AAM’s 2012 Digital Publishing Survey

PURPOSE OF THIS SURVEY

In 2009, the Alliance for Audited Media (then known as the Audit Bureau of
Circulations) first surveyed its U.S. and Canadian newspaper, magazine and
business publication members to learn more about their digital initiatives
and strategic plans. With four years of responses from this annual survey,
AAM has accumulated valuable data about the progress many media
companies have made, with unique insights into their experiences and
future plans. The 2012 survey was conducted in conjunction with
Roslow Research.

TABLE OF CONTENTS
Introduction............................................................................................... 3

Section 1: Expanding Apps....................................................................... 6

Section 2: Rising Paywalls...................................................................... 12
Section 3: Creating Profits...................................................................... 14
Section 4: Providing Accountability....................................................... 18

Conclusions............................................................................................. 20

Respondent Profile and Survey Information.......................................... 22

About the Alliance for Audited Media.................................................... 23

2
AAM’s 2012 Digital Publishing Survey
 INTRODUCTION
In the past decade, digital publishing has become widespread, thanks to expanding
consumer adoption of tablets and other mobile devices. For traditional media
companies, digital content has progressed from static replicas of a print edition and
basic website content to dynamic, engaging smartphone and tablet apps. Meanwhile,
new media companies and platforms are emerging that drive innovation, audience
engagement and new business models.

With the explosion of devices and publishing platforms also comes a slew of choices.
Publishers must decide which devices offer the best opportunity to reach their
consumers, what content to provide for each platform, and perhaps most importantly—
how to profit from producing content on multiple platforms.

The Alliance for Audited Media polled its large membership of media brands to gather
insight into how they were adopting and embracing mobile media. We asked publishers
to share their experiences and plans for paywalls, apps, revenue models, devices,
auditing and a lot more. Here’s some of what we learned:

· More than ever, AAM media companies are distributing their content via mobile
devices. When we conducted our first survey three years ago, 51 percent of
respondents claimed a mobile presence. Today, it stands at 90 percent. Even
more encouraging, the remaining 10 percent plan to develop mobile-optimized
content in the next year.

· In a market flooded with competing devices and operating systems, publishers

are distributing their content on multiple platforms, eager to get in front of readers
on their device of choice. Eighty-five percent have iPhone apps, 87 percent have
iPad apps, 67 percent have Kindle apps, 57 percent have Nook apps and 75
percent have Android apps.

· While Apple products still dominate the market, Kindle and Nook apps are
growing at an astonishing pace. The number of publishers developing Kindle
apps has grown two and a half times, up from 24 percent in 2011 to 67 percent
in 2012. Nook apps have increased more than four times, from 14 percent in
2011 to 57 percent in 2012.

3
AAM’s 2012 Digital Publishing Survey
 · And publishers aren’t offering just a single app on each device. On average,
companies are producing 3.4 iPad and iPhone apps, 3 Kindle apps and
2.4 Nook apps.

· With regards to app publishing technology, our survey respondents were split.
Seventy percent are producing native apps—downloadable programs built
for specific operating systems—while 67 percent are producing Web apps,
programs that use web browsers to deliver content and are optimized for specific
screen sizes. When we dig deeper into the data, we note a difference between
magazines and newspapers. Eighty percent of magazines are leveraging native
development technologies for at least one app versus 50 percent using browser-
based Web apps. In the newspaper market, 69 percent are using native apps
while 74 percent are using Web apps.

· Another trend that emerged in our study was the wide variety of platforms and
tools used by publishers. Of the respondents who provided feedback on their
platforms, more than half indicated they are simultaneously producing content
using two or more different content management and development platforms.
And of the publishers who provided feedback on their content analytics tools,
one-fourth indicated they are using two or more different solutions to track
content consumption. Still other publishers expressed their frustration with legacy
tools that only allowed the creation of basic content experiences instead of the
rich content they want to produce: “If you have legacy systems, it’s very difficult to
offer a good digital product.”

