Speaking at the D: Dive Into Media conference in Southern California on Tuesday, Hearst Magazines President David Carey said that 10-inch screens appealed to men for magazine content but that women were reluctant to embrace them. The 7-inch screen such as those found on the Nook or iPad, however, is leading to a surge in female subscribers.

Still, overall tablet figures are hardly overwhelming. Despite the fact that 40 percent of Hearst’s traffic is coming through mobile sites, tablets still account for only three percent of overall revenue; Carey says he hopes to get that figure to 10 percent by 2016. (Note: we’ll be exploring new revenue models for media at paidContent Live in April). Carey had predicted Hearst would reach 1 million digital subscribers by the start of this year but the number came in closer to 800,000.

In the meantime, traditional print magazines will continue to occupy a primary role in Hearst’s business. Carey says that perceptions of magazines have been tarred by the dramatic decline of newspapers. He argues that the ongoing popularity of print magazines with young women as well as their general brand strength means Hearst is in a good position.

Carey also praised Apple’s role in teaching consumers to buy online content. In response to a question about Apple’s control over consumer data, he said this isn’t a problem since 65 percent of readers volunteer to share such data.

But how long will these pricing strategies work? Digital still makes up only a tiny percentage of magazine publishers’ overall revenues: The Alliance for Audited Media (formerly the Audit Bureau of Circulations) reported in August that digital replica editions (which replicate most of a print magazine’s editorial and advertising content, and make up the vast majority of magazines’ digital versions) made up just 1.7 percent of overall circulation. The WSJ story says big magazine publishers think digital won’t hit 10 percent of circulation until 2015.

Pricing strategies that very early adopters appear to be accepting are not likely to work for a general population. Magazine publishers may need to adopt more nuanced digital pricing strategies as tablets take off. And they can look to book publishers — who are a lot further along in the digital revolution, with ebooks now making up over 20 percent of revenues at large publishing houses — for some help. Here are a few things they’ll have to think about:

The advertising conundrum

One of the biggest differences between the magazine and book publishing industries is that magazine publishers rely on advertising for revenue while book publishers don’t and never have. Print magazine subscription prices have plummeted, Hagey writes, because “magazine publishers have guaranteed advertisers their titles will reach a minimum number of readers and, to fulfill that pledge, they have long cut prices sharply for promotional subscriptions.” That’s why you can get an annual print magazine subscription for under $10. In tablet editions, magazine publishers see a chance to charge higher rates. Hagey notes that the average annual price of a digital subscription to a Hearst magazine is $19.99, “twice that of its average introductory print-subscription price of $10.”

At least for now, though, magazines’ digital editions bring the advertising from the print edition along for the ride. So digital readers aren’t getting an ad-free product in exchange for paying a higher price — magazine publishers are just charging more for the novelty of reading on a tablet. That’s a short-sighted strategy that probably won’t work as tablet adoption becomes widespread.

Will readers pay for enhancements?

The bells and whistles that magazine publishers are adding to digital magazines remind me of enhanced ebooks, which book publishers got very excited about a couple of years back. They hoped that by adding video and music to an ebook, they could charge more for it. Fast forward to 2013 and enhanced ebooks are widely considered a flop. So far, readers simply haven’t been interested in paying more for them. Book publishers have scaled efforts back and are no longer trying to charge higher prices for enhanced editions.

Magazines may be better suited to these enhancements than books are: E-commerce fits in well, for example, and videos and music may make more sense. But since a lot of this enhanced material is already available free online, readers may be reluctant to pay extra for it. The benefit for magazine publishers is that they can monetize those enhancements in other ways — through affiliate links to iTunes, for example, as Rolling Stone is doing. And Lucky is about to roll out a major e-commerce component that will likely rely on affiliate links as well.

