Working paper, version 2.0, March 2012 Department of Informatics, Umeå University 901 87 Umeå, SWEDEN Copyright © 2011, The authors D A N I E L N Y L É N

J O N N Y H O L M S T R Ö M

K A L L E L Y Y T I N E N

Bonnier: Digitalizing the media business

The Bonnier Group1 (Bonnier below) is the oldest publishing house in Scandinavia. Founded in 1804, it remains fully owned by the Bonnier family and is run by a member of the family as the CEO. Bonnier is well known as a conservative high quality publishing house, which has discovered and honed Swedish Nobel prize winners such as Tomas Tranströmer, August Strindberg and Pär Lagerqvist. Because of its rich publishing record it is seen as an icon of Swedish culture. At the same time, Bonnier is a powerful force in Swedish media and society at large. In fact, Bonnier now calls itself a multi-channel media company, because it owns Sweden’s largest morning newspaper (DN), the second largest evening paper (Expressen), the largest daily business paper (Dagens Industri), one of the largest TV-channels (TV4), and the dominating movie theatre chain (SF). Since 2005, Bonnier has become a global through series acquisitions in the Nordic countries, Europe and most recently - in the U.S.

(2008). Currently, the firm consists of 175 firms operating in 16 countries2 while the headquarters remain located in Stockholm, Sweden.

The expansion to the US magazine market was the first one of two major initiatives that were launched by the new CEO Jonas Bonnier as he stepped in 2008. The second one was to establish an independent R&D-department. Bonnier hired well-known media consultant Sara Öhrvall to run this department. Having extensively consulted for Bonnier in the past, and serving on the boards of TV4 and Dagens Industri, she was not a complete stranger to the firm. When Sara was hired she asked for full freedom to assemble her R&D team. Placed on the top floor of the Bonnier building in Stockholm and reporting directly to CEO Jonas Bonnier, her new role was therefore viewed controversial among many pockets of the old company.

Since the summer of 2009, the R&D team worked primarily on a project that will define the future digital magazine. During the project Sara decided to move to Silicon Valley and acquaint herself with local media firms and digital entrepreneurs. Her goal was to investigate the possibility of setting up a project team in San Francisco to develop a platform for the future digital magazine. By December 2009 she had an office up and running in Silicon Valley. The team consisted of U.S Bonnier employees, members from her Swedish R&D-team and external consultants and digital entrepreneurs. Also representatives of a media agency Berg (London) moved to SF to work with the team. The team’s goal was to create a prototype of a (software) platform to publish and distribute digitally magazines on tablets. The team worked intensely for one month by running extensive design and coding camps. These workshops practically ran around the clock. At the end the team managed to build a rough prototype of the future digital magazine. The team produced also a video to illustrate the prototype, which was uploaded on Vimeo on December 16th 20093.

The events that unfold after this release are unprecedented. As Sara woke up next morning after the film was uploaded the news about their Mag+ concept was on the front pages of Wired, Engadget and Gizmodo. She had voicemails from reporters of The Financial Times and New York Times wanting to

1 http://www.bonniercorp.com/ 2 Bonnier Website (http://www.bonnier.se/). Accessed 20/04/2011

3 http://vimeo.com/8217311

interview her. Yet, at this stage she had no plan to the launch a real platform. The prototype video was distributed to get ideas out and to obtain feedback on these ideas while waiting for an appropriate tablet to be available for implementation.

In January 2009, Sara attends the traditional Apple keynote event where Steve Jobs introduces the iPad. Sara remembers how she, after the event, immediately calls up her team and tells them to download the Software Development Kit (SDK) for iPad OS. From this point on, Sara and her team will fully focus on implementing their prototype on the iPad. The first version of the prototype on iPad is released on April 2010. Bonnier’s magazine Popular Science becomes the first publication to be adapted to the new Mag+ format. Along with Time magazine, Popular science is the first magazine available on iPad, which can be purchased in the App store. On April 8th 2010 during his keynote, Steve Jobs calls Popular Science+ "the king of the hill" among apps for the iPad. Bonnier and the new Mag+ format receive thereby new wide media attention. This pays off: the Mag+ becomes profitable within six months. Never before had any product become profitable so quickly within the Bonnier group. Mag+ has since then been spun off into a separate company Moving media+.