· The impact of HTML5 as a new additional publishing technology is still undecided

for most publishers. When asked to think about the next year, 41 percent said
they plan to continue using native apps while 31 percent said they plan to try
HTML5. Forty-four percent are still undecided.

· The million-dollar question is how are publishers monetizing mobile and how
is that revenue offsetting print declines. Seventy-seven percent agreed mobile
revenues must stem from both advertising and circulation, up from 52 percent in
2009. Fifty-four percent of respondents said mobile currently represents up to
9 percent of advertising revenue. Similarly, 56 percent said mobile represents up
to 9 percent of circulation revenue.

4
AAM’s 2012 Digital Publishing Survey
 · Publishers anticipate mobile advertising revenue will continue to grow through the
end of 2014. By that time, 46 percent of publishers expect mobile to represent at
least 10 percent of their overall ad revenue.

· Overall, 56 percent of AAM publishers charge for their iPad apps, 42 percent for
their iPhone apps, 38 percent for their Kindle apps and 31 percent for their Nook
apps. Nearly 40 percent said they are not currently charging for their content on
any device.

· We also asked respondents about their website strategies, particularly about

the growing number of paywalls cropping up in the industry. In the newspaper
industry, paywalls were virtually nonexistent until the last few years. Now,
48 percent of newspaper respondents said yes, they have a paywall.

· The most popular type of paywall is a metered paywall, where customers receive
access to a predetermined number of articles before payment is required. Almost
40 percent of publishers are using this type of paywall while 17 percent are using
a hard paywall where payment is required to read any content and 33 percent are
using a combination paywall that restricts access to premium content.

· Despite the promise of mobile publishing, our survey respondents are still
pragmatic about their print publications. Less than 15 percent said they have
plans to reduce their print publishing frequency and less than 3 percent think
their publication will only be produced digitally in the next five years.

· Sixty-seven percent of AAM publishers acknowledge that advertiser demand

for independent, third-party verification of mobile metrics is increasing. Sixty-six
percent said it is in the industry’s best interest to audit and verify digital content
accessed by mobile devices and 62 percent said the publishing industry should
begin disclosing digital usage metrics such as access rates and time spent.

5
AAM’s 2012 Digital Publishing Survey
 SECTION 1: Expanding Apps

Apps, apps everywhere. That seemed to be the theme of this year’s survey. With
mobile penetration nearly at capacity, most AAM media companies are now taking
the skills and learnings they gained from their initial mobile forays to expand their
app libraries.

Graph A – Ninety percent of survey

respondents said they have mobile
content. The remaining 10 percent
said they planned to begin distributing
mobile-optimized content within the
next 12 months.

Publishers are now more familiar with how their readers are viewing their content on
mobile devices like smartphones and tablets. Judging by the growth in apps, many
think the app offers the best reader experience. As one respondent stated, “It is still the
quality of the content that matters most; more than cool, high-tech enhancements.” Still,
there’s no doubting consumer demand for apps is high and publishers are responding.

Graph B – For the first time since we

began conducting this survey in 2009,
publishers are developing more apps
for the iPad than the iPhone.

6
AAM’s 2012 Digital Publishing Survey
 SECTION 1: Expanding Apps

While Apple products still dominate the market, Kindle and Nook apps are growing
at an astonishing pace. The number of publishers developing Kindle apps has
grown two and a half times, up from 24 percent in 2011 to 67 percent in 2012.
Nook apps have increased more than four times, from 14 percent in 2011 to
57 percent in 2012.

And publishers aren’t offering just a single app on each device. On average, publishers
are producing 3.4 iPad and iPhone apps, 3 Kindle apps and 2.4 Nook apps.

Graph C – On average, survey

respondents are producing the most
number of apps for Apple products – 3.4
for both the iPad and iPhone. Amazon’s
Kindle follows close behind as does
generic apps for the Android OS.

