On Monday of this week Jason Pontin, publisher of Technology Review, posted an article on the magazine's website titled Why Publishers Don't Like Apps in which he detailed his own publication's experience with selling subscriptions through their app. The post was picked up or referred to several times and the post itself garnered quite a number of comments – far more than a B2B media website would have gotten. My own response appeared that day here at TNM.
I invited several firms to respond to the post, but as it turns out Mike Haney, US Director at Mag+, had already written his own response to Pontin's post. Haney's response appeared yesterday on the company's blog and the company has given TNM permission to reproduce it here.
A post from Jason Pontin, editor in chief of Technology Review, about his magazine’s frustrating experience in and subsequent abandonment of the app world is making the rounds today. I don’t know Jason, but as a former editor at Popular Science, I know his book well and really admire it.
Having worked in this ecosystem since before the iPad launch, and speaking with dozens of publishers before and after they move into this space, I don’t doubt Jason’s experience, and I feel his pain. Although we have some clients, like PopSci, which has made more than $1 million NET revenue (after design costs, licensing of our platform and Apple’s cut) on its iPad edition, or Popular Photography, which has moved more than 10 percent of its 350,000 rate base to iPad, saving tons of money on paper, postage and distribution—others are still struggling to make a profitable business from their tablet edition, and it has not had nearly the quick impact industry-wide that many anticipated (hoped) in early 2010. Meanwhile print continues to struggle.
But I would also say there are variables here that should be considered before one completely dismisses the idea of content companies—especially ones with content as great as Technology Review—succeeding in the app space. First, Jason cites $125,000 in tech development costs—at that price, I understand how near-term ROI was difficult to achieve. However, there are solutions out there like ours (and others) that have done the tech development for you and offer much lower-cost paths to this space. Our apps aren’t custom, but they’re as powerful as anything on the market and they’re cheap. Tech Review would pay us no more than $6,000 a year, plus $.17/gigabyte downloaded IF it had us host issues (it could also host issues itself).
Second, just like the print business, success in the app space is rarely automatic—it requires ambitious promotion, especially in a market as dense as iTunes. Jason mentions having little success pushing digital subscription sales on his own site—I believe that, but that’s a marketing challenge, right? Publishers have mastered the art of selling the print product—direct mail, blow-in cards, multiple circ channels, newsstand placement, etc—because they’ve been doing it for 100+ years. The challenge here is that it’s a completely different ecosystem you’re selling in, but it’s not impossible—it just requires a different set of skills and tools. No one had really monetized the Web three years in either—it takes time for these systems and practices to develop.
Third, apps and Web sites (or Web apps), which Jason says TR is moving to, are not the same thing—both have a place, but people do use tablets offline, and do have high expectations for the experience an app gives them, whether it’s a game, a tool or a content experience like a book or magazine. For a daily newspaper like FT, I can see the argument for pure Web. For a magazine—whose strengths are design, packaging, visuals—apps are often a better way to deliver an experience more in line with what people expect from your brand. Not to mention how much easier it is to monetize in the app world than the web world (I’m not saying it’s impossible to monetize Web content, just trickier, at least on the consumer revenue side).
I would argue that many existing print publications will not find a way to make a profitable business by delivering the exact same package of content they do in print—however enhanced or redesigned—and certainly not until there’s a real advertising ecosystem in place. But that doesn’t mean there isn’t opportunity in the app space for businesses—like magazines—that are experts at delivering curated content to audiences that want it. That may mean a different package of content than the print pub, but there are 60 million tablet owners and they do want content—text, images, movies, audio—on their iPads. They don’t care whether it comes from a “magazine” but they’re going to find it somewhere. I’d hate to see folks like TR, who know how to create such amazing, engaging material, abandon that audience forever.
The point I take from Jason’s experience, and others like it, is that publishing companies really need to think critically about their opportunity in this space and do it in a way that gets beyond existing products (the print mag, the .com) and business models. And they need to have the tools (and the will) to be able to experiement cheaply and learn. I rarely tell a potential client our system will make them rich in this space; instead I tell them it’s a inexpensive and pretty simple tool for them to figure out how to get rich in this space (eventually).
Print alone is going to be an increasingly tough way to make enough money to support the kind of ambitious editorial work magazines like TR do and that audiences of that brand expect. And very few magazines have figured out how to get a real revenue contribution from their site (though the online success of brands like The Atlantic and New York magazine suggest there’s a lot of room for growth there too). The bottom line is that all content producers (magazines, TV shows, bands) are operating in a multi-channel world now and their revenue is going to increasingly come in smaller pieces from more sources. The sooner they start learning what that mix could be, the better. That will be a tough transition, but it’s absolutely one worth engaging in, for both the business and the consumer.
Mike Haney is the U.S. Director of Mag+, the digital publishing platform that was developed and later spun out of Bonnier Corporation. TNM featured a two-part interview with Haney last year, part one of which can be found here.