people keep talking about ipads (and other e-readers) as the salvation for print – in particular, for newspapers and magazines. (books, on the other hand, aren’t really in need of salvation, so for the book industry the e-readers are more of a threat, it seems.) the idea, it seems, is basically this: people don’t want to pay for access to news on a website. but apparently, they do want to pay for apps on iphones and ipads. so let’s sell news as apps!
and the prime example, above them all, is wired magazine, whose first ipad app sold 110,000 copies at $3.99. of course that first app was news itself, so the numbers have gone down since – but according to wired editor-in-chief chris anderson, in an interview with jon lund, they still sell “in the multiple tens of thousands” per month.
that’s a little more modest, of course, when compared to a monthly circulation in print of 750,000 (at $4.99). but hey, if it doesn’t cost them much, it still turns a profit right? well, it turns out that it does cost them a lot.
i don’t know anything about the development costs of the app – apparently it was developed by adobe, which seems to be using it as a showcase, so i’m sure they got a good price. and if we leave that out of the equation, it is all profit right? well no. still according to anderson, the ipad app takes up 20% extra editorial resources. a number which they hope may fall to 10-15% “as our processes improve”. based on these numbers, jon lund speculates that by 2012, the ipad app may represent 15% of their circulation, for a mere 15% of their resources. success!
all right. so the prime success story of selling news as ipad apps is one which maybe, if everything goes according to plan (and it always does, right?), will break even two years from now, as long as we disregard the development costs. something-about-this-rings-a-bell.com.
well, actually, wired survived the dotcom bubble and they’re not stupid. there is of course that magical brand effect of having the world’s most hyped ipad app, which i am sure is worth loads for a magazine like wired. but how much is it worth to have the world’s second coolest ipad edition? or the tenth? or the one hundredth?
here in norway, our biggest newspapers (vg and aftenposten) are preparing their ipad editions even before the ipad is officially for sale. reputedly, something like 40,000 ipads are in use by people who purchased them abroad and brought them home – around 1 per 100 norwegians. so that means there is already a huge market out there to fill, right?
well, in print these newspapers sell roughly 200-250,000 copies a day. which means they are bought by ca. 4-5% of the norwegian population. let’s say ipad users are itching all over to spend money on apps for their new gadget, so they are much more likely to buy the vg/aftenposten apps than regular people are to buy the print edition – let’s say 4-5 times as likely, meaning 20% of ipad users buy each app every day. that means these ipad newspapers will sell – you may want to sit down for this – around 8000 copies each! a whopping 3-4% of their circulation, roughly half of national giants like klassekampen and nationen.
just to give some perspective, the amount of norwegians who own a smartphone and thus can access a mobile version of a newspaper website in their browser, is in the range of 20-27%. that is, 20-27 times as many as there is ipad users. there is obviously a challenge in making money from that audience – but at least there is an audience there.
have fun making business, guys.
update: i posted a comment about this on twitter, asking the ipad fans to correct any errors in my assumptions. @iacob pointed out that the number of ipads will presumably increase once it is officially released for sale. that is obviously true, but it also implies that the “early adopter” profile of the ipadsters will be a little diluted – meaning that they will perhaps not be so much more likely to spend money on content compared to regular newspaper buyers. even if eventually half of everyone who now has an iphone buys an ipad – which is far from being the case anywhere else – that leaves us with ca 250 000 ipad users (1/3 – 1/2 of the current number of smartphone users, which is also on a rapid increase). even if 10% of them buy the apps, that is still just 25 000 copies – around 10% of the current paper circulation.
update 2: got a tip from @johanhal about financial times, whose ipad app has produced 1m pounds in ad revenue and represents 10% of “new digital subscribers“. if ft spends a similar portion of editorial resources on their app as wired does, this may still not translate to a profit, but either way it seems obvious that niche publications, and in particular those within economic news, have an easier time charging for digital content.
update 3: jon lund points out that the figure for wired’s cost only refers to editorial resources, not total cost which includes “distribution, production etc”. but unless wired has some exception in the app store, apple does charge them 30% for distribution. as for production – which i presume refers to physical printing on the print side, development and maintenance on the app side – this is the unknown figure of course. i don’t know the magazine industry that well, but the norwegian publisher gyldendal has shared their comparison of the production cost of e-books and paper books – calculating that e-books can be sold for 25% less than a paper book. however, when you are making an e-book you are just adapting to a standardized format, whereas the whole point of doing an ipad app is that you can do so much more – right? so we have to assume the costs of making an ipad app are significantly higher than just churning out a standard e-book, and roughly corresponding to the production costs of the print magazine, in proportion to number of readers. secondly, jon lund also points out that ad revenues are left out of the calculation – but unless ipad ads bring in more per reader than print ads, that point is moot.
don’t get me wrong, i’m all for experimenting with new media in general, and mobile formats in particular – i just think it’s important to bear in mind the needs of the audience. of which 99% currently don’t own an ipad. android is predicted to take a big bite of that pie, and if the smartphone market is anything to judge by, platform fragmentation is not going away anytime soon.