Since spring 2011, Sara has been back in her office in Stockholm. She now looks back at her last three years as a R&D manager and she is satisfied. The time spent in San Francisco and the launch of Mag+ had been a success exceeding all expectations. Not only Bonnier as a company, but herself as an innovation leader were now recognized on the international media scene. However, the future is full with new questions. Surely Mag+ had been a success, but in which direction should Bonnier take the product? The design process so far had been intense mainly focused on the format and functionality of digital magazine. But the questions about the environment and broader business model remain challenging. Should the future reading experience be integrated with social media platforms such as Twitter and Facebook? Do readers want to discuss and see comments on social media of the articles they are reading? How much content and of what kind should be included in a single issue of a magazine? Essentially the digital format challenges the very definition of what a magazine used to be. Developing these features on Mag+ was just one of the challenges. The main focus should be on creating new business around products or services rather than translating existing products into a digital format. But what could be this “new type of business”?

Changing media landscape During the last three decades digitalization has had a pervasive effect on several industries, such as

the music and imaging industries as testified the bankruptcies of one iconic company after another including Tower Records, Kodak and so on. The printed media industry is no exception. The rise of the Internet in the late 90s did not have an immediate effect on traditional printed media. Most publishers just set up their webpages. Those were often static and contained contact information and re-productions of the content from the printed media. Recently, newspapers have, however, extended their presence online by adding more and more interactive and multimedia features to their sites.

Around 2003-2004 the number of blogs around the world started taking off. At the same time, the term Web 2.0 was becoming popular in the netizen discourse. One characteristic of this new type of functionality is the drift of users of being just consumers to becoming content creators. By 2006, Myspace had quickly grown to host around over 100 million users, Facebook was growing fast, and Twitter was launched. The emergence of social media triggered a rapid growth in the number and popularity of independent websites, blogs, twitter feeds, and Facebook groups. These new arenas of content delivery also overlapped with the distribution channels traditionally occupied by the mainstream news 4 . Although many traditional publishers initially were critical towards blogs, eventually they increasingly incorporated blog portals, and also started using Facebook and Twitter as new distribution channels. This enabled their readers to increasingly comment on articles published across media. Blogs, and Web 2.0 offered new forms of content crowdsourcing as well as dramatically increased the pace of spreading information. As readers turned overwhelmingly to online sources for content, sales figures of printed newspapers and magazines started dropping and the business models in printed publishing were under severe attack. This resulted in the constant decline in the circulation, subscription income and advertising revenue, which challenged the core business of most printed media.

4 Jenkins, H. (2006). Convergence culture. New York: New York University Press.

In the last decade most if not all traditional product categories in the printed media industry have become challenged including the traditional book format. In 2009 several major US Newspapers filed for bankruptcy5, which is a seemingly inevitable result of declining newspaper sales since 20046. In the magazine business, the number of paid subscriptions had been on a steady increase during the period 2001-20087. The following two years, 2009 and 2010, however, saw a distinct decrease8. (see exhibit 1) Summing up, most of Bonnier’s core business are under severe threat.

Publishers have adopted multiple strategies for responding to these challenges. Magazines have launched social ventures such as wine clubs, weight loss clubs, web shops or events such as different types of award ceremonies. New forms digital and online presence has become a salient theme in how to balance free content and premium services or content crowdsourcing and professional journalism9. The same challenges apply also to Bonnier and its magazines. What is unique in Bonnier’s response however, is its determined effort to radically innovate using digital capabilities as reflected in its effort to establish a centralized R&D-department and the highly exploratory approach of its projects.

200 years of Publishing: A short and Glorious History of Bonnier

Bonnier has its origins in the bookstore that Gerhard Bonnier opened in Copenhagen in 1804. Eventually, during the Napolean wars due to the continental embargo Denmark was hit by economic depression that led to the whole country filing for bankruptcy. Gerhard's son, Adolf, was sent to Sweden to explore other options along with a couple of boxes containing books10. These operations expanded during the following decades and Bonnier eventually became one of the largest publishing houses in Sweden. Karl Otto Bonnier took over the leadership of the firm in year 1900 and the expansion continued. In 1909, Karl Otto bought a majority of the shares in the biggest Swedish newpaper Dagens Nyheter. The expansion continued to magazines in 1929, when a major publisher of weekly magazines, Åhlén & Åkerlund, was acquired. Ever since this acquisition magazines have continued to be a key business for Bonnier. In many respects the company led the emergence and growth of the magazine market in Sweden.

The related business story is not only a successful publishing firm gradually integrating most types of media channels and categories into their content delivery portfolio. It is also story of deeply intertwined media influence within Swedish society and its public sphere. Bonnier’s highly dominant position in the Swedish media scene has been a subject of debate not unlike discussions of the effects of media ownership concentration around Silvio Berlusconi or Rupert Murdoch’s (Newscorp) publishing empires.

