A SWOT Analysis of a Double Degree…

Chinese Network E-magazines

I. Developmental Course
In the narrow sense, an e-magazine refers to a publication that regularly sends information by email to the email boxes of specific subscribers. In a broader sense, it also includes things like online versions of print magazines. These “e-magazines” are not delivered by email, and in form they have no clear boundary with ordinary information newsletters, so their historical development is difficult for us to verify. Therefore, in the section on “developmental course,” I examine e-magazines in the narrow sense, while the later assessment of e-magazine profit-making paths will still discuss them in the broader sense.
 
1. Nascent stage — before 1997
At that time the Internet had not yet become widespread, costs were high, e-mail was rare, and mailing-list services were only being used on a small internal scale by certain research institutions, universities, and so on.
 
2. Rise stage — 1997 to 2000
As computer prices and network fees fell sharply, the number of Internet users surged. At the same time, domestic free e-mail services represented by 163 and 263 gradually became popular, and e-magazines began to rise. Representative examples were Soim (www.soim.com, now defunct), which began issuing e-magazines (March 1997), and the establishment of Bodachina (www.bodachina.com, now transformed), the earliest domestic platform operator (January 1999). The survivor among the first major pioneers to this day is Xiwang Network (http://www.cn99.com), now the largest mailing-list distributor in China (founded in November 1999) [①]
 
3. Mature stage — from 2001 on
After the initial probing and pioneering, major content providers and platform providers began looking for ways to charge. Because of fierce market competition and ruthless reshuffling, the number of e-magazine platform providers fell sharply. At the same time, the varieties of e-magazines and the number of subscribers continued to grow at high speed, but the metabolism of e-magazines is extremely fast. Quite a few free e-magazines sustained by personal enthusiasm have found it difficult to continue for long, and many e-magazines that hoped to profit through advertising revenue or paid subscriptions have also ended in failure. Yet new successors keep joining in. Overall, although China’s e-magazine market has now initially formed a market structure, it still appears extremely chaotic. A more accurate description of this stage would be “a stage moving toward maturity,” and there is still a long road ahead before real maturity is reached.
 
The developmental course of e-magazines is similar to the early development of the newspaper industry (only much faster). Both must go through a path in which publishers move from popular, casual, and non-profit operations to commercialization and then to professionalism, standardization, and commercialization. Yet this road is fraught with difficulties and twists and turns.
 
II. A Lesson from the Past
Soim (www.soim.com) was the first pioneer of free e-magazines in China, and also the earliest explorer of e-magazine profit models. In July 2000, it issued the first B2B paid magazine, 《Chinese Home Appliance Market Intelligence》 [②], thus opening the way for paid e-magazine distribution.
But in the end, through its own failure, it revealed the common predicament shared by e-magazine platforms, content providers, and individual owners alike.
Soim was second to none in the regularization of corporate operations: it had professional editorial and marketing staff; it had signed republication agreements with a number of authoritative domestic information sources, such as Xinhua Net; and its mailings were punctual and its production refined. At its peak, it had about fifty e-magazines and more than five million total subscribers. Its hottest daily magazine, 《Hot Topics》, reached a circulation of over 500,000, and the second-ranked 《Daily News》 also reached more than 300,000. In order to break out of the loss-making situation it had faced since its founding, Soim also launched a series of active explorations: [③]
First, advertising. Soim’s e-magazines featured various forms of advertising such as banner ads and questionnaires, and Soim also sent advertising information directly to subscribers’ e-mail boxes, but these did not win recognition from advertisers and were of limited effect. [④]
This forced Soim to shift its hopes for profit toward paid subscriptions. In addition to the aforementioned first B2B paid magazine in China, starting in September 2001 Soim tried to charge for some of its major magazines, such as 《Daily News》 at 0.3 yuan per issue. [⑤]
Under the predicament of being unable to break through, Soim still persisted with various measures and remedies, such as canceling free e-mail boxes and providing them only to paying users; cutting some magazines with fewer subscribers and lacking potential; canceling a series of free services such as network hard drives; and also providing some value-added services, such as online subscriptions to traditional newspapers or the electronic versions of traditional newspapers, using this service to charge some service fees, selling paid mailboxes, and so on.
But none of this could reverse the “burning money” situation. Half a year later, users who had paid for a year of subscription suddenly found that they could no longer receive the magazines, and Soim’s office phone was also unanswered. Soim’s series of pioneering efforts in the field of e-magazines ended in failure. Where did the problem lie?
 