Promotional pricing can work

Countless self-published authors have found that offering their books at initially very low prices is a great way to gain new readers: When the barrier to entry is low, readers are more likely to take a chance on an unknown name. This strategy is working less well as the ebook revolution progresses (and there’s a sea of self-published books out there), but magazine publishers, in the early stages of their digital era, can take advantage of it.

Magazine publishers already offer print subscribers discounts on other magazines they publish. Why not do the same thing with digital magazines? Or magazine publishers who sell print and digital editions separately could offer print readers a couple free digital issues or a discounted digital subscription for the first year. I also love the New Yorker‘s strategy of giving iPad subscribers free digital extras, like compilations of articles on a given topic and cartoon collections.

The good news for magazine publishers is that, with their digital revolution in the early stages, they can learn from those who came before them. The bad news is that many magazines are more threatened by free online content than most books are. As digital magazine reading moves from early adopters to a larger population, magazine publishers will have to find a way to give readers high-quality, no-substitute content at a reasonable price — or risk losing those readers to the internet.

Photo courtesy of Shutterstock / bernashafo

The “nearly 800,000 figure” falls short of the million digital subscriptions that Carey said was the company’s 2012 target in last year’s letter. (Last year, Carey did not break out how many digital subscriptions the magazines had.) The list of platforms also underscores how digital magazine reading changed in 2012: Last year, Carey mentioned subscriptions across “iTunes, Zinio, Nook, Amazon and Next Issue Media.” This year, Zinio, which is reportedly up for sale (and still without a buyer after six months), and magazine publisher joint venture Next Issue didn’t make the list.

Carey tells AdAge, “When I issued the one million goal, we had mid-300,000 e-subs in house, and while I knew it was going to be a real stretch, it was the right, super aggressive number to shoot for.”

A few other highlights from the letter: Carey says the company had 186 million monthly mobile page views by the end of 2012, up from 39 million in 2011; foodie site Delish.com introduced a print special that was sold with six titles at Wal-Mart, producing a 22 percent lift in single-copy sales; Hearts plans to “‘future-proof’ its digital business model at account for mobile viewing.

Full letter below.

Dear Colleagues,

Happy 2013! Welcome back after what I hope was a wonderful holiday break for each of you. If you were minding business at the office last week, I trust you also found it a peaceful place to be.

As we begin a new year, I want to take stock of our company’s accomplishments in the last year and look forward to what’s on tap for the coming one.

We have been thrilled by consumer response to the new print products we introduced, led most notably in the U.S. by HGTV Magazine and, globally, by 10 new Hearst international editions, including Esquire in Singapore and Colombia and Harper’s BAZAAR in Poland. We’re also enthused by the pace at which our content is ricocheting around an increasingly mobile world. At the end of 2011, we had 39 million monthly page views on mobile devices; by the end of 2012 that number had grown to 186 million.

But no question, 2012 will not be remembered as mellow in either media or meteorology.

Many of our businesses soared and produced record results. Others faced challenges, and the teams behind these brands have put in place fresh thinking for 2013. While in the past our businesses tended to move in unison—collectively, up or off—I believe that the variability and volatility of performance is here to stay, which puts a greater emphasis on the impressive can-do spirit and creativity of our teams.

Whether you were doing business in sunshine or in storm, so many of you pushed ahead—continuing the enormously imaginative work of expanding our company’s reach and influence. I want to thank all the teams that make Hearst Magazines great.

The barometer of our 2012 performance marked important developments. Our core print brands were honored with a raft of prestigious awards: three National Magazine Awards, total domination of Advertising Age’s A-List, including Magazine of the Year Marie Claire and Publisher of the Year Nancy Berger Cardone, numerousFolio: Eddie and Ozzie Awards, and an Adweek Hot List nod for HGTV Magazine.

