It's the question that haunts mainstream media: how are we going to make money from the net? It was asked again last week at a conference attended by 350 publishing executives from more than 25 countries, and the reply was far from positive. Asked about the level of their online revenue, only a few of the magazine and newspaper companies indicated, on a show of hands, that they were making more than 3% of their sales online.
Only one company, Meredith Corporation - the US-based publisher of 26 magazines such as Ladies' Home Journal, Better Homes and Gardens and Family Circle - said it was making a profit. Even then, according to its chairman, William Kerr, that profit is coming mainly from web advertising and subscription referrals, not from the digital sale of its chief product, text.
The overwhelming consensus among the executives gathered in Hanover, Germany at the Magazine 2.0 conference was that, despite finding no profit in going digital just yet, they have to go on trying. Some publishers offered strategies for transforming their online businesses to become profit generators. For example, Philippe Hautrive, a senior executive with the French magazine publisher, Hachette, reported that his company started selling online subscriptions to 200 of its magazines last August.
About 20,000 consumers had taken up the £6.60-a-month offer to access digital facsimiles of four magazines, enhanced with embedded audio and video. He said Hachette will expand its online sales to 500 titles in France and, later this year, it will include its British titles too. They include Elle, Elle Decoration, Sugar, Real Homes, and Red.
In spite of the problems, most of the large publishers at the conference said they had no choice but to expand their online operations because their largest advertisers are starting to abandon them for online forums, websites and even web games. What these old media reactions indicate is that the changes being wrought in the communications industry are more profound than publishers can grasp.
They are still trying to impose newsprint strategies on to the web. They won't work, I'm afraid.
