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Menzies closes digital mags arm: What next for e-editions?

John Menzies Digital, the division behind digital magazine supplier Magazines On Demand, has been closed by parent company Menzies Distribution because of a lack of demand.

"Digital magazines have not proved as popular as we had hoped and in this difficult economic climate it was not possible for us to continue trading," a statement on a holding page, which has replaced the service's website, said.

The service, which allowed customers to download 140 magazine titles, had established a partnership with WHSmith, which allowed downloads via the retailer's website, and recently signed a deal with Telegraph.co.uk to distribute e-editions of NatMags titles.

Ellis Watson, CEO of Menzies Distribution, told Journalism.co.uk that all five jobs on the digital team would be lost, but there are hopes to place two staff members elsewhere in the company.

"I'm proud of what we achieved. We had a great product and a great team; it was probably a couple of years before its time and the consumer recession wasn't that helpful to our chances either," he said.

Menzies would consider revisiting digital editions if market conditions change, he said, but this is 'unlikely to be imminent given the current appetite and trading environment'.

Speaking to Journalism.co.uk in April, managing director of Menzies Digital, Sarah Clegg conceded that the venture was not yet in profit.

But she remained optimistic about the future of e-editions and the demand from both publishers and consumers.

"We're not in profit yet. We didn't anticipate we'd be in profit yet, this is a long-term business plan. It doesn't mean we're not doing well, we are where we should be and I think the next 18 months is crucial for our business development," she said in April.

"It's a three to five-year plan. We've got a lot of educating to do and it's an emerging platform, but I think we are seeing the turning point now. We've never had a week where we've declined."

According to the annual financial report for 2008, Menzies Digital, which launched the Magazines On Demand service in June last year, was still in development: "[P]rogress has been slower than anticipated as a result of the consumer slowdown, but this exciting venture - with little fixed cost - is worth pursuing at this time."

What went wrong?
Journalism.co.uk understands that the decision to shutter the operation was made by John Menzies' board, and staff were told just days before the site was closed.

Richard Stephenson, CEO of ePublishing firm Yudu Media, told Journalism.co.uk that while the team worked well and customers of the service seemed satisfied, there were fundamental flaws with Menzies Digital's offering.

Offering customers a subscription-based, paid-for download model meant the service was 'a one-trick pony', he said.

"There's a market for subscriptions in the UK, but it's a niche market (...) In this model you were asking the consumer to pay. On the net there's only a niche area where the consumer pays," he explained.

"At Yudu, we have a subscription system and we are going to develop that further, but it's only one of a dozen things we do.

"I would not build a business only on subscriptions, because I would never get a return on investments."

The Menzies service required users to download an e-edition, a feature Clegg said was valuable to users, as it enabled offline reading.

But Stephenson said this was the wrong way to implement the technology: "We have a mantra at Yudu that anything that is done on the net has to be browser-based.

"Seventy per cent of people reading magazines through Yudu are doing it from a work environment. That's why Yudu doesn't require a download to read things."

The future of digital magazines
Firms in the same space as Menzies Digital remain confident that there is demand for digital editions from both consumers and publishers.

"We are extremely confident that digital editions can be harnessed as a value adding or stand alone proposition, with international publishers reaching wider communities, and smaller publishers promoting their online presence," Ben Edwards, marketing manager of PageSuite, which supplies online digital editions for the Express and Daily Star, told Journalism.co.uk.
 
"Digital editions are increasingly interactive, with rich media video, audio and flash animation content. PageSuite's new search tool, easy to use interface and instant global downloads increase readership and ultimately, publishers' revenue."

In April, Clegg said 85,000 paid-for downloads of Menzies Digital titles had been made so far and sales were growing by 20-30 per cent a week.

According to Stephenson, more than 1.5 million titles on Yudu are opened every month by readers.

"It's a good market and there's an opportunity to have someone pose a good challenge to Zinio [Menzies Digital's main competitor]," he said.

"The decision just reflects on John Menzies' priorities. The company has many other issues and things to focus on."

Tags (click tag to find related articles; click icon for feed):
magazines | ben edwards | sarah clegg | pagesuite | magazines on demand | digital editions | yudu | menzies digital | robert stephenson |

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