More of our greatest brand hits last year:

• ELLE had very strong growth in its first full year of Hearst ownership, gaining market share and becoming our second-largest business in the U.S.
• HGTV Magazine, created in partnership with Scripps Networks, ended its first year with nearly 700,000 paid subscribers, producing average monthly newsstand sales of more than 250,000 and strong reception from advertisers. This year, the title will move to 10 issues annually.
• Harper’s BAZAAR had a perfectly executed redesign that has been a hit with readers and advertisers, and Good Housekeeping introduced a new look and feel in its January issue, a front-to-back revamp driven by extensive consumer research and testing. Now under way: a dramatic restyling of Road & Track and a new direction for Redbook.
• Marie Claire’s powerhouse publishing team delivered the most revenue ever in the magazine’s 18-year U.S. history.
• Already the No. 1 epicurean magazine on the newsstand, Food Network Magazine had a sales jump of 18 percent last year and earned the top spot for ad pages in its category. Projected FNM circulation for 2013: 1.55 million.

In keeping with our UNBOUND positioning, we made impressive gains in digital media. By the end of the year, we counted nearly 800,000 monthly digital subscriptions in the U.S. across iPads, NOOKs, Kindle Fires and Android devices—the highest in the industry. Those subscriptions are now generating profits after 24 months of investment. And how exciting to see how this business is developing organically: More than 80 percent of our digital subscribers are new to our files, and their engagement levels meet or exceed the high levels we see from our print products.

We achieved important digital milestones all across the company:

• The number of unique monthly visitors to our websites grew by more than 30 percent. Our brands have driven an explosion in social engagement with their audiences; Hearst has 7.7 million Facebook fans, 4.7 million Twitter followers and 5.5 million Pinterest followers, including the No. 1 brand on Pinterest, Harper’s BAZAAR.
• Cosmopolitan doubled the size of its digital edit team in December, with the goal of reaching 20 million monthly unique visitors. The magazine also used a multi-pronged social media strategy engineered by iCrossing to welcome new editor in chief Joanna Coles: 18 million tweets announcing Joanna’s move were sent in just a few hours. (The brand is also active on the TV front: Watch for Cosmoas a star of a new Mark Burnett series debuting in February.)
• Jumpstart, a key asset from our Lagadère acquisition, had the most profitable year in its history. Jumpstart grew to become the No. 3 website for auto shoppers, with more than 9.5 million monthly unique visitors.
• Innovation flows in all directions in our halls: Hearst’s popular foodie destination Delish.com introduced a print special that was sold with the November editions of six titles at Wal-Mart, producing a 22 percent lift in single-copy sales.

We welcomed new faces last year and, in some cases, rearranged places. Chief Technology Officer Phil Wiser, who joined Hearst Corporation last January, quickly became a key resource for our technology teams. In addition to Joanna at Cosmo, we named three new editors in chief: Susan Spencer at Woman’s Day, Larry Webster at Road & Track and Anne Fulenwider at Marie Claire. We were also pleased to welcome Carine Roitfeld as global fashion director of BAZAAR, who, in an industry first, will create fashion editorial that will run in all 26 international editions of the magazine at the same time. This high-profile creative initiative with Carine is among my favorite rule-breakers of 2012 and paves the way for more global content sharing.

Benchmarking industry leadership took a number of creative forms at Hearst in 2012:

• We created the Hearst Design Group by consolidating the editorial staffs of ELLE DECOR, House Beautiful and Veranda under Newell Turner’s leadership, bringing a streamlined, nimble, European publishing model to the U.S.
• Again, in the spirit of not holding onto established orthodoxies, we changed the business models of some titles, including Woman’s Day and Veranda, shifts that have dramatically improved bottom-line performance.
• You will see more brand extensions this year based on last year’s success; Cosmopolitan for Latinas, Delish and ELLE Accessories will all increase their frequency in 2013.
• From its genesis as a column in Good Housekeeping, 7 Years Younger is now a book and a website with extensive social media presence—and the launch has been a collaborative effort across our company.

Always looking for new ways to connect with our readers, Hearst developed fresh, effective commerce initiatives last year, including ShopBAZAAR.com and the House Beautiful Marketplace, a partnership with HSN.

