Accenture Media & Entertainment Point of View
Combining traditional reader experiences with innovative digital channels to drive a new era of profitability for the newspaper industry
A tabula rasa or “clean slate” suggests the ability to write a new future on the foundation of the past. In this article, Accenture thought leaders ask whether the iPad™ and similar products might be a “tableta rasa” for the newspaper industry — the hope of a new era of profitability. The authors explore the implications of tablet computers on the reading experiences and business models needed to generate sustainable revenues.
A tabula rasa or “clean slate” suggests the ability to write a new future on the foundation of the past. The iPad and similar technologies could be a “tableta rasa” for the newspaper industry: a chance to bring about a new era of profitability. Being a first mover in any industry is never free from risk, of course. Yet, tablets represent a huge opportunity for the newspaper industry, and the time to act is now.
Apple’s iPad has arrived on the market to great acclaim, joining — but in many ways surpassing — the functionality and usability of other kinds of digital readers in the marketplace. Among the industries that have embraced the iPad with great enthusiasm have been publishers — specifically publishers of newspapers and magazines. These companies have been hit hard by the recession but, at a deeper level, by the great sea change of the digital revolution, which has dramatically changed user behaviors as well as revenue streams. High-powered tablet computers — offering full multimedia and online capabilities — represent a new opportunity for newspaper publishers. However, it’s an opportunity they could miss unless they focus in particular on two key aspects of the tablet trend and adapt themselves and their channels accordingly:
to retain the best aspects of the print experience, while also using the unique capabilities of digital and online to offer enhanced functionality and deepen relationships with users.
refined over hundreds of years — while also integrating innovative capabilities of the online world, captures the best of both worlds. To be appealing to consumers to the point where they will pay for the product, a tablet newspaper must deliver a satisfying experience to them. We believe that ideal experience is one based in large measure on the print paradigm. By bringing together the print experience with online capabilities in a tablet edition, newspapers have the chance to increase revenue streams in three ways. Online functionality delivered in the context of a familiar reading paradigm can give consumers value beyond the free versions found online—value for which they will pay. In addition, online and digital capabilities can increase revenue streams from advertising and add-on products. All three of these revenue streams are now critical for newspapers’ survival.
How business models should be crafted to capture multiple revenue streams — something that eluded the publishing business during the initial move of content to an online environment. The kind of product newspapers and magazines should be seeking to create needs to not only secure revenue from readers (which no newspaper has yet successfully managed with digital content) but also ensure that two other critical revenue streams are captured: advertising revenues as well as add-on products or embedded shops.
How a newspaper or magazine on a tablet should be ultimately designed
If they are to catch what may be the “last profitability train” represented by the tablet phenomenon, newspapers need to bring together these two considerations. Appealing to the successful print experience — successful design and experience philosophies
Many if not most traditional newspaper and magazine publishers were trampled in the mad rush to the online world. The industry itself made some bad decisions, to be sure, but it also was in many ways a victim of circumstances beyond its control. Companies pushed to get content online quickly. Only later did they ask the vital question of where the money was going to come from to sustain the digital wave.
Newspapers and magazines now find themselves bucking a very difficult psychological phenomenon: Once people get something for free for long enough, they’re not very supportive of getting the same old thing but then having to pay for it. Publishers such as the venerable New York Times tried to charge readers for certain premium content, but backed down after only a few months. Human nature is a hard thing to change. Indeed, a recent Adweek Media/Harris poll found that only 23 percent of US Internet users are willing to pay anything for online newspaper content.1 A similar poll by Harris Interactive in the United Kingdom found that 72 percent of Internet users would not be willing to pay more than £10 for an annual subscription to a news-paper website.2 The iPad and other kinds of digital readers therefore represent a compelling opportunity for newspaper publishers: Consumers are not likely to be content paying for the same old daily newspaper or Sports Illustrated they’ve been getting for free online. But they might be willing to pay for the different kind of experience of an innovatively designed e-version delivered to their tablets. This means companies must plan carefully along two related dimensions — one creative and the other economic. First, they must deeply understand the kind of unique user or reader experience that has long been associated with their printed brand — and then use that understanding to design the kind of tablet experience worth paying for. If there is discontent among many consumers of online content, it is that it is too limitless and freeform. The iPad and other kinds of tablets present the possibility of creating an extremely powerful user experience — one combining the best of both worlds, traditional and digital. Second, companies must avoid repeating the mistakes of the late 1990s when their business models were taken unawares by the online phenomenon. They must leverage the right business models to tap into all three revenue streams: from readers, advertisers and partners. It’s an approach that could bring many newspapers back from the brink of disaster.
