February 27, 2013

WAYS TO CHANGE Insight on How to Succeed in the Digital Future of Magazine Publishing

Jack Gri!n CEO and Co-founder, Empirical Media

There is no doubt that success in media from now on will be digital

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The Only Constant is Change

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The Non-linear Networked World

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A Connected Mobile World… 7 Billion People as of November 2011 (and growing!)

77% connected by mobile devices

5.3 billion at the end of 2010; U.N. Telecommunications Agency, http://www.itu.int

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…and More to Come 8 Billion People in 2020

90% connected by mobile devices

5.3 billion at the end of 2010; U.N. Telecommunications Agency, http://www.itu.int

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The Opt-In, Always Connected Consumer

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Digital’s Growth to Dominance: 67% of total E&M spending growth from 2011 to 2016 will be generated by digital

Source: PwC 2012; Note: Digital spending consists of broadband and mobile Internet access; online and mobile Internet advertising; mobile TV subscriptions; digital music; electronic home video; online and wireless video games; digital consumer magazines circulation spending; digital newspaper circulation spending; digital trade magazine circulation spending; electronic consumer, educational, and professional books; and satellite radio subscriptions.

28.0% 30.3%

32.6% 34.2%

36.1% 37.5%

2011 2012 2013 2014 2015 2016

DIGITAL SHARE OF GLOBAL E&M SPENDING

TOTAL  GLOBAL  E&M  SPENDING  =  $1.6  TRILLION  in  2011  /  $2.1  TRILLION  in  2016  

There is no doubt that China is ready to lead the future of digital media

384

513

245

88

701

269

91

0  

200  

400  

600  

800  

China United States Japan

2009

2011

2015e

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China - World’s Largest Market for Internet Use China will have nearly twice the number of Internet users as the U.S. and Japan

Source: BCG

CHINA INTERNET WATCH

240

87

2011 Penetration

2015e Penetration

38%

51%

80% 70%

83% 72%

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Top Five Tablet Markets by Country in 2012

Indonesia 3.88%

Thailand 4.04%

United Kingdom 5.27%

China 7.82%

United States 25.70%

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Transition From Print is Already Underway

CHINESE NEWSPAPER CIRCULATION co

pies

sol

d

7,000,000

6,250,000

5,500,000

4,750,000

4,000,000

2008 2009 2010 2011

The important question is how do we transform our businesses?

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Have We Been Here Before?

“A new medium is never an addition to an old one, nor

does it leave the old one in peace. It never ceases to oppress the older media until it !nds new shapes and positions for them.”

– Marshall McLuhan, 1964

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Digital Media Absorb and Challenge Every Traditional Model

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Especially for Print Publishing, the Tablet is the Major Disruptor

140 200

270 320 375

140

230

320

389

2012 2013 2014 2015 2016

Mill

ions

of

Uni

ts

ESTIMATED GLOBAL TABLET SALES & RETAINED BASE 2012-2016

New Unit Sales Retained Units

760

340

170

500

640

Source: Forrester Research, June 2012

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The Comfortable, Linear World of Print

ad sales

newsstand

subscriptions

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Digital Transformation

1961 2011

Advertising

-17%

Circulation

-11%

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Print Media’s Decisive Years

Source: PriceWaterhouse Coopers, 2012

Advertising

-24%

Newspapers Change 2007-2012 Global Spending

Magazines Change 2007-2012 Global Spending

+2%

Circulation

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Making The New York Times Digital: Web App

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Advertising Becomes a Lesser Factor

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Result: NY Times’ Digital Circulation Now Exceeds Daily Print Edition

Advertising Age, February 7, 2013

640,000 Digital

Subscriptions

+13% Q4 2012

Ways to Change

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Like Calculus, Digital is Cumulative

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Convergence Adds New Competition for Users’ Time and Attention…

Source: McKinsey iConsumer 2010

Video/ Audio, 25%

Social, 18%

Browsing, 14%

Localization, 11%

Reading, 6%

Email, 5%

Documents, 5%

Voice/Text, 4% Shopping, 5%

TABLET USERS – U.S.

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And New “Jobs” and Opportunities…

mobile is becoming an important companion, particularly for the in between times

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Content That Fits Every Platform

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Digital Organizations: New roles and skills

CEO

Chief Revenue O!cer

Data and Analytics Sales

Chief Content O!cer

Social Media User Experience

Chief Marketing O!cer

Subscriptions Discoverability Partnerships/ Opportunities

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Commitment to Perpetual Change: The Newsweek Experience

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February 27, 2013

Jack Gri!n CEO and Co-founder, Empirical Media