International expansion

Bonnier positioned itself as a truly international player within the media business in 2008. This was a big step for the company. However, visions of branching out globally and establishing the firm on the U.S. market were not a new phenomenon. Already in 1911, the soon to be CEO for the Magazines division, Åke Bonnier founded the Bonnier Publishing in New York11. Aquiring U.S magazines with strong market positions was at the top of Jonas Bonnier’s agenda when he entered the role as COO in 2005. Jonas is the son of Lukas Bonnier, who was the CEO of Bonnier owned Åhlén & Åkerlund for a

5 http://www.guardian.co.uk/world/2009/feb/24/advertising-us-recession

6 http://stateofthemedia.org/2011/newspapers-essay/data-page-6/

7 http://www.magazine.org/CONSUMER_MARKETING/CIRC_TRENDS/1318.aspx

8 http://stateofthemedia.org/2011/magazines-essay/data-page-4/

9 http://www.economist.com/node/18928416

10 Karlsson Stider, A (2000). Familjen & firman. Doctoral dissertation, Stockholm School of Economics. 11 Larsson, M (2003). Bonniers - en mediefamilj 1906-1990. Albert Bonniers förlag, Stockholm.

total of 23 years and later Bonnier chairman. In January 2008, Jonas succeeded Bengt Braun and was the first family member at the CEO-position in 10 years.

“We have to constantly adapt our businesses to the changing – or unchanging – needs of readers, viewers and visitors. We have to stay ahead, but not too far ahead. In a world that is becoming more global and transparent, with lower barriers of entry and competitors everywhere, at the end of the day it is quality that counts (and is what people are willing to pay for).”

— Jonas Bonnier, CEO, Stockholm, March 2011 (From 2010 Annual review)

Bonnier’s expansion strategies can be characterized as opportunistic. At the same time they have

been based on solid understanding of the global media industry enabling them to make sound assessments on which markets to enter. First, in 2006, it acquired a large percentage of World Publications hosting 35-40 special interest magazines, mainly in the area of action sports. Second, in 2007, Time4Media was bought from Time inc. The firm hosted around forty five titles. The strategy was to acquire specialized niche interest type magazines12.

Bonnier describe themselves as a firm that approach their investments in long-term. Investments are driven and controlled by the board and the Bonnier family. When the major US acquisitions were made, the American business press asked Jonas about what Bonnier’s intent was. When Jonas answered that they could come back and ask the same question in twenty years many journalists were puzzled. Jonas enjoyed communicating the message that Bonnier should not be perceived as a quarter-economy firm.

Bonnier R&D and the Mag+ format In 2009, the Bonnier operations were divided into six business units; books, magazines, broadcasting and evening paper, entertainment, business press, morning paper and digital13 (Exhibit 8). In this case study however, a particular focus is on the central R&D team as well as the magazines and digital divisions. A breakdown of each business area and corresponding net sales is displayed in Exhibit 2.. When the R&D department was started it was sort of floating above and beside the existing business units. Digital projects where discussed in a coordinating group made up of the media managers from each division. This group was called the New media council and Sara had to present digital initiatives to this group before initiating projects. However, during 2010, a new division called Digital was founded. Shortly afterwards it was also announced that the R&D department would merge with this division, Sara entering the role as R&D manager at Bonnier digital. Up until 2008, Bonnier had never worked with R&D matters on a central level. Innovation took place locally within business units. There was weak, close to non-existent co-ordination between the projects. Sometimes products and services competing with each other were launched. One example is when the evening paper Expressen launched a cooking website a day before TV4 did the same. Pontus Schultz, Head of Business Development at R&D, and Bonnier employee since the late 90’s:

When I had my desk at the head office, every now and then someone would come in and ask for Bonnier. When that happened, all of the staff would start shifting their gaze, not really understanding what the person was talking about. It was like: “But what? Do you want to talk to Expressen, TV4 or ...” It is an extremely decentralized organization that has nearly developed a touching phobia, horrified by any type of central initiative. There are historical reasons for that. It is mainly built on the media concentration debate, which the Bonnier-owned businesses handled by basically not getting involved at all in what any other business was doing.

