The news that Zinio might be up for sale is interesting, as is the $50-100 million price tag.
Without knowing the financials it’s hard to know whether this figure is realistic, or a bit of kite-flying by the sellers, but I’d be surprised if the business was worth this much. In November last year it raised $20 million of new funding, but there’s a lack of transparency on why they wanted this, what they’ve done with it and how much is left.
Zinio is a classic example of the advantages and the perils of being the first into a market; it is by far the biggest player with by far the biggest range of magazines, but its structure and business model is geared towards it having a near-monopoly and for it to have achieved exponential growth. It obviously wanted to do for magazines what Amazon had done for books, but it has never come close.
The Zinio offering is based on the digital facsimile edition, what has become disparagingly know as the ’page turner’. They were designed to be read on your desktop or laptop, and originally one had to download Zinio’s own reader in order to read the magazines.
I’ve seen page-turners being touted as the next big thing since the Telegraph planned to use the Olive system for a digital version of the daily paper (with wonderful, and wonderfully ludicrous, projections of the hundreds of thousands of sales that would be generated), but they combine the worst bits of print with the worst aspects of digital – fixed navigation, issue-based editions, layout designed for offline, multi-page formats, slow load times – and they have few of the advantages of either. (Seriously, why would you want to read a magazine on your computer when you could either a) visit the website or b) read the paper magazine.)
Zinio’s problem was that it thought the cost of entry for other providers into the market was too great and failed to appreciate how its product would be subverted by publishers upping their game on the web. The vision was that digital editions would overtake print, but although the market has grown, it is still nowhere near the size of the old ink on tree business.
Just as a platform – the tablet – on which these page-turners work better gains traction, the market fragments. Publishers can cheaply produce their own editions and sell them direct to consumers; Apple newsstand is acting as a direct competitor (and benefiting from better margins, lower costs and less work); switched-on customers are demanding proper apps rather than clunky facsimiles. Meanwhile, Zinio has had to keep investing to keep up with the developments in technology, operating systems and consumer expectations.
As tablets continue to grow, page-turners will also grow, but they still feel like an interim technology, one that will be replaced by something much better. Zinio might be a good investment for someone, but I’m keeping my $100 million in my wallet.