7
AAM’s 2012 Digital Publishing Survey
 SECTION 1:
SECTION 1:Expanding
ExtendingApps
Apps

With regards to app publishing technology, our survey respondents were split. Seventy
percent are producing native apps—downloadable programs built for specific operating
systems—while 67 percent are producing Web apps, programs that use web browsers
to deliver content and are optimized for specific screen sizes. When we dig deeper into
the data, we note a difference between magazines and newspapers. Eighty percent of
magazines publish using native technology for at least one app versus 50 percent that
publish via Web apps. In the newspaper market, 69 percent are using native apps while
74 percent are using Web apps.

“We must do both now, although we still deliver a better experience with native,”
explained one newspaper publisher. “Apple’s charging for subscriptions are a drawback
and Amazon does not have acceptable economics for publishers.”

A consumer magazine publisher also shared an opinion, “Apps will continue to

be important, but we’re also looking at Web solutions for the long term.” Another
respondent summed up the multi-channel publisher’s mission: “To optimize the
content based on each device.”

Graph D – Publishers are focusing

on creating native and web apps
almost equally.

8
AAM’s 2012 Digital Publishing Survey
 SECTION
SECTION1:1:Expanding
ExtendingApps
Apps

The impact of HTML5 is still undecided for most publishers. When asked to think
about the next year, 41 percent said they plan to continue using native apps while
31 percent said they plan to try HTML5. Forty-four percent are still undecided.

Graph E – Magazine publishers show a

desire to stick with the native app format.
Newspapers and business publications
are still undecided.

9
AAM’s 2012 Digital Publishing Survey
 SECTION 1: Expanding Apps

The type and number of different technologies used to create apps may also have some
impact on the type of content publishers are serving. Currently, 73 percent of apps are an
exact replica of the print product, which seems to indicate the challenge publishers face
scaling their production workflow to support more costly rich content versus more easily
produced replica content. Conversly, 21 percent are delivering unique content unrelated
to a print edition.

And just as in print, the ever-present deadline looms in digital where any friction in
production process eats away at valuable time. As one publisher expressed,
“Creating an optimized workflow is critical for time-sensitive publications like ours.”

Graph F – Most publishers are still

producing apps using the content
from their print editions.

10
AAM’s 2012 Digital Publishing Survey
 SECTION 1: Expanding Apps

Charging for content is also a mixed bag and, once again, Apple products are in the lead.
Fifty-six percent of AAM publishers charge for their iPad apps, 42 percent for their iPhone
apps, 38 percent for their Kindle apps and 31 for their Nook apps. Nearly 40 percent said
they do not charge for their content on any device.

Graph G – Publishers are most

likely charging for content on
Apple products, including the
iPad and iPhone.

Media companies are taking many different routes as they try to determine the best path
to reach audiences on mobile devices. Despite these differences, 63 percent agree that
tablets are the most important digital channel for their publication’s future.

11
AAM’s 2012 Digital Publishing Survey
 SECTION 2: Rising Paywalls

After years of giving away content for free, many AAM media companies have modified
their strategies and implemented paywalls to help recoup lost subscription revenue. The
results have been positive and our survey shows it is a trend likely to continue in 2013.
In fact, our survey respondents were adamant about the benefits of a paywall, many
lamenting that it took so long to fall into fashion.

“We should have put that wall up years ago,” said one survey taker.

Another observed, “Locking down our websites has kept our total circulation fairly stable
for the past four years. Free web content will not contribute to a successful business
model in the future.”

Graph H – More and more publishers

are considering the benefits of a
paywall. Business publications and
newspapers are more than twice as
likely to have implemented a paywall
as magazines. Of those currently not
using a paywall, 44 percent plan to
implement one in the next 24 months.

12
AAM’s 2012 Digital Publishing Survey
 SECTION 2: Rising Paywalls

The most popular type of paywall is a metered paywall, where consumers receive access
to a predetermined number of articles before payment is required. Almost 40 percent
are using this type of paywall while17 percent are using a hard paywall, where payment
is required to read any content. And 33 percent are using a combination paywall that
restricts access to premium content.