— Pontus Schultz, Bonnier R&D, Stockholm, November 2011

12 http://www.bizjournals.com/orlando/stories/2007/03/05/daily6.html 13 Bonnier Organization chart (http://www.bonnier.se/sites/default/files/Bonnier_110613_Organization.pdf - http://www.bonnier.se/sites/default/files/Bonnier_110613_Organization.pdf) Accessed 20/04/2011

Traditionally, the media industry has been conservative. Changes in the industry take a long time. In this regard, Jonas’ fast decision to hire Sara and have her start an R&D division from green field can be interpreted as a bold move. It signals an ambition to break free from traditional ways of working and change Bonnier’s innovation culture. The changes that followed are illustrated in Exhibit 3.

Setting up an R&D division

After finishing her MSc in international business in Sweden in the early nineties, Sara Öhrvall started her professional career through embarking on a period of international appointments. First, she worked with product development at Toyota in Japan. From there she moved on to Volvo where she worked for several years with the development of new car models while being stationed in Singapore, Hong Kong and Brussels. In 1998, Sara moved back to Sweden where she started a position as a CEO and partner in a firm focusing on brand strategy. One of the customers that she continually consulted during the following ten years was Bonnier and she sat on the board of directors for TV4 in 2006 and for Dagens Industri in 2007.

When Sara received the call from CEO Jonas Bonnier in 2007, she was surprised. For a long time, she had been trying to convince Bonnier’s top management to re-organize their R&D activities for the digital age with little response. Hence, the call was unexpected, but welcomed.

“I was on the board for both TV4 and Dagens Industri before I went over to Bonnier. But still when I was called up by Jonas Bonnier... it was a bit unexpected, really. Because by then, in some way, I had been nagging and expressed my views to management about what they were lacking. How they really should think about coordinating certain things. But I hadn't really received any feedback on my suggestions. But then Jonas was appointed as the new CEO in January 2008. I guess that he felt that when starting off on this position, he wanted to try new things and ways to innovate the business. However I do believe that it was pretty much the board's initiative, because they had been requesting some changes for a long time. I guess senior management had been resisting this, but then when Jonas was on board, I felt that this suits me very well, I want to do this.”

— Sara Öhrvall, R&D Manager, San Francisco, October 13, 2010

However, what Sara was offered was pretty much a business intelligence role, which was not the type of role she was looking for.

“So, what they requested was very research oriented. We discussed it long and hard, and I was sort of agreeing with them in one sense, but said that, if that's what you want to do, then you can look somewhere else.”

— Sara Öhrvall, R&D Manager, San Francisco, October 13, 2010

Sara pushed for the role to be a Research & Development-role and Bonnier finally agreed with her. One way of describing it is that Sara created her own role at Bonnier. She was hired from January 1st 2008 and Bonnier founded an R&D-division, which she was appointed to manage. Sara was given complete freedom to recruit her team. Placed on the top floor of the Bonnier building in Stockholm and reporting directly to CEO Jonas Bonnier, this appointment was seen as controversial by many within the company. The R&D-team that Sara assembled was a mix of internal and external recruitments.

“At Bonnier, we started the year with the launch of a new Research & Development unit, led by Sara Öhrvall. Their task is to identify opportunities to develop and initiate new projects in a fast-changing media world. The R&D department sits next to the business area CEOs for maximum information sharing at Bonnier’s new open-plan headquarters, where we moved in April.”

— Jonas Bonnier, CEO, Stockholm, March 2011 (From 2008 Annual review)

The R&D-team that Sara assembled consisted of a mix of internal and external recruitments. Sara’s first recruitment was Alexander Jamal (Concept Development Manager). He was recruited internally

coming from a position as a producer at TV4. Björn Jeffery (Director, Future Media & Technology) was recruited externally, coming from a position as a CEO at a web agency that had done consultancy work for Bonnier. Emil Ovemar (Director, User Experience) had also done consultancy work for Bonnier and was recruited from another web agency. Pontus Schultz (Head of Business Development) was an internal recruitment. Pontus was and continues to be the editor for Veckans affärer (Swedens largest weekly business magazine) while working for R&D at the same time.

Projects

During its early days, the R&D department worked hard to legitimize itself. Divisional managers questioned R&D's role and were worried that they would take over all their innovative projects. According to Sara, the very decision to start a central R&D department was seen as highly controversial within the firm.

“For a lot of companies, it is very safe to employ someone who only works with business intelligence. It's a very "nice thing to have". The business intelligence-guy is a person you can use externally - he can go to lectures, hold presentations and he can be a bit of fun to listen to. He can attend all the annual meetings - he's like a little mascot. But as soon as you're going to work with development you are dangerous, and you're a worrying person that suggests changes that will hurt a little. Companies are likely to get stuck in a situation where... "it's nice to get some good advice", but that's it.”