After a year of close collaboration, the Cosmopolitan Collection debuted in September in 700 jcpenney stores nationwide. At year’s end, consumer sales were running more than $1 million per week. (Operating as entrepreneurs entails taking chances: Our 2011 partnerships CLAD and Gifting Grace were discontinued. There will be some swings and some misses—we learn and move forward.)

As you know, Hearst is the largest publisher of monthly magazines around the world, with 284 of our 304 editions outside the U.S. I’m pleased to report that in 2012 our international business grew by more than 50 percent. European shortfalls resulting from the ongoing turbulence in the economy were offset by the strength of earnings from our businesses in Russia and Asia—China, in particular, where ELLE has seen so much success that it moved to a semi-monthly publishing schedule.

Our other lines of business also made bold inroads in new areas. Hearst Integrated Media had its biggest year ever in 2012, selling more than 30 custom programs.

We welcomed new leaders, in the U.S., the U.K. and Latin America, to boost iCrossing’s digital marketing leadership. In 2012, iCrossing won two out of every three pitches and signed 30 new accounts—with its average deal size now 250 percent larger than two years ago. iCrossing’s fourth quarter revenues were the highest in its history.

CDS Global celebrated its 40th anniversary in 2012 and successfully focused on transforming its technology to offer new digital and e-commerce services and diversify its business across industries. CDS Global is a key part of the magazine industry’s tablet media infrastructure and at the same time is building business beyond media—it ended 2012 with nearly 20 percent of its revenue from non-magazine clients.

One thing that’s distinctive about Hearst is how important partnerships are to driving our growth, a key strategy established long ago by our CEO, Frank A. Bennack, Jr. We’re fortunate to operate joint ventures with many of the world’s leading corporations. (These ventures not only generate earnings, but also bring great talent—our just-named Hearst president, Steve Swartz, originally came to the company via a joint venture with Dow Jones). Because of our reputation of being such a good partner, we regularly receive inbound concepts from media companies looking to jointly create new products with Hearst. (So don’t be surprised if we test yet another new magazine by year’s end!)

Finally, a sad note and a heartfelt tribute: Helen Gurley Brown, the Hearst magazine editor who first made Cosmopolitan famous and single women proud to be smart and sexy, died on August 13 at the age of 90. She led Cosmo for more than three decades, leaving an indelible, personal imprint on several generations of women—and their men. Helen’s re-creation of Cosmopolitan produced profits that were quickly reinvested into a diversified set of businesses that helped build the modern Hearst Corporation.

Which brings me to 2013: Every member of the team has the chance to make a Helen Gurley Brown–level contribution, one that can have a long-lasting, positive impact on our company and colleagues.

Many are hard at work on achieving exactly that.

Esquire Editor in Chief David Granger and Publishing Director Jack Essig will soon announce a bold new partnership—an initiative that will dramatically expand the Esquire franchise. The brand also has big plans in the works to celebrate its 80th anniversary this year.

Our consumer marketing colleagues are collectively rethinking how we bring our titles to market by striking new partnerships with retailers—as they cast aside the “same old way” of doing business—and building world-class digital marketing capabilities.

The company’s digital leadership team is working on plans to “future-proof” our digital business models for a world where more than 50 percent of our traffic will be on small screens, and our readers will demand fresh, high-quality content from our brands around the clock.

The team at Hearst Magazines International is readying another dozen launches in 2013, from France to Australia.

And there’s so much more.

I’m also pleased to announce that in 2013 we will put greater emphasis on the training and development of our team. In the last few weeks we’ve had the good fortune to welcome to Hearst Tower inspirational executives like Facebook COO Sheryl Sandberg and HSN CEO Mindy Grossman to talk about how they are managing change at their companies. In 2013, we will significantly step up these programs and our exposure to some of the business world’s smartest minds. We will also invest more in digital training of all kinds.

Regardless of the headlines, change in GDP or cyclical trends, our teams are pushing ahead to create a successful 2013. This is the spirit that has put Hearst at the forefront of the industry.