The advertising attempt
Internet advertising has great advantages in interactivity and targeted communication, and advertising in e-magazines is more content-specific and more flexible in form than ordinary page ads. But on the one hand, in China the effectiveness of online advertising has not yet been understood and accepted by most businesses. At the same time, objectively speaking, the advertising effect of e-magazines also lacks effective monitoring and evaluation. In order to increase click-through rates, Soim adopted a click-to-subscribe method that forced free users to browse online ads. This was, of course, an innovation, but it also caused e-magazines to lose their basic advantage of being downloadable, savable, and readable offline, and ultimately drove away free users.
At the same time, Soim’s largest-circulation magazines were news and entertainment magazines, and the audience positioning was not sufficiently clear, which was another reason it failed to win recognition from advertisers.
 
The attempt to charge
On the one hand, Chinese Internet users were still accustomed to free use of online resources and had not formed the awareness of paying for services.
But such a broad-brush analysis is meaningless. Below, let us look at Soim’s mistakes from the perspectives of payment methods, pricing strategy, content, and services.
Payment has always been a major difficulty in China’s e-commerce market. In China, even the credit cards of traditional banks were not yet widespread, and credit evaluation and supervision were still far from perfect, let alone the establishment of a fast and convenient online payment platform. Soim provided several payment methods for users, mainly postal remittance, supplemented by bank-card transfers in some areas; among them, only one or two methods allowed direct online payment. Soim even once took pride in the fact that some readers crossed half of Shanghai just to pay at Soim’s headquarters [⑥], without noticing the hidden crisis in that very fact.
As for pricing, Soim’s e-magazines were clearly overpriced. For example, 《Daily News》 cost 0.3 yuan per issue, and included only two pages, one on international news and one on domestic news. Compared with 《Yangtze Evening News》, which cost 0.5 yuan and had more than forty tabloid-format pages, the unit cost of information was obviously too high, not to mention that the latter still had a paper carrier.
In terms of content and service, Soim’s e-magazines drew their content from some authoritative online information sources. For news magazines, these included domestic Xinhua Net and overseas Lianhe Zaobao Net; for comprehensive magazines, they included portal sites such as Sina and Chinese Yahoo. For subscribers, this information could all be obtained through web searches, and Soim’s advantage lay only in providing refined and selected essence information and making the pages a bit more beautifully designed, pleasing the eye a little more. Yet customers are smart: they know this information can also be obtained from other portal sites, or by subscribing to other free e-magazines. All this made Soim’s slight advantage seem not worth mentioning.
The problems faced by magazine charging are also widespread among other e-magazine providers. For example, the several paid magazines tentatively launched by Xiwang, China’s largest e-magazine platform operator (see figure on the right), also have similar problems: they only support postal remittance, and each paid magazine has a different remittance address; the problems of excessive pricing and vague positioning also exist. These issues will be discussed further below.
 
 
III. Advantages and Opportunities
Although Soim, Burning Years, Bodachina, and others have all fallen, and the e-magazine providers still standing are also trudging through difficult times, many people are still pouring into the e-magazine market, precisely because China’s e-magazine market does in fact hold enormous opportunities and potential.
Below, let us look at the advantages e-magazines have over traditional magazines, as well as the opportunities for development in China.
 