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The Paper Chase
Creating a uniquely compelling user experience
Print media of course have suffered significant decline over the past few years. Yet millions of people still get their news on a typical day from traditional or offline newspapers and magazines.
A March 2010 Pew Internet & American Life Project and Pew Project for Excellence in Journalism report found, for example, that 38 percent of US adults get their news only from offline resources, and that an additional 59 percent leverage a combination of offline and online sources. Only 2 percent of adults get their news solely online.3 That’s a powerful argument in favor of a traditional newspaper reading experience. Since that is the case, newspapers designing a mobile or tablet experience must keep in mind what has made them successful from a usability perspective. Here are some aspects of the traditional print experience that a tablet newspaper designer should keep in mind: A sense of completion The digital, online world, for all its engaging qualities, is nevertheless daunting in its sense of total limitlessness. Its hyperlinked nature means that one is never really “done” reading something online. With a traditional newspaper, on the other hand, one has a sense of reading, as the New York Times slogan puts it, “all the news that’s fit to print” for that day. Being able to say “I’ve read today’s newspaper” provides a sense of completion. This is one reason people save piles of unread newspapers at home: they want to complete that task. No one, on the other hand, is saving old Web pages. More enticing layout Layout is an art, and the layout of a print piece is part of the aesthetic experience as well as something that enhances comprehension and emphasis of key points. The unique mix of pictures, text and ads in a paper tells a story, just like a commercial or a movie. This sense of having the design reinforce points and direct readers to what is critical is largely missing from an online media experience. Better sense of control and interaction Newspapers are easy to use and handle and they provide a comfortable and familiar format. Readers have a broader understanding of how much they have read and how much material is left. Interesting research has recently been conducted by Anne Mangen, published in the Journal of Research in Reading. Mangen — a reading specialist at the National Center for Reading Research and Education at Stavanger University in Norway — explores what she calls the “intangibility and volatility of the digital text” as compared with an experience of text on paper. Digital texts are intangible and detached from a physical referent.
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And, she says, "materiality matters." The relationship a reader has with a physical text will differ from that of a digital text. Turning the page of a newspaper or magazine (or book) is a literal touch of the thing you read. "The digital text,” on the other hand, “has no material substance." As a consequence, Mangen argues, the digital text makes us read "in a shallower, less focused way." 4
More powerful advertising experiences Newspapers are often strong brands with clear attributes to which advertisers want to connect. And those attributes tend to be more firmly embedded in the printed paper than the online edition. A 2008 Yankelovich study argues provocatively that ads in traditional media such as newspapers and magazines are more likely to make a positive impression on the people reading or receiving them, compared with ads running in digital media. The reason is because people consuming traditional media are more apt to be in a positive mood. They are more relaxed, and more likely to be receptive to the diversion of a magazine and the advertising it contains. 5
The point here is that the differentiating characteristics of a print experience mean something — they speak to something deep-seated in human beings and how they are disposed to consume information. As newspapers design themselves for the tablet world, they need to appreciate the things that have made them great in the past. They then have a better opportunity to design a tablet experience that is differentiated and that takes advantage of the rich online world, and yet is still rooted in the familiar. This combination could yield greater reader loyalty and therefore greater revenues.