Like you, I get a lot of e-mail newsletters. A few months ago, one contained an especially insightful passage that succinctly sums up the opportunities for our company and industry:

If one thing is clear, it’s that over the next 20 years the shortest distance from A to B is going to be anything but a straight line. To survive, much less to thrive, will require being both clever and smart. Clever means a willingness to try new things—be scrappy and make bold bets, even if they may not pay off. Smart means keeping your eyes on the year-2032 prize—be ready to cut off the experiments that aren’t working and cultivate your willingness to let go of the legacy as the time comes.

I am so proud of all the talented and smart men and women at Hearst who work to empower, educate and encourage our readers, advertisers and partners. In picas and pixels, you are simply the best, through all kinds of weather. And I know you are not alone—supported by family and friends who encourage you to do your best work and reach for the stars.

Thank you, again. I wish you a new year filled with personal and professional success and happiness.

Sincerely,

David Carey
President
Hearst Magazines
@CareyAtHearst

Hearst said it’s sold over 500,000 digital subscriptions across its titles and, as previously stated, expects to hit 1 million paid digital subscribers by the end of 2012.

“In addition to [Cosmo]‘s success with digital subscriptions, we’ve also been able to launch brand extensions like CFG: Cosmo for Guys on the iPad, which enables us to test new concepts without a significant capital investment. We hope to do more of that in the future,” said David Carey, Hearst magazines president.

Unlike Time Inc. (NYSE: TWX) and Condé Nast, Hearst charges separately for its digital additions rather than bundling them with print subscriptions. A one-year print subscription to Cosmo is $15, while the iPad or Zinio edition is $19.99 per year. The magazine is $1.99 per month for Kindle Fire and Nook.

release

The full letter:

January 3, 2012

Dear Colleagues,

Welcome to 2012!

I hope your holiday season was happy and that you either enjoyed some personal time off or found the Hearst offices peaceful and productive at a relatively quieter pace. And now, we’re recharged and back in the exciting world of magazines UNBOUND.

The economic climate for the year ahead presents an admittedly confusing picture, judging from commentators’ and experts’ predictions in just the last week: The U.S. economy is poised for a higher level of growth than the less-than-satisfactory 2011…or the debt crisis in Europe represents a threat to our economic growth. The election season will lift media and advertising…or the gridlock in Washington will further impede economic progress…

While it’s hard to make sense of these conflicting reports, and no one has a crystal ball, one thing you can be certain of this year: Our company’s growth and success, its continued innovation and creative excellence, and our ability to engage audiences and outpace our competitors remains firmly in our hands-irrespective of the Dow, the euro or the professional pundits.

As a company, we achieved an enormous amount in 2011 and set the stage for a very important 2012.

You stretched your capabilities and broadened the definition of what the magazine company of the future can and should be. By embracing the future, and all that goes along with it-the capital investment, the expansion into new geographies, the risk taking, the rethinking of long-held orthodoxies-we remain the leader in our industry.

We have much to be proud of. Our magazine company has nearly doubled in size in the past 18 months. We can thank organic growth, new products and acquisitions for that. While the scale of progress is important, the areas where we expanded are even more important: key international markets; digital marketing services (iCrossing just acquired Red Aril, a data management company); digital media, generally; fulfillment services (CDS Global acquired PayDQ to accelerate its entry into online billing); and our core U.S. print operations, which saw the continued growth of Food Network Magazine and strengthening of a number of our established properties.

Our efforts have resulted in a broadly diversified business-today, roughly 40 percent of our revenues are U.S. print and digital, 40 percent international print and digital, and 20 percent are services (iCrossing and CDS Global).

