Commentary
Publishers Still Trying To Unlock iPad's Promise
- by Mark Walsh @markfwal, January 17, 2011
The iPad continues to frustrate magazine publishers who counted on the Apple tablet as a digital lifeline for their ailing traditional businesses. A key sticking point has been Apple's reluctance to allow publishers like Hearst and Conde Nast charge for subscriptions for iPad editions of their titles, as they do offline.
A New York Times story today highlights that publishers feel having to charge on an individual basis (typically at the same cost as a print copy) is holding back their progress in attracting readers to the iPad. Only a select few publications, such as The Economist and News Corp.'s soon-to-launch iPad-only newspaper, The Daily, are able to sell their apps on a subscription basis.
Underscoring the unwillingness to plunk down $5 for a magazine issue in the App Store, a new study by research firm Knowledge Networks appearing in Ad Age found 86% of iPad owners said they would be willing to accept ads to access free content such as TV shows and magazine or newspaper articles. Only 13% said they were willing to pay any fee for iPad content, and only an extra $2.60 on average.
The findings jibe with those from a Nielsen survey last fall indicating that nearly 60% of users across the iPad, iPhone and all other connected devices said they were "OK with advertising if it means I can access content for free."
Further, 39% of iPad magazine readers in the Nielsen study said the ads they see are "new and interesting" (compared to 19% of all connected device owners), while 46% say they like ads with interactive features (compared to 27% of all connected device owners). In these kind of surveys, online users generally prefer free (ad-supported) content to having to pay, and ad-free content to having to see advertising. Wikipedia is nirvana in this regard, but most large sites and costly-to-build apps aren't supported by donations.
Publishers, naturally, would like to generate revenue from both advertising and paid content via the iPad as they do offline. But not being able to charge annual subscriptions on the Apple tablet as they do in print interferes with their ability to calibrate the pricing and combination of ad-supported and paid material within magazine apps.
That's why publishers are looking beyond the iPad to competing Android devices and other tablets coming on the market this year for more flexibility in setting terms. The increased competition could also put more pressure on Apple to support app subscriptions more widely. One potential bright spot in the Knowledge Networks study is that 14% of iPad users are willing to pay for a special iPad edition of a magazine they already receive in print.
That means there's extra money to be made from packaging or repackaging narrowly tailored content via apps with a portion of existing subscribers. Whether that would be worth the cost of creating and distributing the app is another question. But given the experimentation going on among publishers in the digital realm, upselling to an app is an option worth exploring.
Mark Walsh can be reached at walsh@mediapost.com
I would be willing to pay a nominal fee for a subscription and would prefer to have the access advertising supported. The most important factor is that the tablet version be created for the tablet and not be a PDF of the print version. I understand that Martha Stewart Living's tablet edition is very good. For me, getting these subscriptions and fomatting issues resolved will influence when I buy a tablet and which one.
"...publishers feel having to charge on an individual basis (typically at the same cost as a print copy) is holding back their progress in attracting readers to the iPad." And they are absolutely right. I won't pretend to know Apple's algorithm for making money, but being environmentally aware and having a busy lifestyle, I'm confident that most younger consumers would prefer to download their magazines onto their iPad. However, charging $5 or more per issue when you can subscribe for $2 per issue or less doesn't make any sense. Consumers want the content these publishers are offering - but they do not want the inconvenience of lugging around magazines and they certainly don't want to be financially penalized for downloading digital content.
If Apple makes rules that will limit what is offered on the IPad it will hurt Apple. Long term Apple will be lucky to have 10% of the Tablet Market similar to what they have for computers and will have for smart phones. But their customers pay more which makes that demo enticing for content providers. But it also means they will have plenty of options outside of Apple should they choose to go that route.