Friday, October 22, 2010

Reuters: Murdoch's News Corp. can't reach critical mass in attempt to create its own digital newsstand

Is this really a surprise: News Corp. is shelving its plans to create a digital newsstand -- at least according to Reuters.

It is interesting that Reuters starts its story by stating that it is "Rupert Murdoch's News Corp" that is ending its online newsstand plans. The addition of the name of the owners, presumably, is a major reason publishers are leery of the idea.

The fact is that any publisher would have a hard time gathering cats publishers together to create a digital newsstand -- the task takes an honest broker and few publishers trust their colleagues, or their motives in creating such a newsstand.

I see that one columnist has warned publishers that slowing magazine iPad app sales "suggest consumer dissatisfaction".

What's missing from the argument is a realistic look at the size of the tablet media market. Yes, Wired may have sold over 100,000 issues with its initial effort and now sales are less than half that. But 100,000 sales out of a market of just over a couple million tablets was a crazy number to begin with. By my calculations, Wired had a 3.3 percent penetration of the entire tablet market after the first week or so of launching its app. Imagine selling 3 percent of the entire print market -- what would that number be?

As the iPad audience grows, and as other tablets (especially Android-based tablets) are released, I am sure we will see publishers reporting increasing sales rather than declining ones.

If one year ago I had told you that by the summer of this year a magazine publisher would have a new way to increase its single copy sales by 30 percent or more would you have believed me?