Pricing Content for E-Readers

Following John A. Byrne's Twitter feed, I back-tracked to read his blog posts on his C-Change Media site. The post on Apple's new iPad caught my eye--not for the iPad analysis but for the insight into BusinessWeek's pricing.

Not so long ago, Byrne was BW's executive editor, and his knowledge of the magazine's inner workings is second to none. That's why his discussion of pricing and profit for a print publication reaching out to its audience electronically is so insightful and significant.

In Byrne's iPad blog entry, he wrote:

But for every monthly subscription BusinessWeek sold through Amazon for the Kindle, we received 75 cents--about 15% of the $4.95 cost of a single copy on the newsstand or a tiny fraction of the $49.99 price BW is asking on its website today for a year's subscription. That's right. A monthly subscription to a weekly magazine on the Kindle returned less than a buck to our company--far below our costs to report, write, edit, art, and design the contents of the magazine. Amazon sells a BusinessWeek subscription via Kindle for all of $2.49 a month, a rate that is profitable to Amazon but pretty much a disaster for a traditional media publisher.

Byrne says that instead of reducing the costs of producing a publication, the electronic edition is more likely to hasten the death of traditional media. Sounds like pricing for e-readers will starve traditional media to death by returning only pennies for work that isn't cheap if it's done properly (meaning accurately, in depth, on time, and so forth).

In printed media, as on most TV networks, advertising revenues subsidize editorial content. It's a trade-off we consumers are accustomed to making. Of course, the best ads are targeted to the audience, which is why I pay some attention to the ads in special-interest magazines and in the Sunday newspaper I buy every week. Not every ad is relevant, of course, but I like the cornucopia of possibilities, available for me to browse and consider at my leisure.

And by the way, I'm a BusinessWeek print subscriber, and I hope Bloomberg invests heavily in the magazine to restore it to its glory days.