iPad apps – still more dash than cash

by The Guardian on January 10, 2011 · 0 comments

Screenshot of VG+, the iPad app from Norwegian news company VG

Apple’s ‘Jesus tablet’ seemed to be the news industry’s best hope of salvation but few publishers are finding apps to be the moneyspinners they so desperately want.


Powered by Guardian.co.ukThis article titled “iPad apps – still more dash than cash” was written by Jemima Kiss, for The Guardian on Monday 10th January 2011 06.59 UTC

The news industry embraced the launch of Apple’s iPad in April 2010 with something that felt like true love: feverish anticipation at that first meeting, lengthy sentimental eulogies and whispers of hope that this must finally be The One.

In an industry largely uninterested in gadgets, the iPad offered optimised reading and viewing, portability – and a built-in payment system wired to the credit cards of 280 million iTunes customers. Editorials began asking if the iPad might be the saviour of an industry in a seemingly terminal decline.

But less than a year on there are already signs that the romance is fading, along with those first flushes of novelty. The latest figures from the Audit Bureau of Circulations in the US show average monthly downloads slumping by the end of 2010. Only two publishers were brave enough to share their figures.

In for a long wait

Condé Nast’s Wired US iPad magazine sold 73,000 copies through the app in its first nine days in May 2010 but that fell to 23,000 in November – a bad month all round. Vanity Fair sold 10,500 in October but 8,700 in November, and GQ’s average fell from 13,000 in October to 11,000 in November. And Men’s Health, published by Rodale in the US, fell from 2,800 monthly shortly after the iPad launch to 2,000 by November.

These baby steps need to grow up fast if they are to compare to the sales and profits enjoyed by print. Last year’s census by the Association of Online Publishers showed nearly two-thirds of publishers pinning their hopes on in-app content as the best chance of making money through mobile – but they might be in for a long wait. The tablet userbase is small and the potential app userbase outside the US smaller still – and Apple takes 30% on every app sold.

Analysts Research2Guidance estimate that 100,000 app sales at 79p would make the publishers £40,000 – not exactly a moneyspinner, when they will have to wait three years to see a return. By then, Apple’s domination of the tablet market could be at an end, bringing a new problem of developing for multiple devices – though Screen Digest senior analyst Dan Cryan expects 6.5 million people will use an iPad by 2014.

If there is any business model to be found for innovative publishing on the iPad, Condé Nast is determined to find it. Albert Read, general manager of Condé Nast UK, acknowledged it is an “undoubtedly expensive” commitment. “It’s a punt,” he said. “A long-term hope is that we create something exciting for readers and advertisers – and that brings its own returns over time. In five years we will have reaped those benefits.”

Read would not comment on how much Condé Nast has invested or when it expects to see a return. But he described the projects as “resource intensive”, with Wired’s app needing up to five dedicated staff. Print pages have to be redesigned and copy resubbed, and advertisers – who are keen to experiment, Read said – have to submit horizontal and vertical formats.

“Though we are ambitious, we are also relatively cautious. We haven’t launched apps for every magazine and have only done one experimental edition for Vogue.

“Rather like the dotcom era, there was a period of hype and excitement over the iPad and then things calmed down. In two, three, perhaps five years, that excitement will be justified.”

Rupert Murdoch seized on “the Jesus tablet” as part of his crusade to elevate his news business from free web content. With a reported investment of m (£19m), he has a team of 100 in New York furiously putting the finishing touches to The Daily, News Corp’s dedicated iPad newspaper, which is due to roll out next Monday. The Daily is expected to include a new push subscription feature that automatically delivers and charges for weekly or monthly editions.

Murdoch will be hoping to outshine Virgin boss Richard Branson, whose own New York-based iPad magazine, Project, launched in November, charging .99 per month. But whether Murdoch can turn around his dubious track record in digital projects, from Iguide to MySpace, remains to be seen.

The Daily could become a mass-market phenomenon – a next-generation Sun – but at 99c (62p) a day, it will be some time before the experiment sees a return.

The Financial Times took advantage of the traditionally lucrative financial news sector to launch an extensive app in May. Download numbers have reached 487,000 in total, the FT said, with iPad generating more than 10% of new digital subscribers. Deputy chief executive Ben Hughes has said that iPad ad revenues reached £1m in the first six months, and ad inventory has been sold out since launch. The app is free and users are encouraged to register to read 10 free stories per month. Subscription models

Common complaints among readers include huge file sizes, and, with more than 300,000 apps in the app store, visibility is also a problem. But by far the biggest issue is that of offering a subscription model within an app. Apple does not share names and addresses of iTunes App Store customers, meaning publishers cannot build that valuable subscriber database. Reports have persisted since September that Apple is working on a subscription service for news and magazine apps; that could launch alongside the second version of the iPad rumoured for April – if it doesn’t debut in Murdoch’s Daily first.

“Apple needs a better balance between its own desire to have visibility of all the data, and the needs of publishers to get data about their readers that is crucial to their businesses,” said Edward Roussel, Telegraph Media Group’s digital editor.

Both the Telegraph and Guardian used big-name advertisers to launch free iPad apps. The Guardian’s Canon-sponsored photography app, Eyewitness, had had 404,559 downloads at last count, with a separate news iPad app under development. Audi has extended its initial 12-week sponsorship of the Telegraph’s iPad app, of which about 100,000 have been downloaded since launch, and version 2 is due out by the end of March.

Roussel said the Telegraph’s in-app registration system shows the iPad is attracting new readers, with most aged between 30 and 50. “We’re making reasonable sponsorship but at this stage apps are more a beta product than a substantial revenue earner.”

Those in the industry express optimism but a lack of confidence in how best to exploit the tablet explosion. Roussel says apps offer the best of the old world and the new. “There’s no question, , it’s a highly significant development of the media industry and the potential is massive. But it will take years, not months, to work out how to make apps better than both the web and newspapers, which they have the potential to be.”

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