For readers, the advantages of e-magazines are:
1.  Easy access: E-mail is one of the most basic Internet services. Almost every Internet user has an e-mail box, and as long as one has e-mail, one can subscribe to all kinds of e-magazines without leaving home.
2.  Convenient reading and storage: E-magazines can be directly downloaded into the reader’s computer via e-mail, so they can be read offline without going online, freely copied, and accessed anytime, anywhere.
3.  Rich and varied content: There are currently many kinds of e-magazines on the Internet. Internet users can subscribe to various types of e-magazines according to their own needs and interests, giving them greater room to choose.
4.  Strong targeting: Subscribers can subscribe to content they care about according to their needs. The information in e-magazines is more distilled and more targeted. Compared with traditional magazines, e-magazines can reduce more superfluous information and annoying advertisements.
5. 
Fast updating: Traditional magazines must go through a series of steps—typesetting, printing, distribution, delivery—before finally reaching subscribers, whereas e-magazines are not only produced more quickly, but also eliminate many of the steps from printing to delivery, allowing subscribers to receive fresh magazines more promptly.
6.  Lively format: Because traditional magazines are limited by their paper medium, they have only two forms of expression, text and images, whereas e-magazines can use all kinds of multimedia and network technologies to make magazines more lively.
7. 
Powerful search function: The data in e-magazines is very easy to index. When a subscriber needs to search for a certain passage mentioned in an article from a certain issue, faced with a large stack of traditional magazines one can only look on helplessly, whereas with an e-magazine one only needs to type in a few keywords to carry out the search task in massive amounts of data.
8.  Low price: At present, most e-magazines on the Internet are free. Since they can be read offline, they require only a small amount of network fees to obtain, and paid e-magazines, if priced reasonably, are generally cheaper than traditional magazines.
 
For publishers and platform operators, the advantages of e-magazines are:
1.  The advantages e-magazines have for readers are at the same time opportunities for publishers and platform operators.
2.  Low threshold: Because e-magazines are technically simple, require low investment, and make it easy to find platforms and readers online, large numbers of people can produce and distribute e-magazines themselves.
3.  Low cost: The production and distribution of e-magazines are quite convenient.
4.  More interactive: E-magazines can use simple network technologies to establish communication between readers and authors/publishers, so as to understand readers’ feedback in a timely manner.
5. 
More targeted advertising: Because e-magazines are highly content-specific, their audiences are easy to identify, readers’ situations are easier to track, and reader feedback is easier to obtain, advertising placed in e-magazines is not only more targeted than advertising in traditional media, but even more targeted than ordinary online page advertising.
6. 
More diverse ways to attract readers: Compared with traditional magazines, which are often only displayed in book and newspaper kiosks and rely merely on titles and covers to attract readers, e-magazines have more flexible ways of attracting readers, such as free sample issues and online hyperlinks.
7.  Great market potential: In China, the pattern of the traditional print media industry has basically matured, and many market sectors have become saturated. By comparison, e-magazines are an emerging market on the rise, with broad prospects.
 
IV. Obstacles and Difficulties
Although there are the above series of advantages, at present, if Chinese e-magazines want to become profitable, the difficulties they face are even more conspicuous. Below, let us briefly list the obstacles and difficulties encountered by e-magazines:
 
For mailing-list platform operators, the difficulties are:
1.  
A chaotic and disordered market: Taking Xiwang, the largest and most important domestic mailing-list platform provider, as an example, “at present it already has more than 38,000 mailing lists, including more than 5,000 excellent e-magazines, with subscriber counts reaching 18.68 million, 5.6 million non-duplicate users, covering about 10% of China’s Internet users.”
[⑦]—These figures seem encouraging, but in fact they are extremely chaotic: among these 38,000 mailing lists, most were created by Internet users out of a momentary burst of enthusiasm, just to have a taste of the editor-in-chief experience, and very few continue to be issued regularly; among the magazines that do persist, even fewer are of high quality. Among these 5.6 million subscribers, because the count is based on non-duplicate e-mail addresses, there are obviously large numbers of unusable e-mail boxes, as well as e-mail boxes abandoned by subscribers, meaning the figures contain a great deal of water. Inflated numbers not only bring little benefit, but will instead make advertisers more skeptical about the actual effect of ad placement.
2.  
The spam problem: Because online spam is currently rampant in China, on the websites of major free mailing-list platform providers there are prompts such as “we recommend using a paid mailbox to receive e-magazines.” This is because most domestic free mailboxes have blocked mail from mailing-list providers, including Sina, NetEase, Sohu, 21cn, etang, and so on. It can be said that there are very few free mailboxes that can normally receive e-magazines from mailing-list providers. And if a platform operator provides free e-mail boxes to subscribers itself, it is often overwhelmed. Soim and Xiwang both tried this, but the former ultimately ended in bankruptcy, while the latter has also canceled its free mailbox service.
 
