Monday, January 31, 2011

Magazines Need a Digital Format Before they Get a New Blueprint?

Tomorrow Apple and News Corp are launching a new periodical, The Daily, specifically designed for the iPad. This could be really exciting and I wish it well (I really do, but we will have some caveats later).

Erick Schonfeld over at TechCrunch decides to peg another think piece on iPad magazines on this event: iPad Mags Need a New Blueprint. This is not a blog up to the usual TechCrunch standards but it does attract an excellent comment (from TechPops - who tells us what he wants his digital magazine to be and do) and a thoughtful blog from Mike Cane. Who correctly points out that the Daily is really about newspapers and magazines are not facing the same challenges or the same opportunities with the iPad.

There are three problems with Schonfeld's piece and they are all signs that he does not have a good understanding of the challenge the magazine industry faces:

  1. A digital magazine or newspaper should feel like a media app, not like a PDF viewer. It needs to take advantage of technology to tell better stories. (Schonfeld)
  2. Apple should fix the subscription problem(Schonfeld)
  3. Making these apps social and realtime is the key (Schonfeld)
The first point is a blatant appeal to the gallery. There have been some very poor early stage magazine apps of which the best that one could say of them is that they look like badly put-together PDF-viewing packages. But the reality is that the magazine industry basically knows how to make magazines which in their print form pretty much are PDF packages (or in practice InDesign files, which are not much different). This is where the magazine industry is starting from, and the iPad is actually an excellent way of reading magazines, documents designed primarily for a print medium. Producing a really good iPad app of the print magazine is a very good starting point for where the magazine industry now is. We should recognize that the magazine format is a PDF format until it becomes something else, and any digital magazine platform is going to build out from this heritage. Connected to this point: Schonfeld is right that media apps such as Flipboard are harbingers for the future digital magazine industry, but it is swinging cart before horse to suggest that most magazines are going to become Flipboard-style aggregators. We need thriving digital magazines for horizontal aggregation services like Flipboard to work. Making digital magazines work will mean making them feel like magazines on the iPad (though of course more digital and 'better'), this doesnt mean making them all like Flipboard with its loose and generous visual style. Half the point of magazines is that they aim at individuality and unique presentation in design. That potential for design excellence and differentiation through design and layout has to be kept!

'Fixing the Subscription Problem', we will know more about Apple's moves on subscriptions for periodicals tomorrow following the launch of the Daily, it is widely expected that Apple will makes some changes to its subscription model to encourage periodical publishers to focus on the iPad. But I very much doubt that 'fixing the subscription model' will come close to the demands that magazine publishers have been making. Apple may provide a bit more customer data to publishers, but it will be surprising if it relents on its 30% commission for sales made through iTunes. Magazine and newspaper publishers have some unrealistic expectations about 'fixing the subscription problem' in iTunes. The bald and unpalatable (for some publishers) truth is that the iTunes commercial and subscription model already works rather well, and unrestricted access to private consumer data is not on offer.

'Making these apps social and realtime is the key.' This is again, at best a half truth. We can agree with Schonfeld that digital magazines are going to be interesting players in the social web. But this role may be more asymmetric than other social content players. Magazines, newspapers and books need to think carefully about the extent to which they introduce on-board, two way dialogue. All holds-barred realtime interactivity is not a guarantee of success. We may be more interested in the potential for Tweeting from magazines than in having magazines Tweet at us (see Cane). In any event the social wave for digital iPad magazines is clearly coming, but it may be that the way this should work is not yet fully in view. Its a bit tough to complain that digital magazines havent figured out their social graph via the iPad when Facebook still has not yet produced its own iPad app. If the Daily goes all social at launch (I doubt that it will) the chances are that it will have gone off at half-cock.

I look forward to buying the Daily tomorrow (it will be a shame if it is restricted to North America, surely it will be available internationally?), and I shall be rooting for it. Its best hope is that it does not disappoint and learns to adapt quickly if it has made a couple of bad early choices. The Daily needs to innovate and the chances are that it will make one or two mistakes, and having such a big budget behind it, it may be hard to recover from a mis-step Here are four tricky judgement calls that I shall be looking out for:
  1. How does it handle RSS feeds? It is called The Daily -- which suggests that it will have an editorial focus around a 'deadline'. So in the week of the Cairo events it will be bang up against Twitter, Flickr and Reuters on the issue of periodicity and topicality. Its hard to get the RSS mix right if the editorial focus in on a daily edition.
  2. How will The Daily be positioned in relation to subtly different tablet options that are coming from Android and HP. Has the publication been so tightly designed for the iPad that it will be an exclusive project for that platform? What about the iPhone, will there in due course be an iPhone edition? (I would love to know what advice Apple gave News Corp on this point).
  3. Will The Daily be aiming for a significant advertising revenue base or is it going to pitch its camp solidly on the basis of subscription revenues?
  4. How will The Daily handle the orientation possibilities of the iPad? Are we going to see a design innovation in that area?

