Can Apple crack the digital news market the way it did with music? The comparison might not be relevant. Here is why:
– Today, in the new business, imperfect as it is, the transition from print to digital is much more advanced than the music industry’s similar transformation was when, in 2001, Apple launched the iPod. There are thousands of web sites now. They come in all shapes, from powerful pure players to paid-for legacy media. Many already make serious money, showing evidence of strong strategic thought.
– The two industries are structured in different ways. In the news business, there is plenty of players; the market is more scattered than ever, unlike the music business in which securing one of the few key distributors is the only way to a sizable market share.
– Technically, when compared to the news business, the music market was easy to standardize: very few digital formats as opposed to many and complex web sites and applications.
– The foray in the music business was driven by Steve Jobs himself. From the outset, he was really fond of music. By and large, he was not a news freak (nor did he liked journalists very much). For Apple, digital news was meant to be a second class business.

For all of these reasons, Apple had no hope to succeed organizing the news business the way it did with music. That’s why it came up with an ultra-simplistic approach for its Newsstand: aggregating pre-existing news applications while taking advantage of its control of the server side (iTunes) and on the device side (iOS).

In its first iteration, Apple Newsstand is no more than a super-shortcut for news related applications. Once a publisher offers subscriptions in iTunes and selects to go for the Newsstand, its app automatically migrates to there. First you get a  push message such as this one….

…Then the publication is displayed on the store’s wooden shelf…

… where it shows up with a clever updated icon reproducing the publication’s most recent cover or front page.

But the Newsstand’s real killer feature is background downloading. Once you’re subscribed, your issue is automatically downloaded on your iPhone and iPad. This feature was actually sought for by all developers working on news application: everyone dreamed about the iOS device being able to wake up following a request from the iTunes Store and download the latest issue of a newspaper or magazine. At the time, no one knew Apple intended to keep this functionality for itself. As expected, its works fine and proved to be extremely useful.

How did the service perform since its October 12th launch? Magazines are doing well, but newspapers are still absent from the platform. I was expecting to get all the English-speaking publications I’m subscribing to or reading on a regular basis. But the Newsstand is mostly filled with leisure magazines — for now.
Take UK’s Future Publishing: with no less than 50 titles, it went full steam ahead to the Newsstand. Future said it logged two million downloads in four days — but we don’t know how many actual in-app copies purchases it generates. Still, that’s an impressive result for a company that sells 3.2 million magazines every month.

Again for the magazine industry, other data seem similarly compelling. According to Paid Content:

Exact Editions, [an US aggregator of paid-for PDF versions] which says it made about 10 percent of the Newsstand app titles on iTunes Store, says downloads of freemium sample editions jumped by 14x in just a few days, whilst some titles’ actual sales have more than doubled.

And Poynter.org reports the following (emphasis mine):

The week Newsstand launched, the NYTimes for iPad app saw 189,000 new user downloads, up seven times from only 27,000 the week before.

That’s impressive, but it’s nothing compared to the NYTimes iPhone app, which saw 1.8 million new downloads that week, 85 times more than the 21,000 downloads the week before. Nearly one-fifth of the 9.1 million people who have ever downloaded the NYTimes iPhone app did so last week, with the launch of Newsstand.

The NYT’s performance is truly amazing given its subscription system’s weird price structure. It is also surprising considering its iPad application isn’t the best in its class.

Why do magazines take the lion’s share of the Newsstand? Two main reasons. First, when it comes to subscriptions, magazines are extremely inexpensive; for a full year subscription, single issue prices can fall to a symbolic level of 50 cents or less. Second, magazines are best suited to the PDF format that still plagues most of the e-publishing industry. Therefore, without redesign expense, publishers can shovel magazines by the bulk into any newsstand. It limits the reader’s engagement, but no one really seems to care yet. Copies are counted as sold.

By contrast, subscriptions to dailies remain quite expensive since they are expected to contribute a great deal to the bottom line. As for the format, most newspapers can’t be reduced to a zoomable PDF to be read on a tablet (let alone a smartphone).

In order to really take off, daily publications’ digital editions will have to morph into dedicated applications designed for tablets (or smartphones). That is exactly what The Guardian did with is brand new iPad, iOS5-only applications that is by far the best on the market.

This app scores well on many items: navigation is reduced to the basic 10 sections of the newspapers; story layout and readability are optimal; photographs are spectacular (although Apple doesn’t allow The Guardian app to be linked to its photojournalism’s Eyewitness app); pricing is right (£9.99 – $13.99), plus there is a huge incentive with 82 free issues (!!); the app is not autistic as it is tied to the brand’s website and to the social media sphere; finally, it downloads fast (which is appreciable but less of an issue now with background downloading).

From a reader’s perspective, the Apple Newsstand is a first step. There is no decisive momentum — yet.  The real transformation will occur when newspapers and magazines will move to applications really designed for tablets as opposed to unimaginative adaptations of their print editions. This means: approaching the market with new interfaces (such as the Guardian’s or Bloomberg BusinessWeek — our story here); moving to ARPU measurement instead of old-fashioned auditing; and setting up new productions schemes. That’ll be version 2.0. not just for Apple, but for the entire industry.

frederic.filloux@mondaynote.com

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