For content providers, the difficulties are:
1.
Lack of an effective management and tracking mechanism; the subscriber figures contain too much water, and the targeting and effectiveness of advertising are greatly reduced: because of the disorder in the aforementioned market environment, advertisers cannot obtain sufficient assurance of advertising effectiveness, and are highly hesitant about placing ads in e-magazines.
2.
The substitutability of content and services: The information provided by e-magazines is often just a simple gathering and organizing of materials on the Internet, such as news and information, which subscribers can also obtain through various news sites, portal sites, and search engines.
3.
Slow updating: Compared with traditional magazines, e-magazines update much faster; however, compared with some professional information websites and portal sites, e-magazine information is obviously lagging behind. For example, portal sites such as Sina can update a piece of news almost every few seconds, something e-magazines can never compete with.
4.
Formal limitations: Although in theory e-magazines can use all kinds of multimedia technologies to make their forms lively and varied, in fact the vast majority of e-magazines are still simple combinations of images and text, with no richer tricks than traditional magazines. On the one hand, this is because producing a beautifully lively e-magazine issue takes time and effort; on the other hand, an e-magazine that incorporates multimedia will become extremely large in size—for example, one electronic issue of 《Ruili pretty》 is over 40 megabytes and also requires downloading a dedicated reader; the two handsome magazines Wo＆AimeiLi Me each require more than 30 megabytes per issue. Such e-magazines cannot be delivered by e-mail.
5.
Fierce competition: There is not only competition among the numerous e-magazines themselves, but e-magazines must also face pressure from other online media. For example, major portals not only provide abundant page content, but also offer their own e-magazines or similar subscriptions or mandatory ad distributions. These ads are placed through the portals’ own free mailboxes. Compared with e-magazines, this kind of ad placement seems to have a more trustworthy efficiency.
6. Payment problems: The payment link has always been the biggest bottleneck preventing e-magazines from moving from free to paid.
7.
Credibility problems: Subscribing to paid magazines generally requires payment before services are received, and subscriptions are often made for six months or one year. But people see that the elimination rate in China’s e-magazine market is far too fierce, and no one can guarantee that a magazine that is thriving today will not disappear overnight. Soim’s bankruptcy shows that such concerns are not without basis.
 
V. Countermeasures and Paths Forward
In response to the advantages and difficulties listed above, below we propose some countermeasures and suggestions for the profit path of Chinese e-magazines, according to different types of providers:
 
Platform providers
1.  
Strengthen tracking mechanisms and promptly clear out dead magazines and fake users: this is quite important. Platform operators must not immerse themselves in inflated magazine and subscriber figures and lose all sense of proportion; they should actively and regularly clear out junk information. For example, they can stipulate the maximum publication interval for irregular magazines, require subscribers to occasionally click a verification link after receiving a magazine, and so on.
2.  
Cooperate with free e-mail providers: The reason free e-mail service providers block e-magazines from platform operators in the first place is largely because they have also seen that the e-magazine market is potentially profitable, and thus want to gain more leverage for themselves. Since mailing-list providers are hard-pressed to sustain free e-mail services on their own, the better way to survive is to compromise with free e-mail service providers and seek mutual benefit. For example, on Xiwang’s newly registered page now, we can see (as in the figure below [⑧])—Xiwang has clearly reached a cooperation agreement with NetEase.
3.   Improve the payment platform: At present, online payment in China is becoming increasingly mature, and platform operators can cooperate with banks to provide diverse, trustworthy, convenient, and effective payment methods.
4.  
Give magazine providers greater autonomy: In this regard, a number of online literature websites represented by Mingyang Pinshu Net (www.pinshu.com) and “Tiexue Military” (www.tiexue.net) offer a model worth learning from. Mingyang Net mainly serializes military fantasy novels. The site sells a kind of “Mingyang Library digital card.” After readers purchase point cards through the payment platform, they receive a certain number of reading points; for example, a five-yuan card gives five hundred points, and then they can read paid chapters of novels, usually one chapter for every five to ten points. The author and the website sign an agency agreement from the outset, and the two sides share the points obtained. The paid chapters and free chapters of each novel can be set freely according to the author’s wishes. Usually, when the work has just begun serialization, all chapters are free. After the number of readers rises to a certain scale, the newest chapters begin to be set for paid reading, and readers must spend points to read them.—Taking this model as a reference, e-magazine platform operators may as well consider a similar approach, namely allowing magazine providers to choose whether to charge and which parts to charge for, while the platform operator provides a unified payment platform for magazine providers. Readers can buy point cards only from the platform, and thus choose at will which magazines to pay for. In this way, readers do not need to remit money separately to each magazine, and because readers first “deposit” their money with the platform operator, they can then spend points only after actually receiving each magazine, without needing to prepay magazines by half a year or even a year. Subscribers need not trust the magazine provider, but only the platform operator, which obviously can make subscribers feel more at ease.
 