Our core print businesses in the U.S. gained share in a tough market. We successfully merged the U.S. and U.K. Hachette organizations into our existing companies and are able to realize significant cost synergies through the extraordinary work of our service departments, particularly our production, IT and consumer marketing teams. Our U.S. digital media businesses were solidly profitable for the first time, and we are excited by the performance and growth potential of Jumpstart, our online auto network. We established an enviable position in the fast-growing e-reading space and are now selling more than 400,000 digital editions every month. More than 40 of our book titles are in e-format, with dozens more coming soon. And you continue to work with partners to find opportunities not apparent to others-the promising early test results from HGTV Magazine, produced in partnership with Scripps Networks (NYSE: SNI), is just the latest example.

Collectively, we are leading the way forward for all of the magazine industry, and I am so proud of the approach you are taking in response to the enormous shifts underway in technology, distribution and consumer preferences.

Now it is time to focus on our objectives for 2012.

Our challenge this year will be to maximize the value of the tremendous investment, creativity and dedication that has been marshaled so quickly and broadly throughout our company.

This will be the first full year of operations with the recently acquired Hachette titles in 14 countries, and we’re fortunate to have added such impressive talent to our company. Our greater global reach can only benefit us as we navigate a world that will likely see strong economic growth in some regions, and less in others. We will see significant digital growth in both the Web and e-reading areas. Though overall U.S. industry print revenue is expected to show modest gains, we’ll invest in product innovations to satisfy our readers, thanks to new efficiencies in our overall structure. And, like 2011, we will fund new editorial projects, both print and digital.

A number of our titles will introduce fresh designs and reimagined editorial formats-starting with a new look and increased trim size for Harper’s Bazaar next month. Brand extensions like Marie Claire @Work and Cosmopolitan Latina are a major push to attract new readers and advertisers. Our close relationship with Mark Burnett is already providing dividends for our magazine brands, less than a year after Hearst acquired a 50 percent stake in his company. We will invest in emerging e-commerce initiatives, and look forward to the upcoming launch of our two branded YouTube (NSDQ: GOOG) channels. We will continue to create pathways to bring the very best ideas from our nearly 300 international editions to the U.S.-and vice versa.

Our target is to reach more than one million paid digital subscribers per month via iTunes, Zinio, Nook, Amazon (NSDQ: AMZN) and Next Issue Media. We will fast-track the transition to HTML5 for all our sites, which allows for a far better user experience on mobile devices. iCrossing’s “connected brands” strategy, now bolstered with a more robust data platform, positions Hearst to grow its leadership position in digital marketing services. And CDS Global, our second largest business in the U.S., will continue to add more technology solutions to serve its increasingly diversified client base.

These are very ambitious objectives. With your help, we will meet them.

As with every advance at Hearst, our people are the key to our success. We will continue to stretch ourselves in our roles, examining-and, perhaps, reinterpreting-what each of us does and how we do it. We will push the boundaries of our brands and products…and hopefully break a few rules along the way.

There’s an old African saying that perfectly describes how to navigate the media industry today: “If you want to go fast, go alone. If you want to go far, go together.” What an apt description of the approach for growing our company-reach across units in the Magazines Group, across divisions in Hearst Corporation and partner with other media companies around the globe.

Our goals for 2012 are clear: create new opportunities independent of the macroeconomic trends, further diversify our established businesses, streamline our processes and operations, and empower our people.

I’m grateful for your contributions-past, present and future. And, by extension, grateful for the “team” that surrounds every Hearst colleague: your family, friends and loved ones. Being part of transformational change in the media business is incredibly exciting and satisfying, but I know the days can be long and often stretch late into the nights and weekends, and I’m appreciative of the support they give you.

I look forward to another year of seeing our amazing talent, our unique culture and our world-class assets rise to meet the future head on. If we work together with the energy and vision we showed in 2011, I have no doubt that we can continue to engineer the historic shifts that will drive Hearst Magazines’ growth in the coming years.

My best wishes to all of you for 2012.

