Friday, May 28, 2010

May Observations: Zmags—Another Online Viewing Alternative




by Jim Lyons

Over the last four-and-a-half years, my Observations column has highlighted numerous alternatives and enhancements to printing. One of the most frequently covered areas, in a variety of forms, is the transition from traditional print to online, non-paper-based “information consumption.,”. I have covered e-books, smart phones, and magazines and newsletters converting to online publishing, with PC Magazine and our very own Hard Copy Observer being two notable examples from the latter category. Just last month’s Observations looked at Google’s news viewer, Fast Flip, and as I keep looking at this space, more and more continues to meet the eye.

Zmags is a growing company helping to facilitate the movement to online viewing, or “information consumption,” that I had a chance to get to know better recently. Starting out in Denmark, the company shares the same 4.5-year lifespan with this column, and helps publishers in the conversion of their magazine content from traditional paper-based to online., and Zmags also participates in the massive, if not quite as visible publishing space that includes brochures, catalogs, flyers, and other marketing collateral.

Going back about 15 years in the printing industry, we started to see the “paper pie” being used in high-level strategic presentations by printer executives. This pie chart, combining all the world’s printed pages (totaling some many trillion annually), showed by category the very small presence of digital printing (in the low single digits as originally presented), just basically office printing and copying at the time, and huge categories of traditionally-printed books, magazines, and newspapers, magazines, and brochures, catalogs, and flyers, to illustrate the opportunity for digital to supersede analog printing. Based on economies brought by electronic distribution (up until “the last mile” where digital printing would step in), customization and shorter print runs were the promise of “distribute and print.” Of course this switch to digital printing could be viewed as only the intermediate step, with non-printing solutions eventually winning out, and this end point is where we could be heading with Zmags, if the firm’s relatively early success is any clue.

Started in Denmark by current CEO Jens Karstoft and two other people, Zmags began as an individual online magazine. After some time passed, the threesome realized that the tools the firm had created were the real value and could be used as a platform by other magazines and the broad world of marketing collateral. Originally self-funded, the company raised $7 million in 2008 to get into the U.S. market and now employs 50 people globally, with about half in Denmark, 20 in the UnitedStates, and five in a small office in the UK, serving 2,500-3,000 customers. Zmags classifies the market into three categories: magazines using the Zmags online publishing platform;, marketing communications clients who publish brochures, catalogs, and flyers online for their clients;, and individual retailers and e-commerce companies either going online or starting online with catalogs and other Web-based sales materials.

When we covered the online conversion of PC Magazine at the beginning of 2009 (Observer, 2/09; /TheLyraWeb/ShowArticleFromFoundset.aspx?ID=1095), we identified its publishing platform as belonging to the vendor Zinio. While Zmags acknowledges Zinio as a primary competitor (along with a few others), at least in the magazine publishing space, Zmags highlights its self-service feature as popular among a number of customers, and assays the firm’s key differentiator is, the ability to track, analyze, and report on reader behavior (pages viewed, time spent per page, videos watched, links clicked, products added to shopping cart, etc.), in other words )—who is reading or looking, when and how often, and what actions are taken as a result, whether drilling down into advertisements in the case of magazines or ordering online in the case of e-commerce.

In a recent interview, Zmags CEO Jens Karstoft and vice president of marketing Peter Velikin described the company’s evolution and future and how they see the needs of the three market areas they have defined. In terms of the three areas of customers served by Zmags—magazines, marketing communications, and online retailers—we asked about distinctions between the latter two. Velikin explained, “Marketing communications and commerce, the difference is that there are two different purposes. The goal of e-commerce customers is to increase the volume and efficiency of their online channel— – online catalogs created with Zmags enable retailers to expose more products, in context, to their target customers and increase conversion rates. Marketers, in contrast, are trying to maximize the time customers spend with their brand and to present their product or service in the most positive light. Tracking and reporting on reader behavior is very useful to our customers in all markets.” ”

When asked to explain in further detail the actual transaction taking place, Velikin describes the Zmags business model as follows, “We are a Software as a Service (SaaS) company, i.e. there is no software for customers to install; they pay an annual subscription fee. Our customers purchase a number of ‘activations.’ An activation is a publication that is created, e.g. a monthly magazine will need 12 activations, one for every issue published, and customer service and support is included in the flat fee.” Velikin concludes, “We have a very simple business model that works to our advantage.”

Zmags and Printing—Threat or Opportunity?

With respect to specific Zmags implementations that drive printing, Karstoft explains, “Yes, there are, especially [related to] books, white papers, etc.,” which go along with the specific content being viewed. While the Zmags solution includes the facility to print locally (see image at ***), we probed a little deeper and asked whether online capabilities like Zmags take away from printing in the long run. Velikin answered, “I think that a bigger portion of information will be collected online—this means less print, more online solutions. This is happening. Zmags offers a great solution for these companies that are looking to embrace the online world but still want to leverage their investment in the offline world (i.e. materials intended for print). In this respect, even though ‘Yes, people will print less if they use Zmags,’ Zmags is synergistic to print companies because it preserves the layout and the mode of consuming information. This means that people will continue to invest in materials that would be suitable for print or online distribution.”

Going back a decade and a half, and as the Web emerged as a legitimate place to go for consumer information, much was made of the repurposing of content, with consoling words to content creators that getting print-oriented materials online was simply a matter of putting the existing print materials into an online format. This scenario led to the creation of the term, meant to be less-than-flattering, of “brochure-ware.” Today Velikin notes, “Converting hard copy to online changes expectations, not just simple conversion.” Karstoft adds, “Taking the offline version and putting it online means big changes—[the new version] needs to be an active magazine, interactive, etcetera, customized for the online reader experience.”

Karstoft continues, “Between the three areas [of magazines, marketing communications, and e-commerce, the Zmags business is] evenly split across them, [but we are] more focused on marketing corporations (collateral). [We] see the market space now with lots of people making investments, and we have customers who benefit from using Zmags in the publishing world, but a fundamental business model problem is that online rules are different. [It’s a] whole other ecosystem. [Going online, by itself,] won’t save the business! [Clients will be dealing with] different variables, distribution, biz model, etcetera...”

With the recent weeks’ tech news dominated by the Apple iPad and its lack of support for Adobe’s Flash technology developing as the major battleground in an Adobe/Apple war, we felt obliged to ask Zmags three questions on Flash, a technology currently prominently featured in the firm’s platform. Karstoft responded, “The Apple iPad is the next evolution of portable devices, covering ‘sofa surfing.’ [As a vision,] we are delivering content in a user-friendly way. We don’t convert PDF to Flash, we convert offline materials to an online experience. We have a flash viewer that is best suited for viewing on a large screen, such as a PC, and a non-flash mobile viewer, (to be released soon,) that is optimized for viewing on most mobile devices, including iPhone, iPad, and Android devices.”

Understanding customers and their needs, including the intermediate publisher as a client/customer and their customers, corporate marketers, and end users, is a key to business success. Zmags seems to have a good handle on those ever-changing user needs and has a good chance to be very successful in its pursuit of new viewing alternatives.

8 comments:

Joakim Ditlev said...

Jim,

Thanks for this in-depth view of the state of the online publishing industry and Zmags in particular. You nail all details, and I have nothing to add other than to stress the point that online distribution is more about doing digital replicas of print versions. Online ther is another audience with other expectations. Fortunately, the web allows for ongoing optimization, so I would highly recommend traditional content providers to jump in - Go digital and see what resonates with your readers.

Thanks,
Joakim Ditlev
Zmags

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