— Sara Öhrvall, R&D Manager, San Francisco, October 21, 2010

Sara describes how she wants her R&D-team to be perceived as people that are courteous and polite, but uncomfortable at the same time. The first product that R&D delivered was news commentary and debate site newsmill.se in September 2008. The site is run by a handful of editors, but the public, hence employing a user-created content, sends in articles. The site was nominated for the Swedish annual award “The great journalist award” in the category “Innovation of the year” in 2009. The site itself was also subject to debate as it was criticized for contributing to an aggressive unconstructive debate, as well as for allowing extremists to spread their views. R&D also became more visible in January 2009 as they started their blog, twittering and an online R&D lab.

“I think the most important thing for an R&D department is that you have the space to challenge the existing business. As soon as you do not have that space, and you are compromising to the extent that you’re getting a bit harmless, then you’re not really R&D any longer. Then you are some kind of business development resource for existing businesses. It has to hurt a little to work with an R&D department.”

— Sara Öhrvall, R&D Manager, San Francisco, October 21, 2010

Although the Newsmill-site received a lot media attention in Sweden and was widely discussed it was not this project that was going to put Bonnier in the international spotlight. Soon after it was finished the R&D team moved on to the next project.

“Going to San Francisco”

During the summer of 2009, the R&D team starts work on the digital magazine of the future. Based on the general understanding that Bonnier’s digital business was not working, the mission was to create a digital product that the customers would pay for. This was handed to them by Jonas Bonnier.

“The actual concrete goal for the project was to create a digital premium product for tablets. I remember when we started the project and we sat and felt like; this is the dumbest thing we ever did. Someone would come up with an idea that seemed great, but then someone else in the team would say; - It's called the Internet and that already exists! I recall that at some point Jonas came in, giving a kind of pep talk saying; "You know what? Imagine this: the best minds in the industry have spent 15 years in addressing this issue, and they haven’t come up with anything. You will not know more in February than you know now, so you might as well start doing something." Somehow, it was good, because we just rigged the project anyway. We realized that whatever conclusion we make, it would be wrong. It is quite a pleasant insight in some way, because first of all you can start to get busy working. Second, you realize that you

have to rig the project in a way so that you can constantly twist and and turn the levers. And that has to be done in some sort of close collaboration with the readers, the advertisers and the hardware people. I think that was the great insight.”

— Pontus Schultz, Bonnier R&D, Stockholm, November 2011

As a way forward it was decided that Sara will move to the U.S. and meet with media firms and digital entrepreneurs with the goal to investigate the possibility of setting up a project team. One motivation for this decision was the significant market potential in the U.S. Since Bonnier had just acquired around 60 magazines it made sense to do something in this market. As explained by Sara:

“And the reason we are sitting in San Francisco was entirely my own initiative. Choosing among cities in the U.S. was a no-brainer. Close to competition in both talent and knowledge, and above all - technology contacts, which I believe is what media companies are lacking most of all.”

— Sara Öhrvall, R&D Manager, San Francisco, October 13, 2010

Looking back today, as the iPad and other tablets have become ubiquitous it is easy to forget that in the autumn of 2009, no one really knew where the future market of tablets would be. Several failed attempts had been made in the previous decade to create a tablet market. The Kindle had been released in 2007, but it was designed with a black-and-white display and was intended only to become a device for reading digital books. Sara formulated her idea of going to SF as follows:

“It was very specific, it was; we believed that the digital touch screen is coming now. We didn't know this for a fact. The talk about Apple releasing a tablet was only rumors, but we were quite sure that it would happen, and that more firms would follow. We saw it as a tremendous opportunity to reposition the digital media, and we had decided that we would launch as these products were released. We were going to take lead and do something that took the world by surprise. “

— Sara Öhrvall, R&D Manager, San Francisco, October 13, 2010

Emil Ovemar (User experience director) pushed for the importance of establishing design principles that would guide the project. A set of such principles were formulated in late October 2009 along with a project plan. These were communicated to the Swedish, Danish and US editorial teams. Pontus was put in charge of this component of the project, with the aim of involving editorial staff from within the company in shaping the idea what a digital magazine could be. Each team was handed the assignment to, over a period of two weeks time, design a lo-fi, conceptual prototype of embodying their thoughts about how a digital magazine could look.

