A relatively obscure circulation development that has mainly been a source of contention within tech publishing circles may be emerging as a hot issue for mainstream magazine publishers and their advertisers. "What is the role of digital subscriptions in circulation?" asked Pat Kenealy, CEO of tech publisher IDG, framing the issue for the industry overall. While such subscriptions, which are based on digital versions of a magazine that are downloaded onto a subscriber's computer, are still relatively small for most general interest publications, they have become an important component for some publishers, particularly tech titles like those published by IDG and its competitors. Kenealy, whose company publishes IT-professional-targeted titles like Computerworld and Macworld, has been telling anyone who will listen that rival publisher Ziff Davis is misleadingly pumping up its rate base for PC Magazine by giving away free digital subscriptions. Kenealy even claims that Ziff Davis is taking advantage of a cozy relationship with former employees to facilitate the process. IDG's gripe is that Ziff Davis is using sponsored or partner-paid subscriptions, a common, though often criticized practice in the print world, to provide consumers free subscriptions as part of larger purchases or in exchange for personal data. Kenealy has a problem with Ziff's giving away digital subscriptions in this manner because of they way they are tracked. Currently, auditors allow publishers leeway when they count digital subscriptions, as both the Audit Bureau of Circulations and BPA International require only the reporting of notification e-mails which are pushed to subscribers, while giving publishers discretion as to whether they report on actual downloads of these digital copies. To Kenealy, that is not good enough. He believes that it is very easy for publishers to hand out free digital subscriptions with any real indication that these copies are read. "If you pay $25 dollars, you are likely to download the copy," he said, while freebies may be completely ignored. Last fall, IDG's PC World announced it would be adhering to a higher standard, reporting only downloaded copies as paid circulation. Yet Kenealy fears that his competitor's failure to follow suite is hurting the industry and the growth of digital distribution. "I don't want the whole tech segment tainted," he said. "I don't want digital subscriptions to come under negative bias among advertisers." To date, digital subscriptions represent a small part of the magazine business. The practice, where subscribers receive full editions of print titles to be downloaded on a regular basis, has been adopted mostly by IT-focused titles and business-to-business publications. In most cases, these subscribers receive an e-mail notification that their titles are available and can choose when to retrieve the issue. Peter Black, senior vice president of marketing at BPA International, says that only 50 to 60 of the titles that his company audits use digital subs, out of roughly 2,600 monitored books. For most of these magazines, Black said, digital subscriptions represent a small percentage of total circulation. Auditors admit that the tracking of these subscribers is still evolving. "It is a debatable point," Black said. "At what point do you actually count subscriptions?" The BPA has formed a digital committee to further explore the topic, yet the tendency has been to hold off on being too strict. "The idea has been, 'Let's allow it to grow, not put to many demands on it,'" Black said. ABC spokesperson Heidi Chen said that digital circulation has been part of an "ongoing discussion. The question of receipt is something that is open to debate," she said. For Ziff Davis' PC Magazine, digital subscriptions represent a significant portion of circulation: over 170,000 subs were recorded in its last official audit. In contrast, IDG's PC World delivered just 2,359 digital subscriptions in the second half of 2003 out of a total delivery of over 988,000 issues. As for Kenealy's contention that Ziff Davis is using former employees to aid in its circulation growth, he is referring to digital subscription technology company Zinio. Recently departed Zinio CEO Mike Edelhart was a longtime Ziff Davis executive, while Zinio's current executive vice president Peter Longo was the former publisher of PC Magazine. Longo is very open about the company's relationship with Ziff Davis. He says that Zinio manages digital subscriptions for Ziff's PC Magazineand eWeek, but the company, "has a relationship with almost every major publisher." That includes several IDG titles. Meanwhile, Kenealy claims that Zinio has access to magazine download data for every title it does business with, but that the company rallied against stricter auditing rules. According to Longo, Zinio does solicit subscribers using various third party agents. One of those agents is Synapse Inc., which several weeks ago was censured by ABC. Following that censure, Ziff Davis publicly defended itself in a statement where it revealed that ABC may require the company to reclassify some subscriptions from "paid" to "analyzed non-paid direct request." The press release also revealed that, Synapse, through its Web site freebizmag.com, had offered free subscriptions to PC Magazine to visitors who agreed to complete a survey paid for by a third-party sponsor. No mention of digital subscriptions was made in the censure, and Longo claims that digital subscriptions are a "very small piece" of Zinio's work with Synapse. According to Longo, Zinio has undergone an extensive audit of its practices. Ziff Davis declined comment for this story.