Sincerely,

David

The prediction was delivered by David Carey, president of Hearst, during the Reuters (NYSE: TRI) Global Media Summit today. Currently, Hearst has close to 400,000 digital subscribers covering its portfolio of magazines, which include Cosmopolitan, Esquire, Good Housekeeping, Harper’s Bazaar and O. The number of subscribers is growing at a rate of 10-15 percent every month, Carey added.

He did not break out, however, how well individual titles are doing, or how those subscriptions break down by region: Hearst publishes in multiple countries, including the U.S. and UK.

While some publishers like the FT are investing now in developing web-based apps for their content, Hearst has chosen to take the native app route, and offers paid subscriptions for the iPad, the Kindle Fire and the Nook. While its editions keep a lot of the look of the printed magazines, the apps, which are made by Pixel Mags, also incorporate some of the bells and whistles you get with digital apps, such as video and interactive elements.

The prices Hearst charges for apps are separate to those it charges for print subscriptions — something that has raised the ire of at least some print subscribers, judging by the comments from app reviewers in the iTunes store. The apps are free to download and then users can buy either single editions or longer subscriptions using in-app purchasing options.

Subscriptions, however, will not be the only revenue stream Hearst is developing for these apps: there is also advertising, which could become more targeted to specific readers over time: Carey today also noted that on the iPad, some 60-65 percent of subscribers have opted in to share personal data such as location with the publisher.

Hearst may be one of the first big publishers to come out with a million-subscriber prediction for its magazine app portfolio, but it probably won’t be the only one reaching that tipping point: in September Conde Nast said it already had 500,000 subscribers to its apps, at a time when Hearst was only reporting 300,000. Their number will likely be growing, too.

“The next wave is almost entirely focused on more consumer revenue – and the early stages look good,” Carey said. “The words ‘paid’ and ‘content’, connected, are my two favourite words in the English language. The technology enables it.”

Cable TV-style recurring revenue is key. “Tablets allow us to get into continuous service monthly bill,” Carey said. “We’re selling a lot at $1.99 a month — $24 a year — which is often more than we get in print. We don’t have to get in to this funny process after a year where we ask readers, ‘Are you sure you want to continue with us?’”

Amongst the device opportunities, turns out tablet magazines is also a long-tail business. “Approximately 40 percent of single-copy sales occur after the physical copy has gone off the newsstand,” Carey said. “We have near-term consumers, we’re getting very good long tail activity – that’s totally new for us.”

That prompts Hearst to think in a more long-term fashion than the monthly publishing cycle…

“The magazine industry can learn a lot from the movie business and the windows they have for their content… theatrical, international, premium, pay-per-view and then it ends up on the Turner channel at 3am,” Carey told panel moderator Pam Horan.

“They always know where it is in that pipeline,” Carey added, contemplating “where [his magazine] is going to be a year from now“. “Historically, we only get one or two bites of that apple, whereas the video industry gets 10.”

Carey also thought magazines can take another cue from Hollywood – tiering editions in to “SD”, “HD” and “director’s cut”-style products, or just as American Express offers several different card types.

“The next advent of our subscriber relationship is premium price subscriptions,” he said. “We hope technology will bring us the ability to segment our heavy users and price up to them versus more casual users.”

Hearst wants to start charging $10 per month for a top-tier product. “That’s going to come in the next year,” Carey said.

Follow paidContent Advertising via our live stream and via Twitter, hashtag #pcads11.

Over the next five years or so, Carey told Bloomberg reporter Brett Pulley that tablets could comprise 25- to 30 percent of magazines’ circulation. He expressed confidence that as the tablet market grows, both in terms of audience and devices, Apple’s stance could ultimately loosen. Either way, he pointed to the “digital storefront” that Next Issue Media has been working on the past year as one of several options that will allow media companies to take fuller advantage of the possibilities presented by tablets.

“You probably have things in your refrigerator that are older than this business,” Carey said, reminding the audience that the iPad isn’t even a year old. “It’s still early and the business models are still being formed.”