The best ideas from the prototypes were synthesized into a more refined, however still very much conceptual prototype by British design agency Berg14..At the same time, Sara set up a team in San Fransisco. By December she had an office up and running (see Exhibit 3). The team was an assemblage of U.S.-based Bonnier-employees along with external consultants and entrepreneurs. Representatives from Berg moved also over to live in SF for two months. An intense process commences where this team works one month to finish a version of the prototype that can be presented internally and externally. Hours are long and the project team practically works around the clock.

It is decided that a way of presenting the prototype is through illustrating it in a video format. One of the reasons being that Berg are specialized in such productions. At this point, the team felt that they should have a try at just throwing the video out to the public and see if it sticks. Sara described this method as an "underground approach". By doing so they used the Internet video service for crowdsourcing. This, in fact, enabled them to cut the development time of the final product in half.

14 http://berglondon.com/

Overall, no PR-people were hired, no focus groups conducted, and no marketing campaigns were financed. Instead, the team members sat down immediately after having uploaded the video to write personal letters through e-mail to a long list of influential media and technology bloggers. The film was uploaded on video service Vimeo on December 16th 200915.

The next morning Sara got up she had a long list of missed calls on her phone and her E-mail inbox was clogged up. To wit she was positively surprised about the massive and quick response. This initial success Sara partly explains by the timing of events.

“It was clearly good timing, as everyone was speculating about the iPad and wondered what this thing would look and feel like. Partly it was probably also because magazine publishers had not been doing very interesting stuff on digital magazines. There was a prototype out of Sports Illustrated out on Youtube before ours, but that one wasn't that amazing... it was not that interesting.”

— Sara Öhrvall, R&D Manager, San Francisco, October 13, 2010

Through uploading the video, R&D team received a lot of feedback that they would use in the next steps of the project. In January 2010 Sara attends the Apple keynote event where Steve Jobs introduces the first iPad. Sara describes how she, after leaving the event immediately calls up the team and tells it to download the Software Development Kit (SDK) for iPad.

Mag+ and the iPad

It is not that easy to describe shortly how the Mag+ works technically. From the reader’s perspective, navigation is done by swiping and tapping (see Exhibit 4 for navigation instructions). The underlying system is in many ways different from other similar products on the market. For the purposes of this case, it is therefore important to describe some basic functionality of the system. Although there are several versions of the Mag+ back-end system, we will illustrate the version that was launched for the mass market and which is on sale today as it does not differ significantly from the original idea.

Mag+ comprises three components; the plug-in16 for Adobe Indesign, the Production tool17 and the reviewer-app. The first two can be downloaded for free from magplus.com and are then installed by the user on her PC or Mac computer18. The reviewer-app can be downloaded from the App-store and needs to be installed on the user’s iPad. Exhibit 5 illustrates an overview of the process for designing and publishing a magazine with Mag+. We will next describe this process in more detail. The starting point is an existing magazine page designed in Indesign. This page can be transformed from the format of a traditional print-magazine page to adhering to the dual-orientation format of Mag+. The plug-in does this. In order for this adaption to run smoothly, templates with the correct dimensions are included in the plug-in package.

The user designates which publication and issue the magazine page she is working on belongs to in the plug-in19. Once a page is done, the user exports it to the Mag+ production tool. This is stand-alone software where the publications and titles are managed. Here, the individual pages of a magazine issue are combined and organized in the right order using drag-and-drop functionality on a publication-level. The content can also be moved between different issues.

15 http://vimeo.com/8217311

16 http://www.youtube.com/watch?v=k6zBc7gc3cI

17 http://www.youtube.com/watch?v=mqnj2KUgpbw

18 http://www.youtube.com/watch?v=JtDR5jpkEus

19 http://www.youtube.com/watch?v=iinGv5O2ook

An important tool is also the reviewer-app. As long as the user is able to connect her computer and iPad to the same Wifi-network, the app can be used for real-time preview when building the issue. This can be labeled a testing-environment20. Once the user is finished with an issue of a publication and wants to upload it to iTunes she has to contact the Mag+ team. This can be done through their website. An account is created and the user can pay via Paypal. The user can then log on to the Mag+ website where she can manage her publications and issues published so far. The actual app that makes up an individual publication is created and uploaded automatically via the website.

When a reader wants to purchase a particular magazine, she searches on the magazine title in the App store. Once found, the reader installs the App. Within each magazine’s app, the reader can tap and install as well as pay for the issue of that magazine they want to purchase.