Content providers
For different kinds of e-magazines, their respective characteristics and developmental paths should be maintained. Below, I discuss separately the profit paths of various kinds of e-magazines:
A, Professional and academic magazines
The earliest e-magazines were precisely those used on a small internal scale by research institutions, universities, and so on. The greatest advantage of electronic professional magazines lies in the greatly enhanced search function. In professional work or academic research, one often needs to consult articles published in past issues, and electronic academic magazines provide tremendous convenience for this. Charging for professional e-magazines can also adopt models such as paid database searches. Of course, such magazines are quite targeted, are less affected by the market, and have their own unique developmental model, so there is no need for further discussion here.
B, News and information magazines
The biggest problem facing news magazines is the substitutability of their content, because most of the information e-magazines can provide can also be obtained through portal sites, news sites, and search engines, whereas the advantage e-magazines can offer lies in sparing subscribers the trouble of searching for information and in filtering massive amounts of information and extracting the essence. Therefore, for news e-magazines to survive and develop, they must emphasize these characteristics, reduce low-value information, reduce advertising and excessive embellishment, and strive to be concise, lively, and pleasing to the eye. In addition, news e-magazines can provide more humanized services: they can specially customize the magazine layout for each subscriber according to their reading interests and habits, further omitting information the subscriber does not need, so that, from the subscriber’s perspective, 100% of the pages are valuable. This requirement may seem demanding, but it is not impossible with current computer technology. Especially for a paid e-magazine, this degree of personalization from customers is by no means excessive.
C, Entertainment and fashion magazines
Fashion magazines should focus on bringing out the lively form and diverse modes of expression of e-magazines, combining animation, sound, and other multimedia components to make electronic fashion magazines more charming.
Just on November 8, 2005, Beijing Feile Records and the well-known multimedia-sharing entertainment platform POCO jointly publicly released China’s first “multimedia正版 electronic music magazine” [⑨]—this issue of the e-magazine is 35.4M in total, centered on the new song “Ai yo ai yo dui bu qi” by the Internet singer Xiangxiang. The e-magazine launched this time has only 18 pages, and the next issue will have more than 88 pages.
This is the new exploration of China’s e-entertainment and fashion magazines. This issue is still distributed to users for free, while future magazine fees and advertising revenue will be shared together with the copyright company.
Of course, the new exploration still faces many difficulties. First is the problem of size: the first issue, with only 18 pages, is already 35.4M; one can imagine how large a magazine with more than 88 pages would be. Such a magazine cannot possibly be sent by e-mail. If it is offered for online download, it will shut out narrowband users [⑩]. Another issue is how to encrypt it, how to charge for it, and so on—all of which must be resolved.
I believe that at the present stage, in addition to distributing paid electronic fashion magazines by placing them online and waiting for users to register and download them, one can also combine them with some traditional channels, for example by using them as supplements or special issues accompanying print magazines, or distributing them together with CD music albums. Of course, if the content is valuable enough, selling them as separate CDs is also a decent choice at this stage.
D, Literary and leisure magazines
Literary magazines should try to cooperate with and learn from the booming online literature websites such as “Rongshuxia,” including the model of Mingyang Pinshu Net and Tiexue Military Net mentioned above: by serializing excellent literary works to hook readers’ interest, and by setting up some paid sections to make a profit. Of course, this model is best carried out in cooperation with a platform operator to establish a unified payment platform.
E, Online versions of traditional magazines
The main problem faced by the electronicization of traditional magazines is the overlap between the electronic and paper versions, which means that the publication of the electronic version may affect the sales of the paper version. The options facing publishers can be to make the electronic version of the magazine freely public, to give the electronic magazine as a free supplement to subscribers of the paper magazine, or to distribute the electronic magazine as a paid publication, and so on. In addition, the electronicization of traditional magazines can strengthen advantages such as the data search function of magazines and the interactivity between readers and editors, thereby bringing publishers greater profit and a broader market space through the electronicization of traditional magazines.
 