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The Digital Boost
Enhancing the print experience with online technologies
By building on a foundation of the tried and true when it comes to the tablet experience, newspapers have an opportunity to extend their brand onto new devices by boosting the printed experience with online technologies. This could be an offering that consumers might find worth paying for. It could also increase revenue streams from advertisers and from partners selling products thorough embedded shops.
The paradigm for design needs to be the experience readers have come to expect from the print version of a newspaper or magazine. The content needs to be deep, the quality high and date numbering of each edition can provide the feeling of completion. Tablet editions can continuously update news and information — an important value-add of the online world — yet these updates to the daily version can still be made within the context of a stable layout and design on a tablet version. In effect, a tablet delivering a “digital print” product combines the best of both worlds for consumers (See Figure 1). Here are some of the additional functions of online technologies that show how to provide a “digital boost” to the traditional print experience, creating a profitable tablet newspaper product. Advanced tracking Marketing managers are under increased pressure to validate their choice of media investments. Bringing online tracking possibilities to the traditional idea of a newspaper ad makes possible pricing schemes based on outcomes. This creates a win-win situation for the newspaper and the advertiser. (For more on this topic, see “How to energize your digital revenues,” Accenture, Outlook Journal, February 2010.)6 Embedded shops Online technologies mean that newspapers can offer partners the opportunity to sell add-on products just one click away from the primary content being consumed. Because of the large numbers of readers drawn to a newspaper or magazine with high brand value, embedded shops can be a significant new revenue source. Apps: Making it easy to pay Mobile users are now paying for digital content, and this is a booming market. The Yankee Group reports that U.S. consumers will download almost 1.6 billion apps in 2010, and that those numbers will swell to more than 6 billion by 2014. Even more impressive, paid app revenue will swell from $1.6 billion this year to more than $11 billion in 2014. “Despite conventional wisdom that says apps want to be free,” the report notes, app stores are training consumers that they need to pay a few bucks for quality phone apps.” Almost a third of downloaded apps are now paid apps, up significantly from the 18 percent level of a year ago.7 Apps have initially focused on software and programs, but the consumption of information apps is also growing. Apps can also create differentiated experiences for how to consume the news content, enabling the same look and feel of the traditional print
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An effective tablet newspaper will be one that combines the best of the print and online worlds.
Type of content: Feel: Sense of completion: Price for reader: Frequency of updates: Unique selling proposition for ads: Cost for material and distribution: Adaptable content and ads: Access: In-depth Quality High $$$ Once a day Brand High Low Physical
In-depth Quality High $–$$ About 3 times a day Brand and actionable Low High App
General Cheap Low (endless info) Free Live Actionable Low Mid to high Browser
experience. They then become not only the most logical method for accessing the content, but also for capitalizing on readers’ willingness to pay for the printed experience on a tablet device. These apps can also create better “stickiness”— holding a customer for longer periods of time. As a recent Enders report puts it, “People can easily abandon a desktop website that ‘goes pay’ — they will less readily abandon an iPhone or iPad app, once installed.” 8 Social media The online experience can link readers to each other via social networking applications (blogs, Twitter, Facebook, etc.) bringing more people together in a timelier way to discuss their views. Online editions of newspapers have become part of the social media revolution, and tablets can capitalize on this phenomenon. (See box, “Getting the tablet experience right” for one promising demonstration of this capability.)
Improved knowledge of readers Information about online readers’ habits, content likes and dislikes can enable content providers and advertisers to target their messages, which increases relevance and value for money. The same applies when newspapers themselves advertise their add-on products. The improved knowledge of readers is possible on tablets but is slightly tricky to apply in practice. Apple, for example, does not share customer information with software providers. A way around that is to have a onetime registration when a consumer downloads the app. This is an extra step, meaning that some readers may opt out; to counter that effect, companies may need to offer readers some sort of reward or compensation for completing that step.