Bonnier owned magazine Popular Science was the first publication to be adapted to the Mag+ format. When the iPad was released in April 2010, iPad users were able to purchase the first issue of Popular Science+ in the App store21. The big payoff for the R&D-team came on April 8th 2010 during a Apple keynote when Steve Jobs calls Popular Science+ "the king of the hill" among magazine apps for the iPad. Thus, Bonnier and the Mag+ format received heightened media attention.

Popular Science+ average sales for the first four editions (April-July) were 14,034. The newsstand sales of the printed Popular Science magazine averaged 115,101 during the same period. Hence, Popular Science+ sales were equivalent to 12% the printed Popular Science newsstand sales. Jonas Bonnier is very satisfied with what the R&D-team have delivered.

“Mag+ (and News+ also) helped to push Bonnier ahead of most of our competitors in the digital media space, but primarily it should be seen as a first step to finding a new business model for digital content.”

— Jonas Bonnier, CEO, Stockholm, March 2011 (From 2010 Annual review)

Mag+ had been a successful project for Bonnier in many ways. Above all, it had put the company on the international media scene and right under the spotlight because of Steve Job’s homage. However there was a lot of work to be done if the Mag+ was going to become a working product that other publishers would want to buy and be able to use smoothly in their daily operations.

Mag+ in maintenance mode? When it comes to digital magazines, Bonnier competes now in two ways. First they compete with other suppliers of digital tools and platforms for producing digital magazines, such as Adobe22, Zinio23, Woodwing24 and Quarck25. Second, the Bonnier owned magazines compete with other magazines for readers. This competition was already present when only printed magazines existed. An example where Bonnier competes with other actors on both a publisher and platform level is the competition between Popular Science+ and Condé Nast-owned Wired’s iPad edition.

Mag+ is currently owned and managed by a Bonnier-owned company; Moving media+ AB. which was formally founded in January 2011. The whole project started as Staffan Ekholm met with Sara in March 2010. Staffan had a long career in Swedish IT-firms such as Framfab and Roxen and was now looking for a new role. Staffan got involved in the project about the

20 http://www.youtube.com/watch?v=2a87qMFvlbg

21 http://vimeo.com/10630568

22 http://www.adobe.com/products/digital-publishing-suite-family.html

23 http://www.zinio.com/

24 http://woodwing.com/

25 http://www.quark.com/Solutions/Dynamic_Publishing/Digital_Publishing.aspx

time the first issue of PopularScience+ had been released. Staffan’s first mission was to analyze how Mag+ could be commercialized on a practical and technical level.

As Staffan started looking at the back-end system, he realized that it was very much a beta version. In order for Bonnier to able to launch PopularScience+ in time, Berg had built a temporary production system. The production system was a web based Content Management System CMS. This type of system is mainly used to create, manage, store, and deploy content on Web pages26. Staffan thought that the idea seemed appropriate. However he quickly realized that this type of system did not fit well with the way magazine’s editorial teams worked. They were immersed in Adobe Indesign and were used to being able to move objects freely on the screen. A CMS-system was perceived as static and complex by editorial staff. The decision was to make a plug-in for Indesign instead.

Moving media + currently has around thirty employees who are divided into three units; product development, sales & marketing and services & support. The main team is located in Stockholm and a team in the US is being set up. The long term vision is that sales should mainly be taken care of via the firm website. Mag+ is being rolled out and several Bonnier magazines are adapted and published through the format. While Moving media focuses on selling the Mag+ to publishers, Bonnier R&D continues working on further developing the format.

The Mag+ payment model is based on monthly payments. The basic model is a fee of $500 per issue on a monthly contract. The customer can choose to host the data themselves or pay an additional fee for Mag+ to do this. Mag+ hosts the content on Amazons servers and 250GB worth of customer downloads is included in the monthly fee. Above that, Mag+ charges the customer $0,17 per GB of customer downloads. Hence the cost depends on which type of content is included in the issue. In the $0,17 per GB charge, Mag+ have added 10% to the amount Amazon charges.

The possibility for customers to handle their own hosting differs Mag+ from Adobe which does not allow the customers to opt out of Adobe’s hosting service. Staffan tells us that additional services are being discussed:

This is the basic package, but we plan on offering other services in the future. This could be an analytics service or other types of premium services. It might be something like an additional $50-110 per month rate for the different services. This would be added on top of the basic monthly fee. We will most likely introduce a range of other services as well. Technical or creative consulting, addressing customer requests such as "help us to develop the first issue because we have no idea what to do". There may be such things as training and education. Then there is also another type of service we can distinguish, it is technical support, which we in the current situation tend to include, but we will offer some form of “Mag+ care” service, which is both product consulting and help with anything else for that matter.

