Two Giants Wade—Cautiously—Into the Waters of Digital Content

Oct 07, 2008


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During one eventful week in mid-September, two big names in American commerce gingerly announced that they would be reinventing their business models for the digital age. Time Inc., the publisher of Time magazine, Sports Illustrated, and People, announced on September 15, a Monday, the launch of Maghound.com, a service that allows users to manage their magazine subscriptions online. Then on September 18 the online retail behemoth Amazon released the news that it would be adding a content delivery network to its suite of web services. 

In many ways, magazines have been left in the dust by the shift to a web-based marketplace—perhaps not altogether surprising for an industry with a paper-based product. With any luck, Maghound will launch Time into the digital age. The service offers more than 200 magazines, restructuring the subscription model so that it is more transparent to the reader. "The goal is to empower the consumer and give them a tool that they can manage with much more control," says Dave Ventresca, president of Maghound Enterprises. "It’s not the publisher sending you notices in the mail anymore. You can go online, pick your titles at different service levels, and make changes right there."

Ventresca’s statement suggests that new modes of content delivery have created new kinds of consumers with different expectations of the services they receive. "We found that those who really responded to the site were of a younger, more affluent and highly educated demographic," he said. Certainly the kind of customers the magazine industry needs to attract and hold on to.

Once Time customers begin managing their magazine subscriptions online, are entirely web-based editions of the magazines the next logical step? Perhaps, but not necessarily, says Ventresca. "It’s something we talk about a lot," he says. "There are a lot of ways this site can employ digital content. But we haven’t made a firm decision just yet."

Amazon’s CDN announcement was greeted with no small amount of concern from the industry—from the myriad upstart companies to major players such as Limelight and Akamai. If Amazon is able to translate its point-and-click retail sales model to CDN technology, the hundreds of small companies that are already using Amazon’s web services are more likely to be lured away from traditional CDN operators. GigaOM.com reported that Amazon "wants to make buying CDN services as simple as buying a book."

Customers will pay for Amazon’s content delivery network on a usage basis, rather than through a long-term contract. And the costs of the service will be published on the web (and they’re likely to be much lower than traditional CDN rates). The ramifications of this new model are likely to be felt throughout the market, but the mom-and-pop CDN shops are likely to be the hardest hit. Streaming Media magazine’s Dan Rayburn says, "It’s not a game changer just yet. There’s a whole lot of functionality that Amazon can’t offer yet that you can only get from the major players. But for organizations that are looking for the basics, Amazon’s might price out some of the small regional service providers."

The announcements from Time and Amazon make it clear that not all moves toward digital delivery are created equal. A company like Amazon, which has already mastered the art of online commerce and come to dominate its sector, has the luxury of being able to develop a content delivery product just because it wants to. A company like Time, on the other hand, has watched its own industry evolve around it, and now finds itself with just two viable options: go digital or go home. 

(www.maghound.com, www.amazon.com)