Reference materials
1. Zhang Jianting: Thoughts on the Problems and Countermeasures in the Development of Chinese Network E-magazines,
http://www.cmcrc.com.cn/gb/cmcxk/detail.asp?barid=3&tbarid=3&articleid=441
2. Zhang Jianting, Zou Ye: Five Prescriptions for E-magazine Service Providers,
http://media.people.com.cn/GB/22114/46419/46429/3602828.html
3. China.com: Soim E-magazines Are Not Easy; Faced with Survival, It Chooses Paid Services
http://tech.china.com/zh_cn/zhuanti/charge/10001275/20010815/10080835.html
4. Shanghai Youth Daily: Soim Launches the First B2B Internet Magazine in China
http://sh.sohu.com/20000804/file/240,162,100115.html
5. NetEase Technology Report: Genuine Electronic Music Magazine Appears; Future Profits Will Come from Paid Reading
http://tech.163.com/05/1109/09/223TQ2NK00091M9B.html
 
 
[①] Reference material 1, Zhang Jianting: Thoughts on the Problems and Countermeasures in the Development of Chinese Network E-magazines,
[②] Reference material 4, Shanghai Youth Daily: Soim Launches the First B2B Internet Magazine in China
[③] Reference material 1, Zhang Jianting: Thoughts on the Problems and Countermeasures in the Development of Chinese Network E-magazines
[④]
After magazines began charging, Soim continued exploring advertising models. In response to advertisers’ doubts about the effectiveness of e-magazine ads, Soim created a click-to-subscribe method. In each issue of the magazine, there were several ad links. Free readers could click these links and browse the ad pages online, thereby obtaining so-called “ad points.” Two ad points could be exchanged for one daily issue, and three points for one weekly issue. To protect the interests of paying users, free users were limited to receiving at most four magazines.
[⑤] Reference material 3, China.com: Soim E-magazines Are Not Easy; Faced with Survival, It Chooses Paid Services
[⑥] Reference material 2, Zhang Jianting, Zou Ye: Five Prescriptions for E-magazine Service Providers,
[⑦]
The above data were taken from Xiwang’s homepage on December 11, 2005. In fact, as of the data on October 14, 2003 (see reference material 1), Xiwang had more than 40,000 mailing lists, 22.84 million subscribers, and about 6 million non-duplicate subscribers. Over these two years, the figures have instead decreased, which is actually a good thing, proving that Xiwang has made efforts in clearing out junk information.
[⑧]
(Some free mailboxes cannot normally receive Xiwang’s e-magazines. It is recommended to use NetEase’s free mailbox. NetEase provides China’s largest 2,280M free mailbox, click to register! Register now and also receive an extra 280M super-sized network disk, while also offering exclusive 24-hour phone support 020-83568090. Click to register)
[⑨] Reference material 5, NetEase Technology Report: Genuine Electronic Music Magazine Appears; Future Profits Will Come from Paid Reading
[⑩] At present, POCO uses P2P transmission methods