Graph I – The metered paywall, where

consumers receive free access to
a predetermined number of articles
before payment is required, is the
most popular. Combination paywalls
that only charge for premium content
is a close second.

Expect the paywall trend to continue in 2013. As one respondent noted, “The growth for
digital editions is from our Web users, not from converting print readers to digital users.”

AAM’s 2012 Digital Publishing Survey

13
 SECTION 3: Creating Profits

Media companies are bullish on the revenue streams offered by mobile content. Unlike the
old print model where advertising revenue was king, respondents were insistent that in the
digital world, revenues need to be generated from both advertising and subscriptions. It’s
the million dollar question: How do publishers make mobile profitable? The answer may
be they already are finding ways.

Seventy-seven percent agreed mobile revenues must focus on dual revenue streams,
up from 52 percent in 2009.

Graph J – More media companies are

realizing the importance of receiving both
ad and circulation revenue from mobile
products. In 2009, 52 percent thought it
was important. In 2012, 77 percent said it
was necessary, up 25 percent.

14
AAM’s 2012 Digital Publishing Survey
 SECTION 3: Creating Profits

Fifty-four percent of respondents said mobile currently represents up to 9 percent

of advertising revenue. Similarly, 56 percent said mobile represents up to
9 percent of circulation revenue.

Graph K – For 17 percent of

publishers, mobile currently represents
at least 10 percent of their overall
ad revenue. And within the next two
years, 46 percent of publishers expect
mobile to represent at least 10 percent
of their overall ad revenue.

Graph L – By the end of 2014,

41 percent of publishers expect mobile
to represent at least 10 percent of their
overall circulation revenue.

15
AAM’s 2012 Digital Publishing Survey
 SECTION 3: Creating Profits

Mobile isn’t the only channel where publishers are growing revenues and reaping profits.
Other products in their digital portfolios are also growing and supporting themselves.

Graph M – Publishers expect

smartphones and tablets to double in
profitability by the end of 2014.
Other digital products will see smaller,
but still significant, gains.

16
AAM’s 2012 Digital Publishing Survey
 SECTION 3: Creating Profits

By the end of 2014, 20 percent of AAM media companies expect their portfolio of digital
products—websites, mobile, social media—to account for at least 25 percent of their
advertising revenue, up from just 4 percent now.

As for circulation revenues, the majority of publishers are taking the bundled approach
where readers pay once to access the content anytime, anywhere. “Subscribers want it
all at one cost,” said one publisher. Another pointed out, “Audiences are self-selecting.
We are seeing combinations we would have never constructed for print.”

Graph N – Sixty-two percent of AAM

publishers are offering readers access to
content on all print and digital platforms
for one price while 47 percent prefer
separate subscription offers.

Strategies on generating revenue from print and digital devices may vary from newspaper
to magazine, from local to national audiences, from older to younger demographics.
What’s key is getting audiences to acknowledge the value of quality content.

As one respondent pointed out, “We must avoid positioning digital as a ‘cheaper’
solution. Customers are paying for our content, not paper and ink.”

17
AAM’s 2012 Digital Publishing Survey
 SECTION 4: Providing Accountability

Although publishers are growing more confident in expanding their product set, the same
cannot be said for mobile measurement including basic measures like reader engagement.

One survey respondent explained, “The publishing industry needs to work more closely
with the platform providers (Apple, Barnes & Noble, Amazon, etc.) to get better reporting.
We currently can’t tell exactly how many digital copies of a particular issue are being
accessed by subscribers. We have to make assumptions with the available data to guess
at the right number.”

The challenge is getting the data from vendors first. Second is establishing some
standards and parameters around that data to create a level playing field. In the words of
one publisher, “there are no standards.”

Sixty-seven percent of AAM publishers acknowledge that advertiser demand for

independent, third-party verification of mobile metrics is increasing. Sixty-six percent said
it is in the industry’s best interest to audit and verify digital content accessed by mobile
devices and 62 percent said the publishing industry should begin disclosing digital usage
metrics such as access rates and time spent.

