Why? The answer lies in Nomad’s distinctly different — perhaps even revolutionary — business model.
Founded by former Newsweek CEO-turned-investment banker Mark Edmiston, renowned designer Roger Black and other magazine publishing veterans, the venture is selling advertising sponsorships, but will rely primarily on subscription revenue. Moreover, it will employ a revenue-sharing plan that will potentially pay freelance editors / writers and graphic artists handsomely (by most online standards) for their original contributions.
The word “original” is key here, as Nomad is asking readers to pay an average price of $24 per year, or $6 per quarter, for each weekly edition. At launch (on October 15), there will be editions focusing on food, movies, surfing and the people / stories behind viral videos — each edited / written by experts in these areas, whose content will presumably compel those who elect for a 30-day trial to convert to subscribers, and compel subscribers to renew.
The model is based on the principals’ recognition that, whereas people have been by and large unwilling to pay for typical, Web-based site content (often consumed on desktop / laptop computers), they have already demonstrated willingness to pay for apps and other content designed for mobile phones and e-tablets — assuming that there is value in that content, explains Jock Spivey, VP, audience development for Nomad.
In contrast to the bulk of free consumer sites, which offer content that’s largely “appropriated” from other sites and frequently factually suspect (reflecting the common practice of paying contributors miniscule sums, or nothing at all), Nomad’s content will be produced by seasoned journalists with that expertise in the subjects being covered and the professional skills — and financial motivation — to do original reporting, says Spivey.
Specifically, Nomad writers will earn up to 30% of subscription revenue per weekly edition, and editors will earn 5% of that revenue, plus a cut of advertising revenue. (Edmiston told the New York Times that writers could make an estimated $50,000 to $60,000 U.S. per year if their editions draw an average of 50,000 subscribers.) “There’s a substantial pool of talent out there — professionals who are unemployed because of the shakeups at traditional publishers,” say Spivey. “We believe in the ‘old-fashioned’ concept that audiences will be willing to pay for authoritative, credible content and knowledgeable, unfettered opinions and idiosyncratic voices, and that these professionals should be well-compensated.”
Further, the Nomad experience is specifically designed to be an easy, non-frustrating read on handhelds, Spivey points out. Stories are self-contained and eschew including links that send readers off on frequently irrelevant information chases, and each edition will be edited to yield a reasonable, 20- to 30-minute read, he notes. Editions are professionally designed and delivered on the proprietary Treesaver HTML platform, which looks good on any handheld, and they offer video, sharing and all of the popular Web-enabled capabilities, he adds.
Rather than focusing on selling one-off ads, Nomad is encouraging advertisers to buy full sponsorships that include eight eights per edition (at about $25,000 per quarter). The idea, says Spivey, is to avoid ad placements that end up breaking articles into reader-unfriendly multiple page views, while enabling vertical advertisers to have in-depth “conversations” with readers.
In the end, however, what’s most interesting about this venture is that its low-overhead, paid-content-dominant model, if successful, could open the door for a new generation of entrepreneurs.
Treesaver’s HTML5-based technology allows Nomad apps to be directly downloaded from various platforms, and therefore, in theory, to bypass Apple’s app store and iPad sub terms for publishers. But Nomad — which has been funded by the principals, friends and families and some “angels” with a reported $600,000 to date — is initially gearing its efforts primarily to the iPhone and iPad. And the company doesn’t feel the need to “have a wrestling match” with Apple over commissions on new subscriptions or renewals, or even over control of customer data (outside of the email address required to deliver Nomad editions), Spivey told me recently. “We will do whatever Apple wants,” he said.
Reasons? Nomad doesn’t view it as unreasonable for Apple to expect ongoing returns for giving content providers access to its already “massive” and rapidly growing device and app store customer bases, according to Spivey. That’s because, without traditional publishers’ overhead and subscription liability issues to contend with, Nomad can afford to view Apple’s take as a cost of doing business — particularly given that Apple’s reach, large as it is, represents a perhaps 20% slice of the mobile universe that is a potential pool of subscribers for Nomad (and other publishers).
“Traditional magazine publishers look at Apple taking 30% off the top and choke,” said Spivey. “We’re starting new, from a totally different business model.”
Nomad’s projections for subscription orders (all credit card-paid, but no auto-renewal program assumed), conversions, renewals and sponsorship revenue are extremely conservative, according to Spivey. “We’ve projected that we can have a very solid, profitable business based on a less-than-1% [mobile device user] market penetration after five years,” with just 15% of revenue coming from advertising sponsorships at that point, he reports.
Can Nomad build and sustain even that modest paid-subscriber base, starting without major magazines’ built-in brand recognition? For certain, the industry will be watching closely, as this promises to be a highly intriguing test of changing media-consumption (and viral) dynamics.
(Read Karlene’s piece in the Sep/Oct issue of InPublishing, entitled ‘Publishers bridling as they feel the pain of Apple’s bite’.)
