publications, a publishing platform that would span multiple devices and operating systems, a unified storefront for content, and an accompanying advertising system.

Between the five participants, the venture potentially encapsulates many of the country's highest-profile magazines and newspapers, including Time, The Wall Street Journal, the New York Post, Cosmopolitan, Esquire, Sports Illustrated, Vogue, and GQ, as well as representing an audience of nearly 145 million, according to figures provided by Mediamark Research & Intelligence. The press release also indicated that the digital platform the companies seek to create would potentially feature content from other publishers not currently involved in the venture. Revenue will be generated by both advertising and content sales, as well as from subscriptions.

Heading up the venture is John Squires, currently an executive vice president at Time, Inc., where he manages the company's digital business models, a role he was placed in earlier this year by company CEO Ann Moore. Squires will reportedly serve as the interim manager for the venture, while a permanent CEO is sought.

In the past few weeks, several of the companies involved with the partnership revealed projects of their own that overlap with the new venture's stated goals. Time, Inc. recently revealed a prototype for a "digital magazine" touchscreen tablet device that ties together traditional print-based magazine layouts and video, while earlier this month Wired reported on a tablet-based content application developed by parent company Condè Nast. Hearst likewise released information about a digital content distribution platform named Skiff, which also boasts various advertising features.

In an interview last week with The Guardian's paidContent.org, Squires-who was unavailable to comment for this story-indicated that these parallel efforts were not immediately involved with the venture, but broadly characterized them as "very much the projects we want to enable for the industry."

Reactions to the new venture have been varied. Some, such as the Associated Press's Ryan Nakashima, cast it as an attempt to directly compete with Amazon's increasingly popular Kindle e-reader. Erick Schonfeld of the blog TechCrunch, on the other hand, opined--in a post that bluntly declared "It's All About The Data"--that the real motivation behind the joint venture was an attempt by the publishers to retain access to the customer data that forms the basis of marketing efforts and ad sales.

Kirk Biglione, a new media consultant and co-founder of the blog Medialoper, expresses a mixed reaction to the announcement. "It's an interesting approach, but the devil is in the details," Biglione says, noting that things like the technical implementation of the system and the exact nature of the standards it develops will have a significant impact on the outcome of the joint venture.

According to Biglione, one of the most significant challenges will be the task of convincing consumers to use the service. "Unlike Amazon and Apple, these publishers don't have the same sort of billing relationship with consumers," he explains. "When Apple launches a new device or service they can market directly to 75+ million customers who already have their credit cards connected to the iTunes store. This new content start is essentially starting from scratch."

Although Biglione sees benefits for the publishers if they succeed in striking out on their own without third-party distribution from companies like Amazon.com and Apple, he isn't optimistic. "Ultimately if they succeed they'll have more autonomy and control over their own destiny," Biglione says. "That seems to be the big dream for everyone in print. Unfortunately, I think we're beyond the point where that's a reasonable expectation."

Biglione also thinks that the effort is long overdue. "This is the sort of venture they should have been talking about ten years ago."

(www.newscorp.com, www.amazon.com, www.timeinc.com, www.hearst.com, www.meredith.com, www.condenast.com)