The merging of media: Providing more effective and interactive advertising Online newspapers can go beyond static news in one format (text) to a multimedia experience that includes video and audio content. The enhanced user experience for readers also enhances the power of advertising, as well, blurring the boundaries between TV, online and print. The ability to deliver enhanced advertising makes the hybrid print/ digital tablet product especially attractive to the publishing industry. The traditional print ad will be boosted with the new online technology of interactive media such as rotatable products, links to advertisers’ sites, embedded shops and more possibilities to boost advertisers’ direct return on their spend.
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In the end, newspapers will end up with three interrelated products: traditional print, online and tablet versions. How companies deal with and integrate these formats is critically important. One model suggested in a recent Harvard Business School case study — a model applied to the e-book market, but just as applicable to the newspaper business — is to bundle the print and digital product together. Harvard Business School professor Peter Olson argues that digital and print versions should not necessarily be viewed as adversaries. “Why not offer both and see if you can make the market more attractive, with additional
features like a video interview with the author?” Electronic versions of publications, says Olson, “can be a much richer and deeper experience than anything we’ve seen before.”9 Even as publishers think about bundling products, they still need to worry about differentiating between them in terms of uniqueness and value. That will be crucial to avoiding the mistakes the industry made in the first online wave. Here there is some cause for concern. Several newspapers are simply emulating the design of their online editions on the iPad. This is risky both in terms of a differentiated reader experience and in terms of generating new revenue sources.
What unique capabilities and functionality of the iPad are really being leveraged if one is basically just putting the online edition on the tablet? How is the tablet channel being used in a unique way? Companies must carefully consider their tablet strategy if they are to forge a sustainable business model.
Getting the tablet experience right
What does an ideal tablet newspaper experience look and feel like in practice? Numerous newspapers and magazines are rushing to deliver tablet editions to their readers, and several demos of these products can now be viewed online. One especially promising tablet magazine is Popular Science+, developed by its publisher, Bonnier, in association with BERG, a London-based design firm. The tablet version is based on considerable research into how people consume traditional magazines. The result is a product that delivers the spirit of the print magazine with the advantages of the iPad. According to Bonnier’s director of research and development Sara Öhrvall, “The beauty of the iPad for a publisher is that, for the first time, readers and users can use our products and actually feel like they’re touching them. That’s critical for a magazine experience.”10 The tablet magazine incorporates multi-touch gesture support, animation and an in-app purchase system, among other capabilities. Video is embedded, as are interactive features. If an article or photo is particularly appealing, a user can call up the built-in keyboard and send the item to friends on Facebook or other social networking programs. As newspaper and magazine companies experiment with this new technology and art form, they must continue to push the envelope of tablet capabilities and offerings. This includes the enhanced usage of video and audio, not only to deliver content but also to create more innovative advertising. Such ads can draw a reader or viewer into a more engaging experience and interaction with a brand. Newspapers can then monetize such advertising more effectively by charging marketers a premium for those extra ad features, and for more predictably delivering on targeted outcomes. In the end, however, it’s the faithfulness to the traditional reading experience, while augmenting it with the iPad functionality, that creates the primary value proposition for a tablet newspaper or magazine. What you want is for a reader not to feel as if they’re reading an iPad; what they should feel is that they’re reading a very high-tech magazine.11
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Sustainable Business Models
Effectively designed, a tablet newspaper represents the best of both the online and print worlds. It also gives newspaper companies the opportunity to forge a business model that can sustain their business, enabling three revenue streams: readers, advertisers and add-on products.