Graph O – Demands for independent

third-party verification are on the rise.
Sixty-six percent of publishers
say the industry needs to step up to
third-party audits and 67 percent agree
that advertiser requests for audited
data will continue to grow.

18
AAM’s 2012 Digital Publishing Survey
 SECTION 4: Providing Accountability

And just how do publishers plan to provide this accountability? Seventeen percent already
are by using AAM’s Consolidated Media Report. The CMR is AAM’s customizable report
that allows publishers to show advertisers their entire media footprint by reporting
audited information on various distribution platforms, including print, websites,
social media, apps and more. Another 18 percent plan to publish a CMR in
the next 12 months and 64 percent said these types of reports are becoming
increasingly important.

Despite the promise of mobile publishing, survey respondents are still very optimistic about
their print publications. Less than 15 percent said they have plans to reduce their print
publishing frequency and less than 3 percent think their publication will only be produced
digitally in the next five years. In the next two years, publishers do expect about 23 percent
of their audience to read their content only in its digital form.

Graph P – Business publications and

newspapers expect at least a quarter
of their audience to only access their
content via digital platforms within the
next two years.

Earlier this year, The Economist announced plans to offer buyers a digital-only rate base in
response to increasing interest for digital guarantees from publishers. With digital magazine
audiences increasing, this may be the direction the industry is headed but for right now,
only 5 percent of magazine respondents said they had plans to offer a digital rate base.

19
AAM’s 2012 Digital Publishing Survey
 CONCLUSIONS
Publishing on digital devices is the new norm. And the environment is complex,
with publishers providing content in multiple apps on multiple devices.

When we first fielded this survey in 2009, about half of media company respondents
said they published content on mobile devices. In three years, mobile publishing is
widespread, with 90 percent of respondents currently producing mobile-optimized
content.

AAM media companies have quickly adapted to distributing content on mobile

devices. Content on iPhones and iPads is most prevalent—85 percent and 87 percent,
respectively. But other devices are also growing in popularity, and publishers are not
shying away. Sixty-seven percent are publishing Kindle apps, 57 percent have Nook
apps, and 75 percent have apps for other Android platforms. Perhaps what’s most
impressive is how these percentages have grown in just one year. Just 24 percent of
publishers had Kindle apps and 14 percent had Nook apps in 2011. Adding to the
complexity of the mobile market, publishers are creating multiple apps for each device.

Publishers continue experimenting with technologies to decide which works

best for their needs.

Even as the market matures, media companies are still testing and revising their
strategies to best provide editorial and advertising content to their consumers. They are
just about split on using native apps designed for specific devices versus web apps that
function across devices. Seventy percent are publishing native apps, while 67 percent
are publishing web apps. “Test and test and test again,” one respondent offered as
advice. “And don’t be afraid to change developers.”

Some respondents noted that the quality of content might matter more than the
technology used to deliver the content. “Readers will pay for quality content with a good
user experience,” noted one publisher. Another explained, “It is still the quality of the
content that matters most, more than cool, high-tech enhancements.”

Mobile monetization is a major focus.

While the majority of AAM publishers have content on tablets and smartphones,
not all charge for content on these devices. Publishers were most likely to charge for
content on the iPad (56 percent), followed by the iPhone at 42 percent, Kindle at
38 percent and Nook at 31 percent. But content cannot be the only revenue
source. Respondents agreed a dual revenue stream from advertising and
subscriptions is necessary to make digital platforms profitable.

20
AAM’s 2012 Digital Publishing Survey
 Signs point to progress in implementing a cross-media business model. Half of
respondents say their websites are profitable today, while just 22 percent say their
smartphone and tablet apps are profitable. But over the next two years, 51 percent of
publishers expect these apps to become moneymakers.

After years of giving content away on websites, publishers are implementing

paywalls and new pricing models.