Thursday, January 27, 2011

InterDependent Content?

John Battelle has blogged a very intriguing essay on the distinction between the dependent and the independent web. Here he makes the distinction:

The Dependent Web is dominated by companies that deliver services, content and advertising based on who that service believes you to be: What you see on these sites "depends" on their proprietary model of your identity, including what you've done in the past, what you're doing right now, what "cohorts" you might fall into based on third- or first-party data and algorithms, and any number of other robust signals.

The Independent Web, for the most part, does not shift its content or services based on who you are. John Battelle: The Interdependent Web
Battelle goes on to point out:
Consider the sub-category of "content" on the web. It's a very large part of what makes the web, the web - millions of "content sites," ranging from the smallest blog to Most of these sites don't change what they show us depending on who they think we are. John Battelle: The Interdependent Web
Perhaps a paradigmatic example of what Battelle is getting at here would be Wikipedia, which in spite of being a construct of millions of authorial and editorial acts is pretty much the same wherever or from wherever you are looking at it. But, hold on a moment, note that Wikipedia is changing all the time, and in ways that can be hard to predict (mostly it is getting better) and it is thus highly time-dependent. Independent of the 'self' perhaps? Certainly, Wikipedia aims at a crowd-sourced balance and neutrality. But note the variety of languages in which Wikipedia is now developed and edited. Nevertheless, Wikipedia is a standard bearer for web independence, rapidly changing, multilingual but determinate, and in a certain sense 'objective'. More and more our content services are becoming dependent services. They are not merely web sites. What you see and read depends on who you are and where you are, what you are doing; and you only read bits of what you are reading.

A very strong example of the way in which content services are becoming 'dependent' in John Battelle's sense is offered by the iPad app Flipboard. Flipboard is a pure content service but is totally 'dependent', the only element of 'editorial voice' that emerges concerns the degree to which Flipboard selects and promotes particular channels (eg this week Davos). Flipboard is not really a web service. It is an iPad app, plain and not so simple, but it aggregates a large number of web-based publications (usually via their RSS streams) and presents them to its subscribers with Facebook and Twitter resources inter-leaved in the content mix. What you see and read in Flipboard is very dependent on the choices you have made in the past, both in Flipboard and in your daily activity on Twitter and Facebook. The user is continually creating and assembling his/her own Flipboard anthology. A hallmark of dependence: no two Flipboard users will see the same content flow -- though for sure many components may be viewed in common. One of the key points about Flipboard is that it is at this point iPad-only. Flipboard is a hugely 'dependent' system, its shape is completely determined by its user's profile and activity and yet it is also completely dependent on web technologies and resources though not itself a web resource. There is no Flipboard web service, of course the company has a web site, of course Flipboard uses the web very intelligently. I can link you to stuff that I am seeing and reading on Flipboard, but Flipboard is not itself a source of content. I can't even 'Flip' you the page of Tweets that I am looking at right now.... (OK so here is a screen shot)

Flipboard works, and in my view it works very well, because it builds on mechanisms which were well established well before the iPad arrived. Publications, especially magazines and newspapers have been struggling to adapt to the web by developing their own 'dependent' web services which complement their existing and hard to monetise independent web sites. RSS feeds were an obvious example of this urge to match the daily, weekly, periodical content to the circumstances of users. But blogs and comment functions are equally significant as mechanisms through which 'content' resources have been trying to match their publications to the various ways in which their audience can engage with a publication through the web. What Flipboard brilliantly shows us is that the magazine (or the newspaper) itself can be pulled through to the iPad environment and appreciated or enjoyed as a quasi-magazine on the iPad. The RSS feed hauls the pictures and comments and some of the layout through into the iPad app environment.

Whether Flipboard will itself become a commercially important channel for magazine publishers is another matter. But it certainly shows the industry that it is possible to deliver magazine content to the iPad environment in a form which is both attractive and enjoyable. For magazine publishers the real challenge is now to find out how to deliver the whole magazine in various forms and via a plethora of reading devices and reading environments to readers in a consistent and self-contained way. This is why the publication "as an app" has strong appeal for publishers and the existing audience. The big challenge for the publisher is to see if the magazine or newspaper app, whether on third generation iPad or a second generation Android tablet, can be a satisfactory way of presenting a full publication better than it could ever have been in print. So that in 2015 you know that what your sister is reading on the Samsung Squiggle, or the Amazon Kindle Mk5, is the same thing as the you are reading on the iPad iNfinite.... The challenge is to make publications as dependent as they can be on the whims, devices, preferences and circumstances of the reader but as independant and as reliably referenceable as web pages and print publications. InterDependence is the goal.

