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How the iPad changes the future of magazines and single-copy sales

If you want to understand the effect that Apple’s iPad will have on the magazine industry, you need look no further than the face of a publisher or editor in chief when you put one in their hands. It is beautiful, it is easy to use, and it can represent advertisers and editorial in breathtaking multimedia clarity.

Add to this the quantitative reality of the iPad – Apple expects 5 million will ship by December and application and ebook downloads in the high billions over the next two years, per ABI Research – and faces turn a familiar ghastly white remnant of the Internet circa 1997.

In short, it is here, it is real, and it is scary as all hell. The first question they ask of me, usually after a long pause to catch their breath, is “Soooo … what do we do now?”

I have had a few weeks to use the iPad – I am writing this article on one now – and have spent time with iPad owners ranging from ages 12 to 60 to better understand how they discover and consume media from this new device.

As is often the case, you get a very different view of technology talking to people who already have invited it into their lives, rather than those who critique it from a distance.

Early conclusions indicate a raised expectation of media consumption and access, and a willingness to pay a premium for it. Herein lies the challenge and opportunity for the magazine industry, in particular.

Ebook or new iPad experience?
The first fork in the road for most magazine publishers is to decide whether their magazine is best represented as an ebook – i.e., a PDF-like replication of the magazine where you turn the pages – or a redefined iPad experience such as an interactive travel guide brought to you by a travel magazine.

Since Apple does not provide an iNewsstand to complement iBook, publishers will need to develop an application either way, but the user experience paradigm has important implications.

An ebook layout is a simpler step, since you have the layout from the print version, and also has the added advantage that a purchased magazine counts as increased circulation by the Audit Bureau of Circulation (ABC) as long as it contains all the same content and advertisers.

This is an easier transition for most publishers, and one that can potentially boost the rate card used to establish the prices for print advertising.

But watch a consumer buy an ebook version of your magazine, or read the tens of thousands of 1-star reviews of any magazine iPad application out there, and you will see the confusion mount.

Why is this layout so difficult to read? Where are the videos, hyperlinks and maps that I have come to expect with the iPad experience? Why pay $4.99 for a travel magazine, when I can buy an application that plans my whole vacation for me for 99 cents?

Although a magazine may look beautiful on the rack next to other magazines, when compared to the vast array of media available on the iPad, it stands out based on its limitations.

Developing a new iPad experience for a magazine brand takes more design thought upfront, and often combines multiple assets and media in ways that are quite different than how this was done historically.

But the results are magical, both to consumers and advertisers, and present far-reaching opportunities to extend the brand.

We have only begun to see magazines experiment with this, but some publishers have already shown how far one can go.

One of my favorite examples of this is an iPad application called “The Elements: A Visual Exploration” developed by Touch Press, which makes a subject as boring as the Periodic Table of Elements into a fascinating multimedia experience of 3D rotating objects and hyperlinked history.

Even I spent 20 minutes learning about Manganese, and I am really not a science guy at all.

One thing for sure is I would never even contemplate buying a $50 textbook for the same information if I could get this for $9.99. It has, quite instantly, redefined my expectations of a textbook.

After watching iPad users for hours, my conclusion is that it is best for magazines to do both eBook and new application experiences, though probably not for the reasons one would guess.

The ebook version is important for distribution purposes more so than the user experience.

I have witnessed many cases where a person on a flight wishes she had a magazine – often already being a print subscriber – and thanks to the iPad and a wireless connection, can now get one instantly.

This is cannibalization of off-rack sales, not subscriptions so much, and it is important to be where the consumers are to take advantage of this before they spend their iTunes credits elsewhere.

Given this purchasing frame of mind, consumers’ expectations are low in terms of the reading experience. But it is also important not to have high expectations about the number of sales you will have here, at least until Kindle and iBook add the ability to sell magazines.

A new iPad application experience, however, is where the consumer can be engaged on a whole new level and the magazine brand can flourish.

The context of the consumer is better understood, such as actively looking for vacation packages, picking a bridal gown or shopping in a new city, and the CPM rates for ads will skyrocket accordingly.

The last few ad buys we have seen for iPad and mobile Apps are in excess of $45 CPMs, well beyond the ~$7 CPM rate cards (per eMarketer) anchored to the print versions.

It is also clear that a new iPad or mobile experience will have far greater reach than an ebook version – we have seen many magazines get hundreds of thousands of users in the first few months while retaining 28 percent click-through rates on their $45 CPM ads. Less than 20 percent of these consumers are existing print subscribers, so the brand is extending to new audiences quickly.

If you want your magazine brand to reap the advantages of this new media, it needs to be optimized for it.

The iPad may very well be the most transformational media technology ever created – so says the man who can’t seem to put his down for more than 20 minutes.

Some of the biggest brands in the magazine industry are already heading down the dual path, such as Men’s Health, Cosmopolitan and GQ. They are the ones who will steal the lion’s share of this quickly growing user base, taking market share from magazines on a one-path/no-path strategy such as Men’s Fitness, InStyle and Details.

Throw in some new media companies that will reinvent the experience from scratch, and it is a whole new ballgame. It may be scary, but it sure is exciting.

Scott Dunlap is CEO of NearbyNow, Mountain View, CA. Reach him at [email protected].