"The positioning of Xplus is clear," Xia said. "We are a publishing platform and not a software vendor, so we never feel pity for the loss of this part of our profit margin."
Trying and trying again
Between March and June 2006, 23 periodicals, including Movie World, New Finance and Economics, Global People, Civilization and Digital Business Times, joined ZCOM. In the second half of 2006, ZCOM secured the electronic publishing rights of many leading publications in the IT, fashion and travel sectors. On July 7, domestic veteran IT media Computer World joined ZCOM. Three electronic magazines--Fashion, Beauty and Deco--of the Ray-li Group signed up on August 7. Authoritative travel magazine Chinese National Geography joined on September 1.
ZCOM soon found that increases in content do not mean increases in income.
ZCOM President Huang Mingming once stated that advertising was the most stable profitability model for e-magazines. Despite his words, his advertising model was not acceptable to most advertising agencies.
"The number of e-magazine readers is not small, but stability is not there because the readers are mostly young people," commented a leading advertising agent. "We don't have faith in this model since it is not easy to identify and cultivate stable consumer groups."
"Today, vulgar and disoriented content is used even on large e-magazines to attract subscribers," Professor Li Xiguang said. "How much commercial value will these subscribers bring? Click rates do not equal reading rates-most of the time the subscriber only reads two pages of the downloaded magazine and abandons the rest.
"A high reading rate does not equal to great impact either," Li added. "How much influence will vulgar content have on readers with true consumption potential?"
Nevertheless, thanks to the Web 2.0 frenzy, ZCOM walked away with the title "Enterprise with the Most Investment Value" in the 2006 Zero2IPO-China Venture 50. "The e-magazine business can settle into a profitable model and grow healthily given sufficient funding and extensive user support," said Huang.
Today, ZCOM's challenge is not to spend money on frantic expansion, but to gain the recognition of the audience and advertising agencies.
Tightening market focus
Beijing-based Gogosun, with an initial investment from Sun Media Investment, is a recently developed alternative e-magazine operation company.
Gogosun has been focusing on the enterprise market since inception. Its business model is very simple: Using multi-media digital technologies, Gogosun creates presentations based on publicity materials-such as product information and the brand image-provided by the enterprise.
The transaction is completed when they deliver their multi-media product. "We don't care if the enterprise puts it on their website for others to download or burns it onto a CD or DVD for their customers," said Gogosun CEO Cheng Hong. "This is their business. Gogosun never participates in the marketing activities of its clients."
Gogosun targets enterprises in sectors that require multimedia presentation, for example, in the automobile, real estate, consumer electronics, furniture and tourism. By nature, what Gogosun does is not much different from e-magazine production, but Cheng would rather position his company as a service provider of multimedia digital presentation technologies. This kind of business-to-business (B2B) company is certainly different from the look-alike e-magazine business that has yet to find a profitability model.
"The problem with Gogosun is whether this kind of business has a sustainable potential," said a venture capitalist after investigating the Gogosun model. "How big can this grow?" Faced with competition from other sectors, the development course for Gogosun-with its limited number of potential enterprise customers-is not an easy one. Nevertheless, for e-magazine providers without a successful profitability model, the enterprise market is certainly a possibility.
(Xinhua Finance) |