Friday, January 14, 2011

Cost Benefits of A Magazine App

One of my colleagues yesterday sent out an email to those of our publishing partners who are not currently offering an iPad/iPhone app of their magazine through iTunes. You can read the email here. It rightly concentrates on the user benefits -- that is the real point of producing an app version of the magazine. A successful magazine app is a good user experience and it should project and promote the magazine to a new and rapidly growing audience. But the email also produced a list of 'Publisher Benefits'. The list is of some interest:

  • Publisher's Account gives you 24/7 access to your app sales
  • Control - You set the price of app (within Apple's matrix)
  • Flexibility - You can change the price at any time and set the number of open access pages you want
  • Visibility - Your app can be found easily in the app store
  • Ease - Exact Editions continue to handle all customer service on your behalf
  • New Revenue Stream - by reaching the new app market
  • Marketing - the freemium app is great exposure for your title to potential subscribers
Perhaps the key item in this list is the one relating to cash -- revenue. How can one quantify or estimate the size of the new and growing market for magazines through iTunes? Here are some considerations:
  1. The market for a magazine app bears some relation to the size of the market for the print magazine. A magazine that sells 100,000 copies a month through news stand and subscriptions will almost certainly sell more as an app through iTunes than a magazine that sells 2,000 copies a month.
  2. The market for magazine apps on the iPad exists, and it is small if you measure your circulation in millions because the market penetration of the iPad is still in its early days. Few magazines have target audiences where iPad ownership exceeds 5% of the existing readership. So it may be unrealistic to expect your readership on the iPad to be larger than 5% of your readership in print. (This is not to say that the potential audience on the iPad is the same as the actual audience in print, far from it, but the audiences may have similar scale).
  3. Note however that the market within iTunes is growing by leaps and bounds -- we expect to see revenues from iTunes growing by 10-20% per month through the rest of this year.
  4. The tablet market is much more significant than the mobile phone market for magazine app subscriptions. We estimate that 80%+ of the Exact Editions iOS magazine app sales are driven by the iPad market (though a significant proportion of users will have their app on more than one device: phone/pod/pad). Customers are buying magazine apps for the iPad much more than for the iPhone. So an Android market will expand the market, but you may not need to deliver Android support until there is a reasonably successful Android tablet.
  5. If your existing magazine subscribers are buying iPads or other tablets, will they expect to see their favourite magazines on the new device they have brought into the home? Do you want them to be reading another magazine or yours?
  6. The Exact Editions platform requires a small upfront commitment from a publisher -- but there are no significant issue by issue costs for the publisher. For the most part we work on a small commission which covers the costs and the support of the freemium solution we deliver. So the publisher who commits to an app on the Exact Editions platform is really opening a new sales channel to an existing market.
So, my bald conclusion is that all but the most specialist consumer magazines should be making profits from apps launched this year. Who knows how the market will grow in 2012? Tomorrow can look after itself, the iPad looks like an interesting target for most magazine publishers in 2011. Forget the bespoke app that revolutionises the news business or the multi-media wonder that transforms the world of fashion publishing with alternative reality cat-walks; such apps may be built, but straightforward readable well executed magazine apps can make money for publishers now. These magazines as apps will look and behave 'pretty much' like the magazines that consumer publishers have produced in print for years, because that is what consumer magazine publishers do produce. But they will be different because magazine apps are a bit different. And in 2012 and 2013 they will start to behave in ways that were not possible or imaginable when magazines were merely print objects.

One thing at a time. And the first thing is to find out whether users like reading your magazine on an iPad or tablet. You may be pleasantly surprised by the results.

Monday, January 10, 2011

The iPad App Market for Magazines

Around the turn of the year we saw a barrage of blogs and articles questioning whether magazine apps were working. The implication being that they are not working at all as planned or hoped for TechCrunch, Matthew Ingram, WWDMedia.

The gloomy news was best captured by a chart from Silicon Alley Insider: Chart of the Day -- iPad Magazines Tank

The story does indeed look pretty gloomy. But when you study the chart more closely the real problem was the extraordinary success of the first iPad edition from Wired. It throws everything that follows into a gloomy shadow. The GQ and Vanity Fair apps had their limitations, but the results and even the trends were not too bad, given that they were very much 'first efforts'.

Our experience has been much less dramatic but much more encouraging, so there may be a case for giving a few sketchy strokes from another picture. But we first need to note and magazine publishers need to recognize a few key points about the app economy and iTunes in particular.