1. Readers likely will be more willing to pay for the unique capabilities of a tablet newspaper edition. As discussed, tablets deliver a more compelling user experience than online editions, with engaging layouts, a more tactile way of interacting with content and a sense of completion that cannot be achieved on the Web. 2. Advertisers may be willing to pay more for the engaging and interactive Figure 2 advertising features of tablet editions. Readers are accustomed to seeing advertisements in a magazine layout and so do not find them as intrusive as pop-ups and banner ads in Web editions. With media capabilities that enable interaction with products being advertised, combined with the consumer targeting capabilities of digital editions, tablet advertising presents a unique value proposition. 3. The purchase of add-on products can be enabled through embedded shops within a tablet newspaper—both whitelabel shops and B2B partnerships. Such shops represent a revenue sharing partnership for newspapers with thirdparty vendors. These embedded shops can now be situated in a more optimal setting: placement in the trustworthy environment of a newspaper, while offering the enhanced functionality of an online store. (See Figure 2.)
Comparing revenue opportunities of print, online and tablet newspapers
Readers Online Digital Advertisers Non-tradional readers purchasing add-on products and B2B advertising partnerships
Type of Product
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Does a Tablet Truly Deliver a Superior Experience?
If one moves beyond marketplace hype, especially over the release of the iPad, does a tablet truly deliver a superior experience — one that actually offers newspapers a ticket to profitability? We believe it does.
Current e-readers with e-ink technology, for example, offer a great reading experience, but one that is still primarily black and white. They effectively mimic the experience of reading a book, but do not support the kinds of enhanced experiences just mentioned. At this point, at least, they also cannot support the three revenue streams mentioned above. Revenues are mostly restricted to readers’ purchase of books, with few possibilities for advertisers and partnerships with add-on products. A mobile handheld or smartphone constitutes another relevant device. It can deliver much of the enhanced functionality of a tablet newspaper and also offers the possibility of capturing revenue streams from advertising and online shops. But a question mark remains over whether they can capture the loyalty of the readers themselves. Many observers feel the screen of a mobile phone is simply too small to deliver on the central value proposition of an enhanced print experience. Compared to black-and-white e-readers, and to mobile smartphones, a more versatile tablet like the iPad can open up a more creative experience for the reader that more closely resembles the printed paper experience. The willingness of consumers to pay for apps can also increase revenue streams from readers, as well as other revenue sources including advertising and add-on products in embedded shops. But the iPad and other tablets represent just the beginning of a boom in new products. When e-readers evolve with super-thin color displays — such as Qualcomm’s Mirasol screen which offers long battery power and visibility even in bright sunlight — they too will be able to deliver the hybrid print/ digital experience. Tablets also represent an opportunity for the book publishing industry because they are more versatile and deliver a superior overall experience than most current e-readers. A tablet version of a book could effectively mimic the paper book reading experience, while also offering interactive, multimedia, hyperlinked functionality. One can envision creative revenue streams through online books including the kinds of product placements now seen in most Hollywood movies. Tabletbased books, therefore, also offer publishers the opportunity to tap into the three primary revenue streams of the next generation of publishing.
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Next Steps for Newspapers
For newspapers and magazines to catch this last train to profitability — the richer revenue streams of hybrid print/digital products — they should take the following steps.
Differentiate your product Creating a profitable tablet edition means differentiating it clearly from the free online product. This could be achieved by reducing the depth of online content and restricting new advertising formats. Because online is free, readers should get what they pay for. It is likely that newspapers will need to discontinue their current efforts to offer formatted pdf-type editions and newspapers, as these will continue to be barriers to moving readers to the more profitable platform of tablet editions. Newspapers must beware of the “good enough” free option. If consumers feel they’re getting most of what they need for free, they will not be incented to move to more profitable platforms. (See Figure 3.) Develop innovative and engaging applications Get involved in application development to create a new way of designing and delivering digital content that
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builds on the power of the print experience. Apple’s software developer kit (SDK) for the iPad is already available and SDKs for other platforms will soon follow. Involve your readers in the evolution of tablet newspapers The kind of interactive, ongoing relationships possible through tablet editions of newspapers offer companies the opportunity to involve them in this exciting wave of publishing. Invite your readers to help develop innovative applications, new kinds of content and additional features. This kind of closer involvement can lead to increased loyalty, willingness to pay and better product development. Lower the device barrier to entry Tablets like the iPad are currently at a price point beyond many younger readers in particular. Although the price is likely to come down, subsidizing your readers’ purchase of a tablet is likely
to be a necessary part of the bargain — something that telecommunications companies have done for many years with mobile phones. Leveraging that business model offers a big advantage: consumers locked into multi-year contracts. Move quickly No revolutionary development like a tablet newspaper comes without risk. Many companies have legitimate concerns about moving into this next phase of newspaper publishing. What if newspapers bet big on tablets, only to find that others don’t follow and decide to continue to launch free apps? We believe, however, that there is a first-mover advantage right now in the tablet space. The current financial state of newspapers means that competitors are likely to follow, as they cannot afford not to. The mistakes made with the first online wave are still fresh in every newspaper’s memory.
