Enter the interactive age in increments

Folio: The Magazine for Magazine Management, March 1, 1994 by Efren Sigel

With demand uncertain, publishers should test the waters before making major investments in electronic delivery.

Editor's note: New technologies linking voice and data are beginning to play a big role in the world of electronic communications, but, says author Efrem Sigel, publishers need to question not only whether they should assume the role of consultants, but whether consumers are ready to accept two-way electronic communication.

Publishers and other media companies are rushing to embrace the new world of interactive electronic media in a stampede that is reminiscent of their adoption of such past fads as teaching machines (the sixties), the videodisk (the seventies) and videotext (the eighties).

Having watched these fads run their expensive course, while other new media (pay TV, videocassettes, PC software) grew into huge businesses, I start with a simple premise: Interactive media will succeed only if there are significant changes in the behavior of information consumers. The question for publishers, then, becomes: If such changes happen, will they come all at once, or by trial and error--i.e., slowly and incrementally?

Today, print publishers, AV and electronic information providers supply almost all their information in a one-way direction: We (the publisher) have it, and we're going to deliver it to you, the information consumer. This is true whether the content is a law review article, stock quote, Steven Spielberg movie or Tom Wolfe magazine piece.

The first couple of decades of computerized databases were a counterpart of this one-way programming. No new information was created as a result of customer wishes: The magic of the new medium was its ability to find and display just the fact, number, scholarly citation or full text of an article that you, the information consumer, wanted.

However, my impression is that the balance is now shifting somewhat in usage of electronic information services from retrieval of preexisting information from vast databases to communication with peers and experts. This is easy to see in the consumer market, with the popularity of bulletin boards and online chat services provided by CompuServe, America Online, Prodigy; it is less easy to see in the business/professional market where the big bucks are spent on electronic retrieval.

But there's another method of interactivity that poses a question: Should magazines have their editors respond online to specific reader queries, even design personalized travel itineraries or investment portfolios? This would be more akin to consulting and seminars than to one-way information delivery.

And what about transactions? Should the publisher become an order-taker for direct-response buyers who want to do business with his advertisers? Does Travel & Leisure, for example, become a tour wholesaler, or Money a mutual-fund agent? Although this seems like a natural in the electronic age, the Prodigy experience, as well as CompuServe's Electronic Mall, ought to give us pause. Consumer usage has been low. Only certain types of products work, and those products (flowers or balloons through PC Flowers, the sale of mail-order computers, both advertising staples on Prodigy) often don't match a publisher's roster of advertisers.

It would be quite a leap to go from selling a $35.95 Money subscription to charging the reader $100 to $500 for a personal financial plan. And though it is a possible business, personalizing the information that's delivered means assigning an editor to research information for a single customer--traditionally a consulting process, not a publishing one--at high cost, to be sure. Consider also that multimedia in the home requires new investments in technological tools with huge storage and processing power, whether those tools reside in the network, or in a stand-alone box.

As yet we have no economic models for how these systems would work, hence no idea if they can lead to a new business, or only soak up billions in capital a la flops like the videodisk or videotext or direct-to-home satellite TV.

A major consideration for the next 10 years is whether consumers are ready for--or can even visualize--personalized multimedia electronic or audiovisual programming. Will consumers flock to it once they understand it? Or will they quickly tire of the gimmickry and stick with good old one-way information--just as Hollywood and the editors of, say, Time have always given it to them? In the latter case, technology will give us increased ability to choose the one-way information in whatever bits and pieces we want, at whatever time, in whatever format--but the story, the facts, the interpretation, the data, will still come from the publishers, editors and producers. Technology will change delivery and patterns of usage, but it will not change the information itself. Electronic delivery, whether for radio, TV or computerized information, is still used heavily for one-way, publisher-dedicated information. Getting new information on demand or personalizing financial advice for a single customer--these are possible with today's technology. But they involve considerable expense.