Publishers need to appreciate that they are in the audience building business, writes Miles Galliford, co-founder, SubHub.
One by one, content industries have been dragged, sometimes kicking and screaming, into the digital age.
It started with the music industry a decade ago when people started copying and sharing music online.
The record labels immediately recognised the threat and turned to their lawyers for the solution.
Steve Jobs on the other hand recognised the opportunity and in the chaos and confusion that ensued, staged one of the world’s greatest reverse takeovers.
Using a pocketable music player and some syncing software, Apple orchestrated a Velvet Revolution taking control of music retailing without a shot being fired.
While most music industry executives don’t have a good word to say about Apple, it provided a parachute to an industry in freefall.
The same ‘outsider thrown into a threatened industry’ situation happened in both the film and book publishing industries too.
Netflix brought the digital age to the film industry, first with its unlimited DVD subscription and latterly with its streaming service that takes films online to a TV utilising existing attached devices such as a PC, X-box or Wii.
Like Apple, Netflix gained such a strong position in film distribution, the film industry had no choice but to work with them on their terms.
Likewise Amazon is revolutionising book publishing primarily through the Kindle e-reader. On the surface this appears to just be a new format for the same books, but as with the iPod it will fundamentally change book publishing forever.
It changes the business model, pricing, distribution, licensing and marketing. It eliminates most of the barriers to entry which for so long, created a moat around the publishers castles.
But what about magazine publishing? Why has no white knight (or Trojan Horse) emerged to help revolutionise this sector?
The industry is worth £4.1 billion in the UK alone according to the Periodical Publishers Association (PPA), but their existing business model is on life support as media consumption habits change.
Magazine publishers have reached a crossroads without a map, and the decisions they make now will determine whether they grow and prosper or end up pushing up trees rather than printing on them.
So far most efforts have focused on trying to move their existing formats and business models onto digital platforms; websites funded by advertising and subscription, digital versions of magazines sold as iPad apps and hybrids of print and digital. Some trials have worked but most have not.
The latest ABC figures highlight a decline in digital magazine subscriptions and many experts believe they are failing to gain traction.
Research from magazine industry body FIPP also shows that 7 out of 10 people find them annoying and 48% said that they took too long to download.
And while nearly three quarters of respondents claimed that video content enhanced digital magazine reading, 46% said that they were "just a gimmick".
In the summer five of the world’s biggest publishers - Conde Nast, Hearst, Meredith, News Corp and Times Inc - launched Next Issue.
A $9.99 or $14.99 subscription to Next Issue gets you not just one magazine subscription but unlimited access to the distributor’s entire catalogue, including popular magazines such Wired, Esquire, Fortune, Real Simple, People and much more.
Will it work? The jury is out. Failure will almost certainly sign the death warrant of the digital magazine format and this will force publishers to think far more radically about how they can reinvent their whole business… and this may not be a bad thing.
People buy magazines to fulfil a need or solve a problem. For some magazines it is obvious; for example Which? is bought to help householders make better buying decisions, thereby saving them money, or at least helping them spend their money wisely.
For most magazines the problem being solved or need being fulfilled is not so clear.
The American magazine publisher Christianity Today undertook a survey of its readers to understand exactly what content they valued and why.
This revealed a large number of their readers loved a one-page section listing sermon ideas and illustrations.
It greatly helped them with the tedious and time-consuming task of preparing their weekly address.
This had a real and measurable value which they were happy to pay for. So the publisher created a dedicated website, PreachingToday.com, and put the sermon content behind a paywall. Today the site has revenues of more than $1 million.
Publishers have to identify the job their readers buy their magazine to fulfil. Only then can they implement a business model based on the real perceived value.
If readers buy a gardening magazine to help them choose plants for their garden for example, the publisher could start selling those plants, or work on a revenue share basis with a partner who sells them.
Car magazine readers who want to find the best car deals could provide the publisher with an opportunity to offer a group buying club to help drive down the cost of cars.
And teenagers reading a music magazine to stay current with the latest bands and songs may be willing to buy gig tickets and music downloads.
On the web, content builds audiences and audiences can be monetised, but publishers must understand where the value lies rather than trying to force their business model onto their readers.
Content is the life blood surging through the veins of the world wide web, but because of its abundance it has little perceived value. However, content builds audiences, and audiences have value.
Publishers just need to appreciate they are in the audience building business and work out how to turn a happy trusting audience into new revenue streams.
Miles Galliford, co-founder, SubHub