He expressed particular interest in possibly emulating The Daily’s varied subscription model, where users can subscribe for either a week or a year. He also pointed Hearst’s use of Zinio, which offers full digital reproductions of magazines, and other device markers, such as Barnes & Noble’s Nook line of e-readers as other options that have pointed out that different users want different things when it comes to digital periodicals.

“We have customers and readers who want the full enhancement that a magazine app provides, such as video and audio, and others who just want to read the magazine in a digital form,” Carey said. “There are others who want the basic magazine and carry it comfortably at all times. It’s like cable, where there’s the HD customer and the basic video customer. Just like cable, as publishers, we have to satisfy both kinds of customer. There are different price points that will make it attractive for the audience. We can’t be like that the old line from Henry Ford – you can have any color you want as long as it’s black. Uniform subscription rates won’t work. For example, we can develop an enhanced version of Popular Mechanics and one that’s more basic and cheaper that will allow for price segmentation.”

In what seems to be like a game of media musical chairs, the current New York City Schools chancellor, Joel Klein, is joining News Corp (NSDQ: NWS). as an executive vice president and member of its board of directors. Klein will be a senior advisor to CEO Rupert Murdoch and will advise him on a “wide range of initiatives, including developing business strategies for the emerging educational marketplace,” according to a News Corp. announcement. Klein also had media management experience before being hired as chancellor; he spent a year and a half as CEO of Bertelsmann’s U.S. subsidiary.

Black, according to New York City Michael Bloomberg, was chosen to replace Klein because of her management skills. The announcement credits Black’s “unique experience building on successes and leading teams to even greater achievements.”

The memo from Bennack announcing Black’s departure to staff:

————————————————————–

Dear Colleague–

It is with both a sense of considerable loss and a feeling of pride in her readiness to undertake vital public service that I advise you that Mayor Michael Bloomberg today named Cathie Black chancellor of New York City Schools succeeding Joel Klein, who has held the post since 2002.

Cathie has served Hearst with distinction for more than 15 years and her contributions as both senior executive and Board member will be missed by all of us who have worked alongside her. As someone who had the privilege of hiring her twice, first at the Newspaper Association of America and then at Hearst, I’m keenly aware of her willingness to take on new and significant challenges. Heading the New York City Department of Education, the largest system of public schools in the U.S., certainly qualifies.

Cathie therefore goes with my blessing. However, not only will Hearst miss her, so too will I personally.

All of us would agree that there is no higher priority in America than our educational system and the willingness to climb into the trenches in the fight for improvement is something to be greatly admired and supported.

Cathie joins me in the belief that David Carey and the rest of the fine management team at Hearst Magazines are up to the task of moving that important part of our business forward in the months and years ahead. Cathie’s handling of the transition with David, which admittedly we expected to take place over a longer period of time, has been exemplary and he is ready to lead.

We will be coordinating the effective date of Cathie’s departure with the Mayor’s Office but expect it will be sometime before year’s end. I know you join me in thanking Cathie for all she has done for Hearst. The press release from the Mayor’s Office follows.

Thank you.

Frank A. Bennack, Jr.

More to come.

In his most recent role, Carey was responsible for Wired and Golf Digest. He had some high points and low points at Condé Nast since taking over as publisher of The New Yorker several years ago. On the plus side, he was credited with helping return that title to profitability. Carey also was the founding publisher of SmartMoney, at the time, a joint venture between Hearst and The Wall Street Journal — Dow Jones (NSDQ: NWS) acquired the title in full in March.

On the negative end, Carey also presided over the creation and demise of Portfolio, which had the misfortune of launching just as advertising was turning downward.

Both Hearst and Condé Nast are members of the digital publishing storefront JV Next Issue Media. But they remain competitors, especially when it comes to achieving primacy on the magazine app front. They also have pursued different strategies, with Hearst moving all its 14 titles to digital app format, while Condé Nast has been more selective, offering only a handful of titles, such as Wired for the iPad, for sale as an app download.