— Staffan Ekholm, CEO Moving media+, Stockholm, June 2011

The Challenges Going Forward

The establishing of an R&D department and Mag+ was a strategic response by Bonnier to the steady decrease in sales of printed media. It was an acknowledgement of the fact that readers increasingly turned to digital channels. These moves are attempts to find a viable business model in the new context. At this point, Bonnier as a company and Sara as a leader are established names on the international media scene. However, the future was filled with new questions.

Sara acknowledged the fact that the current version of Mag+ is essentially a translation of an existing product into a new channel. The product needed to be taken to the next level. Mag+ provides an excellent user experience, but it is an isolated environment. Even though it is a digital product, there is

26 http://en.wikipedia.org/wiki/Content_management_system

no way of interacting with other readers or content producers. All possibilities of word-of-mouth, viral marketing have been effectively closed off. How can this be changed in a way that makes sure Mag+ still is something customers want to pay for? Which strategy should Bonnier employ to effectively position Mag+ in todays digital ecology? Should it be integrated with social media such as Twitter and Facebook? ? Should sharing be enabled and certain content free, and if so, how can that be solved in the service design?

CEO Jonas Bonnier had been very clear that the next mission for Bonnier R&D was to find totally new types of business. When innovating on new products, simply putting the word digital in front of TV, newspaper or book was not enough from this point on. The company could see where these types of products were going and would be able to deliver them.

The world is becoming digitalized and new technology start-ups see the light every day. Many of them are launching new digital platforms and services that people are spending more and more time in front of. There is little saying that what used to be a world of passive media consumers, now turned to connected pro-sumers, tailoring content from digital sources as well as creating their own content would stay loyal to the old media companies. The members of the R&D department were asking themselves how much longer the TV or the magazine format really would remain dominant ways of delivering content. Were these product categories really the right ones today? In the future?

As a way of discussing what a “totally new type of business” could be, Sara asked the R&D-team to think about how digital media potentially manifest in new ways. Although it will be a bumpy road trying to answer these questions early on while innovating with new products and services, it is clearly the way to go in future. But how can this be done and what does it take?

Exhibits Exhibit 1: Decline in magazine sales & subscriptionsExhibit 2: Bonnier business areas and

corresponding net sales figures

Exhibit 3: Mag+ and R&D-department timeline

Exhibit 4: Navigation in Mag+

Exhibit 5: Mag+ design & publishing process

Exhibit 6: Additional links to videos about Mag+

Exhibit 7: Financial Statements

Exhibit 8: Organization flowchart

Exhibit 1: Decline in magazine sales & subscriptions

Year Subscription

2001 305,259,583

2002 305,438,345

2003 301,800,237

2004 311,818,667

2005 313,992,423

2006 321,644,445

2007 322,359,612

2008 324,818,012

2009 310,433,396

2010 292,237,864

Exhibit 2: Bonnier business areas and corresponding net sales figures

Division Net sales 2009

Books $ 990 889K

Magazines $ 837 456K

Broadcasting & Evening Paper $ 620 671K

Entertainment $ 275 559K

Business Press $1 406 440K

Morning paper $ 471 964K

Exhibit 3: Mag+ and R&D-department timeline

Exhibit 4: Navigation in Mag+

Exhibit 5: Mag+ design & publishing process

Exhibit 6: Additional links to videos about Mag+

Apart from the videos linked in the footnotes, there are a number of other videos available online that are relevant to the case:

Two keynotes from Umea University that were produced within the research project that formed basis for the teaching case: 1. Sara Öhrvall talks about the experiences from Bonnier R&D and the Mag+ project: http://www.youtube.com/watch?v=Ngj08YemnVs 2. Professor Kalle Lyytinen’s talks about the challenges and opportunities associated with digitalization and innovation: http://www.youtube.com/watch?v=LAWS58wiVGY There are also a large number of videos produced by the Magplus team: http://www.youtube.com/user/magplus A presentation by Megan Miller (Program director, Bonnier R&D U.S) from the conference Managing Experience Across the Web & Beyond, March 6-7, 2011, San Francisco: http://www.youtube.com/watch?v=LNC3G9jOwzs Exhibit 7: Financial Statements

Exhibit 7: Financial Statements (continued)

Exhibit 7: Financial Statements (continued)

Exhibit 7: Financial Statements (continued)

Exhibit 8: Organization flowchart