  1. The first point to emphasize is that free apps will get much more traction and much more currency than paid for apps. A free app may get 100 times or even 1,000 times as much attention as an app that the user has to pay for.
  2. Freemium can work well for magazines. Give some content away for free, and make it attractive and easy to trade up to a paid for subscription. Freemium can work either as sheer promotion, where you do not expect to sell much to the iTunes audience, but you wish to whet an appetite. Or it can work well as a first step on the way to paying for something....
  3. If you are going to charge for your magazine app (and if it is really good and it costs you money to make it you should charge for it), recognize that it is a lot easier to sell an app for 99c or $2.99, or even £4.99 than it is to sell one for €9.99. And selling an app for $19.99 is really tough. I am not sure that consumer purchases can be sold effectively for $19.99 or $29.99 on iTunes. This is a fact about iTunes, where users have got used to spending 99c for a track. Purchasing habits on iTunes are different from purchasing habits using PayPal or Amazon. Recognize that fact before you get too far in. Recognize also that purchasing on iTunes can be very frictionless, easier and smoother than PayPal or a Credit Card. iTunes is different from Visa or MasterCard. At low prices, iTunes is better, slicker, easier than any other e-commerce environment, but not at the prices that many magazine publishers wish to charge for annual subscriptions.
  4. iTunes has an amazingly large audience. You cannot ignore it. You should use it to extend and embrace your existing audience. Make sure that your pricing works for your existing readers and your new readers. Make sure that your pricing makes sense to your existing print subscribers. Think about that.
One of the key things about the iPad is that it has given publishers a good reason to re-engage their existing audience in the concept of digital access. We think that this is the really, really good news about the iPad. Digital subscriptions for your existing audience are a key part of the reason for embracing the iPad. The point is that a magazine publisher can quickly and efficiently convert his print audience to a digital audience at low cost using free access to the digital feed as a reward for print subscribers. That way the circulation of the print audience is confirmed and strengthened and at the same time a new digital only audience can be won. Because the publisher sells digital access (via iTunes or directly) to those customers who do not want to buy the print service.

The data about the uptake of apps using the Exact Editions platform is confidential to the publishers of the magazine concerned. But we can publicize a few data points about the uptake of two nameless magazines. These are both high quality consumer magazines with an international but mostly ex-US audience. Both magazines have had freemium apps in the marketplace for several months at affordable prices (£4.99/$6.99 or less for 30 day subscriptions). Both have had respectable uptakes. In the case of magazine A, there have been nearly 50K freemium downloads and nearly 2K purchases. In the case of magazine B, there have been nearly 20K downloads and approaching 3K purchases. Incidentally, when publishers see this data, they are sometimes surprised by what appear to be 'low' conversion rates. Publisher B was inclined to put in some 'pre-qualifying' friction when he saw the rates (eg a form collecting email addresses); publishers with this reaction are severely underestimating the 'friction-free' style of iTunes and are also underestimating their need for exposure and promotion. The appropriate reaction would have been "Why haven't I had 60K downloads?" A 2% purchase-response rate is good for iTunes freemium apps. For both magazines the monthly purchases have been reasonably steady, steadily growing, and have shown a good ratio of renewals (ie renewals through iTunes). The renewals figure is perhaps the most telling point about the data. Apple has not yet implemented a really easy form of renewal, and it will be very much in Apple's interest for them to offer a form of 'automated' or 'unless I say otherwise' renewal, but even so magazine subs are being renewed at an encouraging rate. Neither we nor the publisher know who these renewing customers are, but Apple does give one sufficient data to tell that specific user ID's have repurchased.

Another point that gives us some confidence in the iPad and its future is that these are still early days. Neither of these 'respectable' consumer magazines have had anything like the promotion and attention of the Wired or the GQ apps. The publishers have given them some 'mind share', and some linkage and advertising via web pages and email campaigns, but I am pretty confident that the promotional budget in both cases has been " low to minimal". Sensibly enough, the publishers concerned have opted for low risk promotion and advertising because they have been experimenting, assessing reactions and feedback. These are still early days, because the iPad is not yet 10 months old, there are still barely 10 million iPads in the market place (many of them in the US). The potential for consumer magazines when there are 50+ million iPads in the market (ie early 2012) is obviously much greater. Another factor that gives me confidence in the potential for publishers making significant profits from their digital editions is that these two publishers have for different reasons not yet begun to exploit the full range of access options for their public. Publisher A has been promoting digital subscriptions through the web, but has not yet offered 'universal subs' to his existing print subscribers. When this is done he will experience a big uptake in app usage and app sales. Publisher B has not yet begun to promote or advertise the option for web subscriptions to the digital edition, when he does so there will be a substantial increase in digital revenues. The Exact Editions platform allows the publisher to promote digital subscriptions across the range: (1) directly as web subscriptions to a purely digital service (2) through iTunes as a way of selling 30 day subs to an iTunes audience; and (3) as an added value service to the existing, renewing and new print subscription audience. It is the potential publishers now have for a cross-platform and integrated, convergent solution for the magazine audience that is most exciting innovation about the iPad. Apple deserves a lot of the credit for that.