Keepmedia Builds Digital Newsstand For Magazines

Byline: Linda Kopp

Keep-Media (Redwood Shores, CA), a new Internet service from entrepreneur Louis Borders of book retailing fame, launched last month with a business plan that not only calls for driving its own revenues, but includes a strategy for enriching magazine publishers by helping them sell archived and premium content, as well as create a new channel for subscription sales.

The KeepMedia “digital newsstand” concept is built on offering a wide variety of content to the average consumer, much the way a traditional newsstand does, but by leveraging the online technology to add a few twists. At launch, KeepMedia had formed partnerships with 140 consumer and business-to-business magazines and a handful of big-name newspapers that allow the service to make content from those publications available to consumers for a flat fee of $4.95 a month.

That fee will get you access to what KeepMedia CEO Doug Herrington describes as “up-to-date archives” – content that dates back anywhere from one year to 10 years, depending on what individual publications provided to the service. For additional fees, consumers can purchase current-issue articles on an a la carte basis, or choose to subscribe to a magazine through Keep-Media, which then gives them access to all of that publication’s content – current and archived.

Herrington says the service was constructed with an eye toward providing consumers with the same attributes as those vital to running a successful retail operation – selection, service and price.

In terms of selection, “This is all branded, high quality, professionally edited and produced content,” says Herrington. KeepMedia currently boasts partnerships with 19 consumer magazine titles that it characterizes as general interest, including heavyweights such as Business Week, U.S. News & World Report, Esquire, Family Circle and Forbes. The majority of its magazine partners to date are classified as professional/trade titles.

While Herrington says Keep-Media is pleased with its content lineup at launch, it continues to actively pursue new publishers. Notably missing are Time Inc. and Conde Nast publications. “We hope to convince them to try us,” Herrington says. Time Inc. earlier this year began testing its own strategy of limiting online access to its contents to its subscribers in part by leveraging its relationship with sister company, America Online (Updates, May, page 9).

In terms of service, in addition to an ad-free environment, Keep-Media offers a high level of personalization based on usage patterns that it hopes will resound with consumers. “After about the second time you come in, we begin to identify new content items we think you’ll be interested in,” Herrington says. The idea is to introduce consumers to brands and content they would not have thought to connect with before, and satisfy their information demands while at the same time perhaps drive new sub sales.

As for price, “For $4.95, the consumer gets access to a vast selection of content from the magazine archives, and an opportunity to buy,” Herrington says.

While KeepMedia hopes to appeal to a broad range of consumers, it also believes it has two important attributes to offer to publishers: a new source for online revenues, and a new source for print subs. Herrington points out that it’s a tough go for publications that try to sell their archived content through their own Web sites. “Most people coming to their Web sites are already their subscribers, and it’s difficult to ask them to pay again for access to the archives.” With KeepMedia, the idea is to push a publication’s content to new customers based on their usage patterns. “We want to introduce customers who are topically interested to brands and content that contain those topics,” says Herrington.

The KeepMedia business model revolves around a revenue split between the service and its content partners. “There are three ways for a publisher to make money – a cut of the $4.95 service subscription price, through the sale of individual current articles, or from the print subscriptions sold through KeepMedia,” Herrington said. While he declined to disclose exact revenue split details, he explained that the more the content from a publication is consumed, the more revenue the publication generates from the service. Also, if a publication agrees to market the KeepMedia service, it gets a higher share of revenues.

Almost as important as sharing revenues with its publisher partners, KeepMedia will also share information about which of their articles are being consumed, which time periods are most active for content consumption, and whether people are finding their way to the content by browsing or searching.

And how does the content make its way onto KeepMedia? “We’ve been working for the last year and a half to create a highly automated process to upload content,” says Herrington, adding that the net result of that upfront investment is now low operating costs to make the system work.

KeepMedia believes that the Internet is just beginning to ride a wave of success where selling content is concerned. “Right now, there’s only 10 to 15 percent of the Internet public paying for content. We’re comfortable that we can tap into enough of that group to have a successful business if it stays at that level, but we really expect it to grow,” says Herrington.

Although he refuses to say how many $4.95 monthly subscriptions to the service KeepMedia has sold to date – or even how many the company hopes to sell – for fear of disclosing proprietary information that the company feels gives it a competitive advantage, Herrington emphasizes, “We believe we’ve set some realistic goals. We believe this can be a big business, a big market. If it takes a while, that’s okay. We have the resources to run this thing while the market builds up to the critical mass we think it can get to.”

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