Tuesday, March 08, 2011
Magazine app review – emerging business models
As the magazine industry innovates, business models are emerging on how to monetizing magazine apps. The root of innovation is creativity based on a solid business case  and market timing. The recent announcement by Apple on how they want to control in-app purchases is not surprising and will impact future business models. This will threaten some magazine app models that use a library hub and a non-Apple check-out as part of their app model.

 


The criticism of the Apple in-app purchase strategy is wrought with naivety by publishers. Apple is an online retailer of digital goods and they have the right to control how the products are sold in their store.

If this was Wal-Mart, a brick and mortar enterprise nobody would be saying anything about it. Wal-Mart sets its own prices and its owns the customer. If Wal-Mart asked you to distribute your magazine in their stores would you balk at the wholesale price negotiated? Of course not.

But what are people buying in the App store? According to this Nielsen report, magazines ranked 8th, with games coming in at the top spot.
 
MAGAZINE APP STRATEGIES

For discussion I have identified three models that we can take a deeper look at. These models follow some existing business practices for newsstand and subscription sales. I have also added a magazine that leverages social networking for content.

A) Single Issue Sales
Time
This model provides a combination of a free sample and the ability to buy single issues. The marketing emphasis is to attract new readers to the brand through this new retail distribution channel. This can be considered a digital single issue paid strategy.

tktk
Single Issue Sales: This virtual store of back issues of Time can be purchased through the App store and provides a free preview prior to purchase replicating the newsstand experience

B: Subscription Bundle

Oil & Gas Journal
Oil and Gas demonstrates a model where existing subscribers can get an app as part of their subscription package. The magazine subscription model enables readers to get it in print or digital on any device you want it. Readers can use the same subscriber login (email) to get access to the app. The app also has the ability to convert new subscribers.

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Issue Preview Page: The magazine issue page in this app provides a free preview sample of the magazine (Note: This App is produced by Texterity, the company I work with)

C: Digital magazine app

Flipboard
Flipboard, is an app that operates outside the typical magazine publisher’s box. It got my attention when it was recognized by Apple as App of the year in 2010.

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Home Page: This page provides the reader with access to their Twitter and Facebook accounts plus the Flipboard feeds


The app’s content can be from the user’s Twitter or Facebook account, plus Flipboard content feeds. It’s is a great way for publishers to build on their social networking strategy to attract new readers.

While these apps work on Apple devices, publishers must also be aware of the importance of Android devices which in my opinion will eventually dominate the mass market. The Apple iPad is premium priced and thus will cater to a smaller market. Just take a look at history and the major impact of white box manufacturers who were the price brands in the PC market. You can now get an Android tablet for $200. So don’t keep all your eggs in the Apple basket, you will need to replicate these efforts in the Android market.

To show the industry what an Android tablet can do, I will be giving away a 7-inch Android Tablet (value $200) as a door prize at each magazine conference Texterity sponsors this Spring: Halifax (Atlantic, March 14), Calgary (Alberta, March 24-26), Winnipeg (Manitoba, April 28) and Vancouver (British Columbia, June 17).  This tablet will also be reviewed in April’s blog.



- Martin Seto
About Me
Martin Seto

 
Martin Seto is the principal of Reflex Media, a media consultancy practice offering media owners online publishing, ad sales and acquisition/selling brokerage services. His media services also include working with ad agencies as a media buyer/planner for tv, radio, print, outdoor and online. He has been in the advertising and media industry for 25+ years and he has been an instructor/speaker with Centennial College and at magazine conferences across Canada. He also moonlights as a pro goalie as a "rent a goalie" at mypuck.com.
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