Media Fortune Fame & Folly

Who wants ‘all you can read’?

As sales of iphones, ipads and macbooks slow, Apple is is rapidly moving into the content business. Its video streaming challenger to Netflix is coming soon. But first comes Apple News+, the revamped Apple News which incorporates Texture (“the Netflix of magazines”) which was acquired last year from publishers Condé Nast, Rogers Media, Meredith, and Hearst. Apple News+ was launched in the US last month, priced at a $9.99 per month, and is an ‘all-you-can-eat’ magazine and newspaper subscription service which includes content from The Wall Street Journal, Los Angeles Times, the Toronto Star and 300 magazines, either tied-in by the Texture sale or attracted by the prospect of immediate distribution to 1.4bn devices. But it means publishers giving up the direct connection to their readers. They don’t get data because Apple doesn’t track users, which means advertisers can’t target them. But many reckon it is still a powerful way of attracting new audiences to media brands in search of growth.

One person who’s unimpressed by Apple News+ is Alex Kroogman, founder and CEO of the 10-year-old, Canada-based PressReader Inc, who also describes his company as “the Netflix for news”. Everybody does it. The reading platform offers unlimited access to full versions of more than 7,000 newspapers and magazines throughout the world.

The company is keen to emphasise its commitment not just to magazines (in which there is a growing number of competitors in Europe and the US) but also to newspapers where, until Apple+, there have been fewer alternatives. PressReader grew out of Kroogman’s former NewspapersDirect which re-printed the world’s dailies for foreign travellers in hotels and on cruise ships: “I was on vacation in Malaysia. I was sitting in a pool and wondering about home. I was thinking about Vancouver. What were the election results? What was happening? It was 1998 and the internet wasn’t exactly readily available. That’s when I knew I wanted to connect people to the stories they care about, no matter where they are. It sounds simple now, but in 1998 it was unheard of.”

The steady success of PressReader is based on replicating, in digital format, the traditional experience of print. It claims some 12m monthly users either pay for single issues, or $29.95 for a monthly all-you-can-eat subscription, or are gifted access by sponsoring airlines, hotels, public libraries and corporations. Skift says: “For airlines, cruise companies, and hotels alike, choosing what content to share and how to make it available becomes another branding opportunity.” The model is simple: like magazine-centric services Magzster, Readly, Zinio, and also Apple+, PressReader pays publishers every time someone reads their content.

Its proprietary technology extracts text and images from the print editions so that readers (using apps available for iOS, Android, Amazon and others) can browse online content or download whole editions on tablets or smartphones and instantly translate in up to 18 languages. Readers can have the content read aloud, share it, and search across millions of articles — all the things that PDF editions, for example, won’t let them do. But all that PressReader needs from its publishers is the same PDF they send to their printers. The aggregator does the rest.

There is something else that publishers have come to like: “We pay them as though someone actually purchased that issue. The bonus is, publishers then get to count their PressReader consumption toward their audited circulation in the majority of countries around the world. For many of them, this is important. It helps them sell print advertising at better prices — because our digital editions include everything you see in print, ads and all.”

The company, which employs more than 500 people, principally in Canada but also in Ireland and the Philippines, had revenue of $28.4m and made a 10% pre-tax profit margin in 2017-18. It paid $5.5m (19.4%) in royalties and commissions to publishers and agents. Despite the quaint branding, PressReader claims more than 20% of the direct, paying subscribers to its app are under 35.

This month, it signed with Hearst, in the US, to give access to 23 leading magazines including Cosmopolitan, Elle, Esquire, Good Housekeeping, and Harper’s Bazaar. It already has deals with many other major publishers including Meredith, Singapore Press Holdings, Bauer, Mondadori, Burda, TI Media, Dennis, Washington Post, News Corp, The Guardian, Telegraph Media Group, and Condé Nast.

You might not have heard much about PressReader which Kroogman puts down to not having raised (or spent) millions for marketing. But, before you can ask the obvious question about the impact of Apple doing just that, he says: “There are a few different news aggregating products on the market, but PressReader is different. We’re the closest thing to a “Netflix for news”, being the only platform in the world that brings together both newspapers and magazines on a global level.” Until Apple News+ really gets going. Perhaps.

The PressReader tech is impressive and the lack of large-scale marketing may be only part of the reason it is not better known. The company is guarded about its revenues (even though these can be found in public filings) and about its shareholders and financial backing. It is anyone’s guess whether the vagueness has anything to do with the fact that at least one of the PressReader investor-directors is a citizen of Russia, the birthplace also of Alex Kroogman.

It remains to be seen whether Apple+ will eventually upset the cosy world of PressReader which has been profitable for five years. But the key strategic issues may be: whether such services will eat traditional media rather than feeding it; and whether the existing services themselves will be vulnerable to more focused competition.

Some publishers are convinced that PressReader et al can help to generate ‘new’ revenues from ‘new’ readers, while others are content to take the profit regardless. The Canadian company’s emphasis on business and travel audiences has been reassuring for media partners but Apple worries them more. If Apple+ takes off, will it erode media branding by, for example, mixing up the content (even more than currently)? And might the tech giant eventually produce some own-brand content, effectively to compete with traditional providers? The questions highlight the all too familiar challenge of a platform that can become more powerful than the media it initially befriends.

Perhaps more significant, though, is the actual potential of all-you-can-eat reading. The market is still relatively small, evidenced by PressReader’s painstakingly built $28m of worldwide revenue, and a growth rate last year of just 7%. Even if Apple does much better, how many readers will really be loyal to a service whose pricing and presentation must reflect the inclusion of thousands of publications they will never look at? The comparisons with Netflix do not stand up. One is a global TV channel packed with original content calculated to appeal to its target audience (with cookies to guide it); the others are large collections of disparate publications together trying to appeal to, well, almost anyone.

So, while PressReader provides unrivalled reading choice, online users may never want to access many more magazine and news brands than they would have contemplated buying as print from news-stands. That realisation might just prompt some publishers to think creatively about how to manage – and monetise – their own digital audiences. Specialist publishers, whose magazine-centric brands are already among the most internationally-marketable media, may consider targeting enthusiasts with focused groups of the world’s magazines in sectors like sports, hobbies, motoring, science, tech, food, and crafts. The same could go for single-sector B2B media and, perhaps, even for the world’s leading daily newspapers. Publishers, which have long been prepared to share retail distribution and marketing with their direct competitors, should consider doing the same in the digital space. Perhaps there’s even scope for such specialist media services to work with PressReader as a tech partner.

Ten years ago this week, Rupert Murdoch said: “The current days of the internet will soon be over.” He was referring to the disastrous knee-jerk strategies of so many daily newspapers (including his own) which made their content freely available on the emerging worldwide web. In their panic not to be left behind by booming digital audiences, daily papers had wrecked the business model and the news business would never be the same again. Traditional media might just be approaching another of those pivotal moments. Think carefully.