The media industry is undergoing profound changes. Publishing companies' established business models are gradually losing their validity. Gratis offerings on the Internet and new players from outside the industry such as Apple, Google or Amazon are putting more and more pressure on the established content providers. The reason for this is: Internet service providers are offering hardware and Internet presence that enable their customers to directly access digital products. Through targeted pooling of content and user-friendly, digital editing, they are poaching customers from the publishing companies.
According to forecasts by the Association of German Magazine Publishers (VDZ), digital offerings will have replaced around 6% of the magazine and newspaper market by 2013. Market research company GfK Group talks of a 4-8% market share for electronic publications by 2012, with a market volume EUR 374-740 million. And these are conservative estimates.
The trend is underpinned by the growing acceptance - and thus dissemination - of digital mobile reading devices such as tablet PCs, smart phones and e-readers. According to a survey by the Boston Consulting Group, around half of those interviewed in Germany can imagine acquiring a mobile reading device - whether an e-reader or tablet PC - within the next three years. BITKOM, the Federal Association for IT, Telecommunications and New Media, predicted there would be more than 20 million mobile Internet terminals online in Germany by as early as 2010.
As the Internet pervades ever more areas of our lives, the demand for multimedia content grows
For the time being, publishers are powerless to resist this paradigm shift. They have little in the way of sustainable business models, open standards, future-proof investments or strategies for removing the restrictions imposed by hardware and software manufacturers that will help them to pursue their renegade readers and customers in their rush to the Internet. The share of digital products in German publishers' revenue, for instance, is still below 5%, as a study entitled "Paths to the Future" by the German Association of the Business Media has revealed. The goal of the publishing houses is to raise this share to 40% by 2013, an ambitious eightfold increase. The spread of mobile terminals and the interactive methods of content presentation they enable are giving rise to new business areas that publishers could certainly tap into with their well-known brands.
E-books are the first step along this path. These products are already conveniently accessible on corresponding platforms. Consulting firm PriceWaterhouseCoopers puts potential revenue of e-books in the German fiction market at around EUR 350 million by 2015, which equates to a market share of 6.3% if the annual growth rate of 77.1% continues unabated until then.
The challenge of the newspaper and magazine market
The picture on the newspaper and magazine market is quite a different one. Success stories for paid content remain thin on the ground everywhere, not just in Germany. Even in the US, the lead market in this context, models involving payment for online content have thus far failed to take root. Some of the industry's leading lights are currently attempting a fresh start on the web, but how this move will affect their core readership remains uncertain. The culture of free content and sharing engendered by the interactive web is so strong as to thwart all endeavors to earn money online with quality journalism - especially when, just a click away, some blog or even a competing publisher is offering ostensibly the same information for free.
What is more, despite big investments in the necessary infrastructure, publishers are reaching only a fraction of their potential customers. As the positive example of e-books amply demonstrates, the customers are used to finding exactly what they want at a central location, conveniently sorted by topic, title or interest. This is precisely the kind of service that individual publishers cannot provide. A logical and economically viable approach would be for several publishers to join forces in order to set up such a platform. Thus far, however, competition between publishers has impeded this, as has the high level of technical complexity involved.
A further problem is the absence of standards: Content has to be made available in a uniform manner for a continually growing number of disparate terminals. Quite unlike the situation with e-books, technical diversity is a trademark of the vibrant media landscape. Not only are the Windows Netbook, the e-reader and the iPad worlds apart in terms of technology, but dozens of different variants would have to be made available for the diverse smart phone standards alone - and every month sees the birth of new ones. Just how efficient would it be in such an environment to be able to automatically adapt content from a single source for use in all channels? This is the dream of so-called single-source publishing. It demands both big investments and a high level of technology development skills, and presents in particular the newspaper market and small publishers with a real challenge.
Deutsche Telekom: helping publishers to develop innovative customer services
Deutsche Telekom has taken up the challenge posed by the changing media landscape. In order to support - and participate in - the growth of the media society, the company is focusing on four growth areas, which it terms Energy, Automobile, Healthcare and Media. With its intelligent networks and innovative solutions for the Internet, Deutsche Telekom aims to exploit digitalization as an opportunity for sustainable growth. In the Media arena, the company's PagePlace platform focuses both on readers (as consumers) and publishing companies (as partners of Deutsche Telekom).
The PagePlace platform, which Deutsche Telekom will be launching at CeBIT 2011, is the crucial step forward in what is known as content distribution/enabling. PagePlace is a combination of a multi-publisher online kiosk and a vendor-independent display, which functions either via a browser or apps. PagePlace is not intended to compete with or replace printed newspapers, books and magazines. Rather, it is a new, additional reading option for today's mobile society. Two of the key factors driving this mobile society are mentioned in the Boston Consulting Group study cited above: a broad range of publications and the possibility of selecting content from a variety of providers would prompt the majority of those surveyed to make greater use of a tablet PC. PagePlace satisfies both of these criteria, and thus far constitutes a unique offering on the German market.
PagePlace: online kiosk and personal online library
PagePlace consists of two essential components: on the one hand, the online kiosk, where readers will find a wide array of digital content from different publishing companies. In close cooperation with publishers, PagePlace offers premium content of all types – whether books, magazines or newspapers. This multi-publisher platform provides users with content independently of the kind of terminal they use.
On the other hand, the PagePlace app, which enables customers to access their personal online library and ensures a user-friendly reading experience on various different devices. A simple system of rights management makes it possible to access the content on up to five different terminals per user. Buying and paying for content is simple and convenient, and the users do not need to waste time going to a kiosk or bookstore. Safe and easy payment modes such as credit card, Paypal, ClickandBuy or the monthly telephone bill enable content to be acquired in a direct, uncomplicated manner. All the content purchased is synchronized across the different devices, which means that helpful functions such as bookmarks or the last site viewed can always be found where you left them, regardless of the device used. Likewise, comments and highlighting in the texts are automatically updated on all devices with the next start-up.
PagePlace: a place for everything
All the content purchased is located in a virtual private bookshelf. Users can utilize the PagePlace app to easily access the purchased content either online or offline, whether at home or on the go. In this way, Deutsche Telekom is meeting one of the consumers' key needs: according to the PriceWaterhouseCoopers study mentioned above, 62% of those surveyed said that mobility was the decisive argument for the use of e-books and e-readers.
Extensions that include the ability to add comments and pass on content as well as an array of social media functions are in planning and will be implemented soon. Customer-friendly processes and intuitive user guidance both serve to enhance the PagePlace experience for users. All the components of the service have the same system of user guidance, no matter whether the customer is using the service on the Internet or via an app.
Deutsche Telekom's long-term goal with PagePlace is to offer as broad a portfolio of publications as possible. For end users, this means being able to read what they want, when they want and where they want, and never again having to search in vain for out-of-print publications. Thus, Deutsche Telekom is turning reading into a whole new experience.
The changing media landscape: opportunities for new business models
With the development of this platform, Deutsche Telekom is supporting the media industry in its transformation process and helping to create new ways of adding value. Together with publishers, Deutsche Telekom wants to make PagePlace an attractive cooperative model for the sale and monetization of premium content. It has thus created a new digital business model for publishers that is independent of their size, reach, customer base or technical infrastructure. In turn, the publishers have in PagePlace a state-of-the-art platform that is to be expanded internationally in future. They stand to profit from Deutsche Telekom's broad reach and extensive customer base, and from the technical expertise and marketing power of a global player in the ITC industry. And, unlike with other providers, the publishers retain full control over the pricing and marketing of their content. That is precisely why Deutsche Telekom's collaboration with publishers provides for a variety of different business models that take account of the market players' specific requirements.