Monday, December 13, 2010
eReaders – If we build it will readers and advertisers come?
Publishers have an opportunity to reach a new generation of gadget friendly readers. To get there they are going to have reinvent themselves in order to develop a business model that competes with FREE content online.

 A recent KMPG’s Consumers and Convergence study says consumers are willing to pay for specialized content with daily news being considered a FREE commodity. 57% will not pay for frequently used content with games, videos and music considered premium fare.  Magazine publishers perhaps have a competitive advantage that can be leveraged for the online world with their specialized content. But if we provide content for these eReaders will readers pay for it and advertisers come?

Industry estimates $150 as the tipping point for mass adoption of eReaders and that number is not too far off the market price. The recent launch of a $199, 7 inch color, touch screen, wifi eReader can be now found at Costco, Best Buy and Tiger Direct. The Cruz eReader manufactured by Velocity Micro, is based on the Android operating system (I will be a getting a review device in the new year of the second generation device).

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Cruz eReader by Velocity Micro. $199 or less, 7-inch colour touch screen with USB port, wifi, Android operating system


To get the advertisers point view on eReaders and their potential impact on the media landscape, I asked Toronto-based Agency 59 president and CEO Al Scornaienchi to answer this question.

Gadget blog: What impact do you think eReaders will have on the media landscape? How would magazines fare in this market segment?


“It’s always interesting to see how new innovations change the status quo. We’ve all heard how the advent of television was expected to decimate the radio industry. It didn’t happen. How VCR’s were going to make movie cinemas obsolete. Nope. Instead, what often happens is there’s room for the ‘new’ media (or new method of consuming media), but there also remains room for the traditional (or original) method. There is no doubt that eReaders will increase in prevalence and acceptance. But there will still be a role for good old fashioned printed magazines. I believe – smart and progressive magazines will embrace eReaders, will work collaboratively with advertisers, and make a great success of it. Those same magazines might also continue with their printed editions – for those subscribers who prefer that format.

Mind you – anytime the ground shifts like this, there are individual winners and losers. Those magazines at the forefront will capitalize and make good strides during the transition. The complacent ones will lag and falter, and probably die off. In other words, not every magazine will be affected to the same degree. If you’re a publisher, where do you sit?”

To carry this discussion on further, advertisers are not looking for technology hype when they make their media selection, it is still all about reach, frequency and target market fit that will generate awareness and desire for products. Until the new gadgets reach critical mass from a reach perspective publishers should be cautious. The publishers that take risks will always succeed, while the ones that sit back and cling to old business models will perish.

Now, lets see who are buying eReaders. The Ipsos Mendelsohn Affluent survey reveals a glimpse on who is using eReaders. In the USA based study it was found the early adopters of new gadgets were primarily amongst the luxury segment. Households earning more than $100,000 annually are helping drive adoption of devices such as smart phones and iPads, they’re also reducing their consumption of traditional print magazines and newspapers.

The study suggests those media consumption trends are being led primarily by the growing number of emerging younger affluents, adding, “The younger affluent are different–they’re also much more into digital.”

Despite the rise of digital devices among the affluent, the survey also found television remains the leading platform for this group to receive advertising, followed by magazines, direct mail, newspapers, and websites. Consumption of print newspapers and magazines declined by 16 percent from 2009 to 2010, while Internet usage rose 12 percent, from 22.6 hours weekly to 25.3 hours over the same period.

It also found that the affluent are also playing a major role in driving the mobile application market, with about 38 percent reporting they have downloaded and installed at least one app to their smart phone or wireless device.

In a Nielsonwire 2010 survey of 5,000 eReader owners, supports these findings. It found that iPad owners skew younger and male with 65% under the age of 35. Kindle owners tend to be wealthier with 44% making more than $80,000 year. One interesting fact, 46% of iPad owners say they enjoy interactive ads.

Wow, this sounds great as I have a luxury demographic that I can deliver my content to that is receptive to advertising. But, I will need to know how many will come if I built it and then I can pitch it to the advertiser. Publishers will have to guarantee an audience figure in order to attract advertisers or use eReaders as competitive advantage to get the advertiser’s attention. And, that is the risk all publishers must take to innovate and stay relevant in today’s marketplace.


- Martin Seto
About Me
Martin Seto

 
Martin Seto is the principal of Reflex Media, a media consultancy practice offering media owners online publishing, ad sales and acquisition/selling brokerage services. His media services also include working with ad agencies as a media buyer/planner for tv, radio, print, outdoor and online. He has been in the advertising and media industry for 25+ years and he has been an instructor/speaker with Centennial College and at magazine conferences across Canada. He also moonlights as a pro goalie as a "rent a goalie" at mypuck.com.
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