Thursday, May 19, 2005

A Conversation with Zinio: Hip SOM Technology with a Solid Business Model

In San Francisco, the SOM (South of Market) area was the home to the dot.com boom and bust. Scattered among the empty buildings and storefronts next to SF Giants baseball park, there are thriving survivors who understand that business economics are more important than the latest, "cool" technology. The "page-flipping" approach to electronic content is not unique to Zinio, and actually began with the earliest ebooks. Each generation improves with the technology and understanding of user needs in the digital environment, as well as changes in preferred reading devices, i.e. the Blackberry. Mimicking the "look and feel" of the experience of the familiar print product may be key to reaching beyond the early adopter market, but does require conversion from somewhat standard publisher formats to a proprietary format and Reader.

In a recent chat with David Zinman, SVP, Marketing & Product Management and Michele Schott, Director of Marketing at Zinio, I found a refreshing focus on the total value chain from the reader, the publisher and most importantly for long term business success, the advertiser. Print publishing has its limitations, with time required to develop the content, sell advertising, then physically print and distribute issues to the readers, as well as significant built in costs. The challenge is to reduce the production costs using digital processes, while still retaining the revenue generating processes that have been financially successful over the years, but currently under pressure with new web technology and competitors. While the public face of the company is the storefront of the over 250 magazines from over 70 publishers, which still needs to grow to critical mass, the backend is the integrated circulation services with an impressive understanding of the nuts and bolts of publishing, including fulfillment integration with all the major U.S. fulfillment houses. Digital subscribers, as well as print subscribers, require customer service, frequently the overlooked stepchild in new product development. Subscription agents are a significant source of subscriptions, so they need to be able to sell both digital and print versions.

After attending conferences focused on web technologies, I've come to appreciate the difficulties of measuring marketing effectiveness. Zinio provides auditable results that can be compared with print distribution, a major selling point for publisher rate cards for advertisers. Digital delivery of advertising messages is but one of many channels, so comparability is essential to adoption, never mind the technical superiority. My discussions indicated that the technical platform is well in place to provide support for traditional approaches as well as innovative tests of new capabilities.

Given all these features are in place, the major challenge is simply rate of adoption, as publishers have to incorporate electronic publishing into their work flow. Even getting a PDF file exactly as it is sent to the physical printer, let alone optimized for digital delivery and advertising can be challenging. XML is a twinkle in the future, as conversion from Quark and other publishing formats is the first step. Technology has always been low priority for publishers, but now their future depends on effectively using it to reach new subscribers as well as retain their current subscribers and advertisers. And the technology can be effective, as demonstrated by the new Zinio Express browser viewer optimized to provide sample issues, a very effective traditional approach adapted to the web environment.

It's really the readers who will drive this switch from print to digital, as I find myself increasingly canceling my paper subscriptions and dumping unread issues. Instead of stockpiling paper on my floor and desk, I'm relying more on headlines and at the moment searching. If all my subscriptions were available on the same technical platform, I'd switch to digital editions. As it is, I'm increasingly seeking out alternatives that are more timely and offer searching capability across sources. Print publishers, take note!
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