After years of tepid sales, the picture appears to be getting brighter for high-definition television (HDTV). HDTV has emerged as a key feature for consumers in the selection of new televisions, finds a report released Tuesday by The Yankee Group. In 2003, for example, sales of HDTV sets rose 66 percent over 2002. The sales are being driven in part by greater awareness and availability of HDTV programming and services. According to the Yankee study, consumer awareness of HDTV has reached 78 percent and purchase intent of HDTV sets has reached 20 percent of U.S., TV households. Yankee forecasts that sales will accelerate due to: *Greater HDTV content availability *Greater fulfillment of the FCC's digital tuner/decoder mandate *Declining HDTV set prices (20 percent annually) *Increased retail availability *Co-marketing arrangements between consumer electronics manufacturers and cable operators The forecast, which measures both U.S. annual sales of HDTV monitors, as well as the installed base of U.S. households with a high-definition television, predicts that HDTV penetration will reach 59.3 million U.S. homes by the end of 2008. Other factors that will drive the expansion include: *Continued migration to HD content *Further consumer education initiatives explaining the differences between HD-ready and HD-compatible televisions *Advancements in digital-cable-ready televisions (an estimated 1 million will be sold in 2004) *Advancements in digital interfaces.
A surging Internet economy in 2004 and upbeat assessments of leading media prognosticators about business over the next few years have helped promote the notion that media and marketing priorities are fundamentally changing for buyers (as they most certainly did for consumers years ago): mass is out and micro is in. Could it be that the Internet, uniquely equipped to respond to this change, is coming of age as a media proposition? Have we finally reached what Malcolm Gladwell, in his landmark work about social epidemics, called "our tipping point?" I went back to Gladwell's book to get a sense of what can happen when you reach a tipping point to see what it all means--and more importantly, how we should prepare. Hush Puppies footwear, which Gladwell uses early on to stake his claim, is alarming in that regard: from 30,000 pairs of shoes sold in a year to 430,000 pairs of shoes sold in the next year. And four times that--1.7 million pairs--in the year after that. That works out to about a 1300% increase in the first year. Assuming $8.3 billion in Internet ad spending this year, if we sold like Hush Puppies, we should sell over $155 billion as an industry next year--and, with a fourfold increase in the following year, $460 billion in 2006. Yikes. We're probably better off with forecasts being made closer to home. Sanford C. Bernstein & Co. proposes that online spending will reach $22.5 billion in 2010. The nice thing is, compared with the forecast for this year from PricewaterhouseCoopers of $8.3 billion, if the industry grows 20% per year, it will comfortably surpass $22.5 billion by 2010. Happily, 20% is an Internet growth rate comfortably relied upon over the last year by legitimate forecasters. So, six years from now the Internet will have added $14 billion of sold inventories to the current $8.3 billion, and will be bigger than network television. Only cable will be bigger--challenging online for supremacy in a specialty-content age. But cable's days will be behind it, and the Internet's will be ahead. Thinking, then, about the effect of tipping points, I wonder where we will put $14.2 billion more dollars online over the next six years, and how we will be accountable for it. I imagine we'll account for some of the increase in price, which many companies in the Internet space are already reporting. Price, however, will be reasonably capped on sites (particularly brand sites) where demand puts pressure on competitive share and separation and where it creates excessive clutter for users, particularly paid subscribers. After all, $22.5 billion is a lot of advertising. This will force distribution over greater portions of the Internet with two positive effects: 1) the improved quality and experience of content across-the-board as independent publishers step up to meet demand, and 2) transparency as buyers insist on strict accountability, including audited placement and delivery of all advertising. Money talks, you see. In the process, money learns. The erudition of $22.5 billion is considerable compared to the street smarts that got us $8.3 billion today. Accordingly, post-tip may be post-pop, and post many other things that would normally hide under the bed or in the closet. People will be looking in those places and poking sticks in the corner. It is very hard for $22.5 billion to go unobserved, which would defeat our advertising purpose anyway. It must hide in plain sight, where it matters and where it adds value--behaving in context and wasting neither time or space. "In the end," Mr. Gladwell concluded, "Tipping Points are a reaffirmation of the potential for change and the power of intelligent action." Which means, perhaps, that the inevitable consequence of growth doesn't have to be compromise. We can get bigger and better. In the media business, we have suspected for years that the Internet is a positive force for change that matters to both users and advertisers. That's the point to finally tip over.
