Spotify Publishing

FORGET PAPER NEWSPAPERS AND MAGAZINES, BUT ALSO THEIR DIGITAL EDITIONS TO BE READ ON TABLETS AND SMARTPHONES: THE FUTURE OF PERIODICALS LIES IN PLATFORMS THAT DO FOR READING WHAT ITUNES AND SPOTIFY DID FOR LISTENING

by Simone Autera, Dept. of Management and Technology, Bocconi
Translated by Alex Foti


For several years now, the traditional business model behind newspaper and magazine publishing has been in deep crisis. In terms of advertising revenues, there was a sharp fall in paper ads, which was not offset by the increase of digital advertising revenues. In the United States, for example, paper-based advertising revenues declined from $45 billion in 2003 to $17.3 in 2013, while digital advertising increased from $1.2 to $3.4 billion (data from Newspapers Association of America).
 
Turnover from the sale of printed copies has since stabilized, thanks to the increase in cover and subscription prices that have offset the decrease in the number of paying readers, while most publishers have yet to find a way to make readers pay for the content they read online.
 
Seeking new solutions to the latter issue, many suggest looking at businees models in the music industry, iTunes and Spotify in the first place. The idea is to make the following proposition to the reader: either you pay only for what you read (pay-per-article or pay-as-you-go) or subscribe in an all-you-can-read mode to a wide catalog of content coming from various publishers. Some experiments in this direction are already occurring. In 2013, Blendle, a platform that offers articles from many local and international publishers, was born in Holland: users can choose what to read and pay from €0.09 to €1.99 depending on the type of content; publishers get 70% of the proceeds. The initiative was successful, and was replicated first in Germany and then in the United States, receiving €3 million in investment from the New York Times and Axel Springer in 2014.
 
Among the all-you-can-read multi-publisher models, there are Texture and Edicola Italiana. The latter was launched in January 2015 as an online platform for the consultation of more than 90 newspapers and magazines part of a consortium linking major Italian publishers (RCS MediaGroup, 24Ore Group, L'Espresso Publishing Group, La Stampa-Itedi, Caltagirone Editore, and Mondadori Group). Texture was born out of the agreement of six major North American publishers (Hearst, Condé Nast, Meredith, News Corp., Time Inc., and Canada's Rogers Media) and provides readers with a huge catalog of magazines that can be browsed at the cost of $7.92 a month.
 
While there is no public information available on the economic performance of these initiatives, some reflections can still be made on the effectiveness of these models. The Blendle/ iTunes model is an appealing solution for quality journalism (investigative reports, analysis, and in-depth interviews). It can be a good showcase for smaller publishers lacking a strong brand, which thus have a chance to see their production valorized. Conversely, the Spotify model works mainly for large publishers who can rely on a large catalog of content and therefore see a high percentage of subscription revenues returned to them - often revenue is split based on the views obtained from each publication. For readers, the value of the offer comes from: access through a single account, breadth of catalog, a native mobile platform content interface, and the ability to read each article as individual content.
 
As with the music industry, the (historical) phenomenon underlying these supply trends is the atomization of content. It is a very serious problem if we think that the main role of publishers is actually packaging content.  At the same time, however, it is positive that these initiatives are being undertakend by the publishers themselves, lessening the risk that third parties will profit from production of their own content, as is already the case with online advertising. Google, Facebook, Snapchat, Apple, and other usual suspects come to mind.