2012 seems to have been the year of building a paywall, especially for newspapers.
After years of allowing customers to access online content for free, many publishers are
following the trend started by companies such as The New York Times and Wall Street
Journal and charging for some or all of their website content. One respondent who has
had a paywall for several years commented on its success: “Locking down our websites
has kept our total circulation fairly stable over the past four years. Having free web content
will not contribute to a successful business model in the future.”

This is the first year we asked about paywalls, but results show that a number of
newspapers—48 percent—are following the trend and putting up a paywall to charge
for some or all of their content. Combined percentages for newspapers, magazines and
business publications show that 41 percent that currently use a paywall. Of those not
currently using a paywall, 44 percent plan to implement one in the next two years.

While some media companies are moving to digital only publications,

print is still part of the cross-media mix.

Digital is still a small—but increasingly significant—fraction of publishers’ total distribution.

In a separate analysis of AAM data, U.S. consumer magazines reported more than 5.4
million digital replica editions, which account for approximately 1.7 percent of the total
circulation in the first half of 2012. For U.S. newspapers, digital circulation accounts for
15.3 percent of newspapers’ total circulation mix in September 2012, up from 9.8 percent
in September 2011.

The growth in digital is obvious but print is still important to media companies. This survey
showed that nearly one fourth of publishers expect their total audience might be reading
in a digital-only format within the next three years. But this doesn’t mean that print
publications are going to disappear. Only 3 percent said they expected their publications
to be digital only within five years. “Readers enjoy the immediacy and portability of the
digital version, but still have the greatest affinity for the print,” said one respondent.
But another noted, “Everyone is going mobile so we have to change to maintain
subscribers.”

21
AAM’s 2012 Digital Publishing Survey
 RESPONDENT PROFILE
Total Sample.......................................................................................... 210

Those who currently distribute mobile content................................... 188

Type of Publication
Consumer Magazine............................................................................. 58
Newspaper......................................................................................... 122
Business Publication............................................................................. 24
Other...................................................................................................... 6

Gender
Male................................................................................................... 124
Female................................................................................................. 84

Average age (#)..................................................................................... 47.7

The in-tab sample consisted of 210 respondents. Interviews were completed online
between October 8 and 26, 2012.

Note that this is the fourth year that the AAM has fielded a digital/mobile survey
among its membership. For this 2012 edition, many of the questions are new or have
been modified to reflect the rapidly changing marketplace. Where relevant, in those
instances where questions are comparable, the earlier results are cited and compared
to the current survey results.

This survey was conducted by the Alliance for Audited Media in conjunction with
Roslow Research.

22
AAM’s 2012 Digital Publishing Survey
 ABOUT AAM

The Alliance for Audited Media (AAM) is a nonprofit organization that connects
North America’s leading media companies, advertisers and ad agencies.
Founded in 1914 as the Audit Bureau of Circulations, AAM is a preeminent
source of cross-media verification and information services, providing standards,
audit services and data critical to the advertising industry. The organization
independently verifies print and digital circulation, mobile apps, website analytics,
social media, technology platforms and audience information for leading
newspapers, magazines and digital media companies in the U.S. and Canada.
In 2012 AAM joined forces with Certified Audit of Circulations. To learn more
about the Alliance for Audited Media, visit the AAM website.

Headquarters Office
48 W. Seegers Road • Arlington Heights, IL 60005-3913 • P: 224.366.6939 • F: 224.366.6949

New York Office

122 East 42nd Street, Suite 807 • New York, NY 10168-0899 • P: 212.867.8992 • F: 212.867.8947

Canadian Office
151 Bloor Street West, Suite 850 • Toronto, ON M5S 1S4 • P: 416.962.5840 • F: 416.962.5844

www.auditedmedia.com
www.auditedmedia.ca

AAM’s 2012 Digital Publishing Survey

23
AAM’s 2012 Digital Publishing Survey Copyright © 2012 Alliance for Audited Media. All rights reserved.