One of the reasons why we often don't know where the buck stops anymore is because we often don't know where the buck starts. Can you account for the spam in your e-mail in-box? Me neither. Where do all these pop-ups come from? Who knows? The problem with accountable media (now there's an oxymoron for you) is that it leaves a trail behind us whenever we use it, wherever we go. Video On Demand, DVRs, telephones, the Internet, and e-mail all create virtual paper trails. By now, however, the trails are far too extensive and convoluted to track for the average consumer, and far too voluminous to erase as well. Only the largest corporations and government agencies have the wherewithal to make sense of it all; our worst nightmare come true. Privacy in such a world is a cruel joke, just a matter of time before someone somewhere betrays our individual trust -- probably by accident despite all the presumed safeguards, kind of like a personal fail-safe scenario. You would think that the sheer uncertainty of when and where our most sensitive information might pop up unannounced with disastrous personal consequences would be enough to mitigate our behavior. But this is not so. A great existential dilemma confronts professional marketers nowadays, especially those who work in interactive media. Enthusiasm for the industry is almost always tempered by the demise in and constant threat to the user experience, and -- by proxy -- to the industry itself. Consumers and corporations alike are investing billions of dollars to turn off advertising. Industry professionals are constantly berated by family, friends, and a hostile press for spam, pop-ups, and a whole litany of infractions committed by the less-than-savory denizens of a bottomless digital deep. Legitimate marketers are vilified for one very good reason: We can't find the real offenders; we don't know where the buck starts. So the legitimate marketers pay for the sins of others by sheer virtue of their visibility, for a paid listing in the Yellow Pages. Ultimately, the price we pay is more emotional and spiritual than financial; we wind up perpetually looking back over our shoulders, just waiting for the other shoe to drop. Legitimate marketers -- paralyzed from the neck up -- are where the buck starts. Thus has emerged a kind of us-versus-them mentality. We just don't know who the hell "them" is most of the time, not unlike our battle against al Qaeda. The fact that we don't know where the buck starts (forget where it stops) translates into inaction, distrust, and paranoia. How can we redress a grievance if there's no contact name, address, or phone number? Who will hit me and run at the next intersection? What's the point of even trying? Inaction, however, can be deadly. "The greatest menace to freedom," said former chief justice Earl Warren, "is an inert people." Like all addictions, our addictions to technology and the media paralyze us, and point us in the wrong direction at all times. In an age when convenience is the primary objective, nuisance looms large, and the real threats go unnoticed. Spam is a sideshow to the real event, a mere distraction from the real problem: our addiction to the media. Nowhere is this more apparent than in our quadrennial obsession with another sideshow, campaign finance reform. Of course a billion dollars -- much of it public funding -- is a lot of money to spend to elect a bunch of rich white guys who sit around and do nothing but campaign for re-election. But the focus on who can donate that money and on what terms, is ill-conceived at best, and reflects the fact that the media -- our addiction -- now control the debate. Far more important than where the money comes from is where that money goes: not -- as one might have suspected a few generations ago -- into the pockets of crooked politicians, but into the much deeper pockets of legitimate media interests. We are always feeding the addiction beast, and the beast is always insatiable. Big media, of course, treats democracy with the exact same sensitivity and respect it reserves for beer, casinos, fast-food, and just about any other paying commercial interest. Not surprisingly, everything winds up in the exact same prime time commercial clutter, where the freedom to vote now must compete with the freedom to get high. It's a competition only the drug dealers -- the media franchises -- can win. They get paid either way. The rest of us lose big time. We lose because the more we invest in the media as the primary tool to exercise our democratic traditions, the less interest the media have in promoting the truth -- just like any other addiction -- and the more inertia we must overcome. But there's another catch: Just as democracy relies on an informed citizenry, passion for the truth assumes an innate ability to distinguish fact from fiction, an ability that always erodes as addiction escalates. And it always escalates. We lose because true freedom of choice cannot co-exist with pervasive addiction. Indeed, freedom of choice is the first casualty of all addiction. The first freedom we relinquish is the freedom to say 'no' to our addiction, the freedom to opt out. We lost when the media -- an industry comprised of perhaps the biggest addicts on the planet -- understandably failed to promote or cover the debate leading up to the 1996 Telecommunications Act, arguably one of the most important regulatory acts of modern times. The beast controls the debate. The beast tells us the user experience is paramount just as the beast tells us that campaign finance reform is paramount. The beast will have us overturn every rock and look under every bed for the offenders. The beast will have us turn the spotlight everywhere but inward. Methinks the digital marketing industry -- one of the beast's favorite playgrounds for now -- doth protest too much. The buck starts here for a reason, per the admonition of Edward Burke almost three centuries ago: "The only thing needed for evil to prosper is for good men to do nothing." Many thanks as always for your gracious time, dear reader. Best to you and yours... Please note: The Einstein's Corner discussion group at http://health.groups.yahoo.com/group/einsteinscorner/ is dedicated to exploring the adverse effects of our addictions to technology and media on the quality of our lives, both at work and at home. Please feel free to drop by and join the discussion.