February 02, 2011
Got an iPhone/iPad app? Don’t count on browser-jumping for extra revenue
Today in New York, Rupert Murdoch unveiled The Daily, the first-ever iPad-only newspaper. It’s available via a new one-click iPad subscription mechanism for 99 cents/week, or $39/year. And it displays paid ads. Many in the news business are watching eagerly to see whether this approach provides a viable revenue stream. Meanwhile, elsewhere in the Appleverse, a controversy is brewing that should concern any publisher who offers content-focused, revenue-producing apps for Apple mobile devices…
By Amy Gahran
On Feb. 1, the New York Times reported on why Apple rejected Sony’s new e-reader app from its app store, which jumped users out of the app and into Sony’s web-based Reader Store to purchase new e-books.
This is the same strategy Amazon has used since the launch of its popular Kindle app to skirt the hefty 30% cut Apple takes from all in-app purchases. In fact, CNN Money wonders whether Apple might crack down on the Kindle app next.
Many iOS app providers view Apple’s move as a bait and switch. For instance, A note on the Sony Reader app page says, in part: “Unfortunately, with little notice, Apple changed the way it enforces its rules and this will prevent the current version of the Reader for iPhone from being available in the app store.”
Here’s Apple’s response, via The Times:
“We have not changed our developer terms or guidelines,” Trudy Muller, an Apple spokeswoman, said Tuesday. “We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.”
...So Apple might not be issuing an outright ban on app-jumping, browser-based content purchases (yet). But if you want to offer this feature, your app must also support in-app purchases.
This situation presents a significant issues for content producers, including news organizations with iPhone or iPad apps. For instance:
- Would publishers have to charge more for in-app purchases, to cover Apple’s cut? If so, consumers probably would just use the cheaper browser option.
- Might Apple require equal pricing for in-app and browser purchases? This could drastically skew the economics of a publisher’s mobile business model.
The Times indicated why news orgs should care:
This requirement may signal a shift for Apple. The company has made more money selling hardware than music, e-books or apps. If people could have access to more content from more sources on their iPhones and iPads, the thinking went, then they would buy more devices.
The move is also surprising, as Apple has indicated recently that it would be more collaborative, not less, with magazine publishers and other content producers that want more control over how to distribute content on the iPad.
Right now, most news organizations’ mobile apps (for iOS and other platforms) generate revenue from straightforward ad serving and, sometimes, access to premium content—although usually premium content is not actually sold through the app, but merely accessed via an existing subscriber account.
But what if more news organizations wanted to start selling book-like content, and initiating this purchase process via a “buy” button from within an iOS app? The booming popularity of e-book readers means that the e-book market now represents a huge consumer market for news organizations to repackage and sell their content.
For instance, the New York Times recently published Open Secrets, “the definitive chronicle of the WikiLeaks documents’ release and the controversy that ensued.” It’s now sold via all major e-book retailers. But what if the Times decided to also sell it directly in a non-proprietary e-book format (such as .mobi) via a buy button in its iPhone or iPad apps? And what if that buy button jumps users out of the app and into a browser-based shopping cart?
Or what if the news app simply jumped buyers to existing e-bookstores on the web? (Using the publisher’s own affiliate codes to earn a little extra money on the transaction, of course.)
There’s more to this flap. It’s not just about selling content via mobile devices, but also about using apps to access to previously purchased content. Wired explained why (emphasis added):
Apple also allegedly told Sony that the app couldn’t access content purchased on other Sony Reader devices, which is where most of the outrage was focused. ...Apple’s statement indicates that this is indeed the case—sort of. If an app lets users access content that they purchased via Amazon’s website, for example, then that same app must also let users buy the same book via Apple’s own in-app purchase system. If the app developer doesn’t want to use Apple’s in-app purchases to sell content, then the app can’t access content purchased elsewhere either.
News Corp has invested lavishly in The Daily—reportedly spending $30 million, including paying for a staff of 120 and prime office space in downtown Manhattan. Personally, I think this was a mistake for several reasons, including that putting all of The Daily’s eggs in Apple’s basket significantly reduces business flexibility and thus increases risk.
At The Daily’s launch today, Murdoch confirmed that the iPad will probably be only provider for The Daily for this year and next year. Eventually News Corp will develop editions for all tablet platforms, he said. But for now, this is effectively an iPad exclusive.
And while it seems The Daily’s only initial revenue streams are subscriptions (of which Apple is probably taking a cut) and advertising, who’s to say they weren’t also eyeing potential sales of additional content products to help meet their sizeable payroll over the long term?
If Apple is willing to pull a major bait-and-switch for app-related revenue options, it jeopardizes the economics of any venture rooted in iOS apps.
News Corp. might want to accelerate its Android development schedule for The Daily. And other publishers might want to think twice about committing too heavily to a platform which, while popular, also has a track record for suddenly changing its rules for doing business.
The News Leadership 3.0 blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.
Comments (5) • Permalink • Tell-a-Friend
Tags: business models, business, apps, ipad, iphone, apple
Comments
The beauty of these blogging engines and CMS platforms is the lack of limitations and ease of manipulation that allows developers to implement rich content and ‘skin’ the site in such a way that with very little effort one would never notice what it is making the site tick all without limiting content and effectiveness.
By ahmad feri fauzi, 02/02/11 at 5:59 pm
thanks for your nice post!
By concasseur, 02/08/11 at 7:31 pm
Im impressed, I must say. Very rarely do I come across a site thats both informative and entertaining, and let me tell you, youve hit the nail on the head. Your site is important; the issue is something that not enough people are talking intelligently about. Im really happy that I stumbled across this in my search for something relating to this issue.
By Lean Spa Acai Berry, 02/10/11 at 11:22 pm
I just started posting comments for blog and facing problem of lots of rejections. I think your suggestion would be helpful for me. I will let you know if its work for me too.
San Diego Movers
By gurram, 02/12/11 at 5:42 am
Make your choice with the different choices of aion kinah styles available, it is much easier to get the wedding cartier watches that is perfect. To make the choice that makes it much easier than you’ve found the look and theme of the wedding, the styles of wedding dresses and, of course, and your budget. The search for different styles of Maple Story Fame PowerLeveling and designs can be loads of fun and very inspiring. By refining what you need and define what you want, you’re sure to find the beautiful wedding cartier earrings after you!
By DMJY, 02/16/11 at 11:02 pm
Page 1 of 1 pages
Commenting is not available in this section entry.
Exploring innovation, transformation and leadership in a new ecosystem of news, by journalist and change advocate 
RSS Feed