LONDON (Reuters) - Computer maker Hewlett-Packard Co(HPQ.N) is expanding its fledgling print-on-demand magazine business globally as it sees a multi-billion-dollar opportunity to reinvent magazine publishing.
HP, the world’s biggest technology company by revenue, is the first major firm to offer publishers and consumers the chance to have one-off magazines printed and delivered to readers. A few similar services exist for book publishing.
HP’s service, called MagCloud, has helped revive photo-journalism magazine Life, which had stopped publishing in print form but now offers special issues through MagCloud. It has also won business from Atlantic Monthly, among others.
HP will now offer worldwide shipping for magazines ordered through MagCloud, after a two-year U.S. trial. It will also offer a software app for Apple‘s(AAPL.O) iPad tablet computer, for readers to download digital copies or order hard copies.
Many magazine publishers, whose sales have been declining for years, have high hopes that the iPad and other tablet computers being launched in its wake -- with their large, colour screens -- will become a driver of new business.
“Volumes are becoming significant and that’s why we’re ramping it (the service) up out of beta,” Andrew Bolwell, HP’s director of new business initiatives, told Reuters in a telephone interview. “We really feel there’s a multi-billion opportunity.”
Magazines, with their high production costs and heavy dependence on advertising, have suffered more than any other medium in the recession.
Forecasts released by Publicis agency ZenithOptimedia on Monday predict that global magazine advertising revenues will drop to $42.7 billion next year from $55.1 billion in 2008, a fall of 23 percent.
Bolwell said that of the 3 billion magazines delivered to news stands in the United States each year, about 62 percent were never sold, citing a report from publishing distribution consultancy Harrington Associates.
“If you were to place them end-to-end they would circle the Earth 16 times,” he said. “So you’ve got this waste in the current model, and with the Internet you’ve got consumers demanding more specific copy.”
As well as producing magazines to order on behalf of publishers, MagCloud also offers consumers the chance to become publishers themselves, and has spawned one-off “pop-up” magazines on topics such as last year’s Haiti earthquake.
HP, whose imaging and printing division accounts for about a fifth of company sales and a third of its operating profit, will use its network of Indigo printing-press customers in the U.S. and Europe to print and deliver for MagCloud.
HP’s standard price is 20 cents per page, which includes a small profit margin for HP, and publishers set their own prices for consumers, taking the entire mark-up.
Consumers pay for delivery, which costs about $1.40 in the U.S. and is subsidised by HP. Bolwell declined to say whether HP was yet covering its costs.
(Editing by Sharon Lindores)
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