Tuesday, October 16, 2012

A quick guide to understanding the costs of digital publishing solutions; keeping hidden costs to a minimum

Are you one of those people who looks for the best deal when renting a car, then end up wondering why you're paying so much at the end of the trip? Did you get the cheapie car, then pay for navigation, insurance coverage, a baby seat (without, of course, having a child to use it)?

For publishers who can't say no to up charges, agreeing to use a third party vendor to create their mobile and tablet apps can be a nightmare of unexpected charges and needless agony. Publishers need to go into the process knowing what they will need, and what they can expect to pay.

For the big boys, building tablet editions means buying software solutions, hiring developers and production staff and then all the servers solutions necessary. It can be expensive, but in the end the big publisher has now transformed their company into an app making machine. Whether they are actually making money at the new venture may be another question, but they are now in a new ballgame.

For most small to mid-sized publishers, their experience will be different. They will be working with one or more vendors who will be charging them not only for a digital publishing solution, but possibly much more, as well.

Understanding those charges, and understanding what you will need is what this post is about.

Many, if not most digital publishing solutions start with a free plug-in or other publishing solution such as an online system. Unlike the Adobe system, which can cost thousands of dollars in upfront costs, most other vendors let you in the door without a cover price.

The nice thing about this is that the publisher's team can play around with the digital publishing solution to see if it will meet their needs. I often ask publishers if members of their production staff have been playing around with either Mag+ or Aquafadas – it is the best first question because the answer often tells me a lot about the state of digital publishing at their firms.

The most common add-on charge that a vendor will charge for is to remove their branding – the logos that will appear on the app that promote their brand, not the publisher's. Getting rid of branding can cost up to a $1000 in some systems, though this charge is generally added onto the vendor's free or inexpensive publishing option.

The more you are willing to pay to launch an app, the less branding you will be forced to live with.

Another big consideration is whether the new app will appear in the App Store under the publisher's name as the seller, or under the name of the vendor. It is a sore point with me that so many publishers are willing to see their magazines enter the App Store under the name of a third party. The publisher pays the bills, hire and fires, but then is willing to give away their product to a vendor so easily. Why?
In order to have an app appear in Apple's App Store one needs their own developer account. It is an incredibly easy process which only costs $99 per year. Any publisher without their own developer account this late into the game really needs to have their heads examined. If that is you, fix this, today. (Start here.)

The two most important costs, after the publishing solution and branding, is probably server storage and analytics. You've built the app using their solution, but now that your app is in the App Store the issues will have to be served to your readers. Server costs are determined by the amount of space you'll need and often can be a minor cost if your file sizes are reasonable. But if your issues are downloaded thousands of times, which is what you'd like, it will add up.

A vendor that charges $0.16 per gigabyte of storage might cost you $800 a month if your issues are 500 MB in size and 10,000 readers down the issue. A smaller issue, downloaded to only 1,000 readers might result in a charge of just a few dollars. The point is that this is a variable charge, and one you should be budgeting for.

Analytics are a service many vendors don't even offer. Those that do usually charge a flat fee for the service. That charge can be a one time charge (preferable) or a recurring charge. The decision to buy analytics will be up to each publisher and the determining factor may be the quality of the service.

Another charge, and one that many publisher overlook, is subscription verification services. If you currently charge for subscriptions (and remember, many B2B publishers don't) then you will want to decide whether your current print subscribers should receive access to the digital issues free of charge. To do this, you'll need to be able to let those readers sign into their accounts through the app.

Quite a number of publishers have decided to charge everyone simply to avoid this process. But one-star reviews of magazine apps overwhelmingly are caused by print readers upset by the policies of the magazine publisher forcing them to pay for digital.

I may have missed other possible charges, but it seems to be that the additional charges one generally sees after all this are usually tied to technical support and custom design services. These costs are highly variable, and are usually pretty easy to understand.

Publishers continue to look for the holy grail of mobile and tablet app production: a low cost solution with minimal hidden costs.

One rule of thumb to consider is whether it is easy to speak to a representative of the company and have them clearly explain their offerings. Companies that insist on communications only through email or forums are to be avoided. If you wouldn't consider doing business this way, there is no reason for you to have to endure this level of service.

Remember, you are the client. Demand good service and clear, understandable pricing.

1 Comment:

Bart De Pelsmaeker said...

Very interesting article - thank you for the insights and analysis!! I would like to add that storage will indeed be a large cost if your apps are 500Mb, but that is not necessarily the case. Typically HTML5 apps are much lighter compared to the InDesign-built ones. So the cost would be significantly lower as well.