The print and digital experiences: Creating a “best of both worlds” tablet newspaper
Close to printed user experience, however limited revenue sources (readers) Books & Pockets e-Ink Reader
Close to printed user experience, but with three revenue sources Printed Paper Preferred State: Best of both worlds product
Close to online experience with low reader willingness to pay = free iPad Risky State: Expansion of online product Online
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A new era for newspapers
Tablet computers are a significant opportunity for the newspaper and magazine industry.
By building on, but also enhancing, a familiar user experience of print media, companies have a chance to catch the last profitability train leaving the station. The competitive advantage of a tablet-based newspaper is based not just on what to consume, but how it’s consumed. If newspapers demonstrate their ability to draw devoted and loyal readers, advertisers are sure to follow. But only time will tell. Executing a tablet strategy is not without some risks. But the greater risk is likely to be waiting too long to take advantage of what may be the last major opportunity for newspaper and magazine publishers to transform their prospects and achieve high performance in the digital age. Contact us For more information on how Accenture can help your company achieve high performance by enhancing your customers’ content experience and improving your publishing revenue streams please contact: Fredrik Lindros Accenture Strategy Media & Entertainment firstname.lastname@example.org +46 8 451 3599 Hans Skruvfors Accenture Strategy Media & Entertainment email@example.com +46 8 451 3883 Niclas Poldahl Accenture Media & Entertainment Lead Nordic Region firstname.lastname@example.org +46 8 451 3564 For more information about Accenture’s Media & Entertainment industry practice go to: www.accenture.com/ mediaandentertainment
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1. eMarketer, March 2010. “Paid E-Publishing Content: Books, Newspapers and Magazines,” by Paul Verna. 2. Source: Harris Interactive commissioned by paidContent: UK, September 20, 2009. 3. “Understanding the Participatory News Consumer: How Internet and Cell Phone Users Have Turned News into a Social Experience,” March 1, 2010, Pew Internet & American Life Project and Pew Project for Excellence in Journalism. 4. “Screen Reading and Print Reading,” by Mark Bauerlein <http://chronicle.com/ blogAuthor/Brainstorm/3/MarkBauerlein/77/> , The Chronicle of Higher Education, October 21, 2009.
5. “When Advertising Works” Yankelovich, June 2008. 6. http://www.accenture.com/Global/ Research_and_Insights/Outlook/Journal/ Feb2010/digitalrevenues.htm 7. Yankee Group, “Forecasting the U.S. Mobile App Gold Rush,” September 2009. 8. “Can mobile save print publishers?” by Benedict Evans, Enders Analysis, February 2010. 9. “HBS Cases: iPads, Kindles, and the Close of a Chapter in Book Publishing,” by Julia Hanna. Q&A with Peter Olson, April 5, 2010, Harvard Business School Working Knowledge.
10. Source: http://www.apple.com/ipad/ apps-for-ipad/popular-science/ 11. To see an online demo of the Bonnier tablet design, go to: http://www.youtube.com/watch?v= iAZCr6canvw Another demonstration of the possibilities of tablet editions comes from Wired magazine, in association with Adobe. That demo can be seen at: http://www.youtube.com/watch?v= T0D4avXwMmM
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