How it works
Nearly a year after Apple launched Newsstand, and on the day that Amazon comes to the world with itsÂ rumored release of the newest Amazon Kindle device, App Annie provide some market insights to assess the opportunities that lie in mobile apps for news and magazine publishers.
Readers are reading more.Â A recent study by Pew Research CenterÂ found that nearly a quarter of Americans regularly get their news from a mobile device (smartphone or tablet). Not only that, those using mobile devices for news consume more content and return to the news site or app more frequently than they do on computers. The Apple App Store is capitalizing on this new consumer trend, by organizing the worldâ€™s digital news into a virtual newsstand. As is the Apple mantra, this vastly improves the total user experience for the reader â€“ thereby driving greater traffic and revenue opportunities for media properties trying to reach these audiences.Â Readers are spending more.Â Over the past five years,Â Apple has built an audience with the sales of over 316 million iOS devices, more than all the Macs sold in 28 years of Apple business. Consequently, the iOS Newsstand has seen an impressive revenue growth of 407 percent since it launched. Itâ€™s clear that Appleâ€™s user-centric and simple approach to design is making it easier for readers to reach into their virtual wallets and pay for content.
The biggest challenge publishers face is how to monetize in a digital world where so much content is free. Unlike the web, app stores are at least minimally curated or filtered, making it a great place for quality brands to monetize loyal audiences within a controlled environment. But how to monetize?
Since before we were all born, the publishing industry has been built off a combination of subscription, pay per issue and advertising business models. And although there are those that write itâ€™s a completely new world out there, the truth is that itâ€™s more of an evolution, not a revolution. Pay per issue becomes pay per download, stamp-licked subscription is replaced by subscription through In-App Purchase, and print advertising models are being replaced through digital advertising models. But of course, itâ€™s not quite that simple – a few trends to point out.
In-App Purchases are your best gateway to revenue generation.Â If the numbers are anything to go by, then if you havenâ€™t integrated in-app purchases, youâ€™re likely not making much money on Newsstand. Weâ€™ll give you two stats to illustrate that – 88% of Newsstand apps globally have in-app purchases integrated into their app, but 99.5% of all Newsstand revenue is generated from that 88% – meaning that those 12% of apps without in-app purchases are generating less than 0.5% of Newsstand global revenue.
Publishers are experimenting with alternative forms of monetization.Â In June,Â Flipboard announced its plans to use paywall to monetize The New York Times content, a system that prevents Internet users from accessing webpage content without a paid subscription. For other publications, theyâ€™ve focused their efforts on avoiding the standard platform 30 percent cut through mobile web apps. Last September,Â The Financial Times defiantly pulled their paid app from iTunesÂ and exchanged it with a free web-based HTML 5 app to drive subscriptions outside the app store and out of the grasp of Apple. However, with so many smartphone users discovering apps through the app store, this is an undertaking that only a brand with an already huge base of loyal users can even consider. Building a mobile audience through mobile web user acquisition is not impossible, but has its challenges.
iPad still dwarfs iPhone for Newsstand revenue.Â Readers favor the larger screen, so focus your efforts on monetizing iPad users, even if the overall audience is smaller. Newsstand revenues on iPad are currently three times the size of those on iPhone, although iPhone revenues have grown at a lightning pace of more than 3200% since Newsstand launch.
Amongst the most popular Newsstand apps, established brand names in the â€˜Newsâ€™ and â€˜Lifestyleâ€™ categories shine. Unlike other apps, where new start-ups like Instagram, Rovio and Path dominate the charts, the Newsstand charts are dominated by brands that have dominated publishing for decades. The top five apps by downloads and revenues are made up of the likes of The New York Times, Cosmopolitan and The New Yorker. The New York Times deserves special mention for occupying the top spot both by downloads and revenue. The Daily also deserves recognition for being the only first to app store brand on the list.
However, you also have the aggregators – Flipboard, Zite and Pulse who combine content from a variety of partners to offer the ultimate in convenience and user experience. These well-designed apps allow users to discover content not just from the publication brand names they know, but also from the ones they may discover from publisher curating, social recommendation and other viral mechanisms. In a world where a reputation going back hundreds of years is not solely enough to build, engage and retain an audience, the publishing industry has realized the need to engage with these new forms of content discovery whilst also adapting to the new app store platform.
The key advantage afforded to publishers by app stores is the ability to publish content to 155 regional stores worldwide, optimized for a mobile experience. Where are the readers of the world, and where are the major commercial opportunities for global publishers?
Revenue generation still dominated by Western countries.Â By analyzing revenue per download, the top ranked countries are Norway, Australia, Switzerland and the United Kingdom, with the U.S. further down the pack in the eighth position. Across the top ten countries, the average revenue per app is $0.97, more than two times the worldwide average of $0.45. There are several interesting threads across these lucrative countries – seven are English speaking, nine are in the Top 25 by GDP per capita and five are European. If you as a publisher are looking to monetize off your downloads at a high rate, then you may want to focus your user acquisition efforts in these regions.
Any newspaper and magazine publisher will need a multi-channel content distribution strategy to effectively reach their most valuable audiences. And Newsstand will need to be a key part of that strategy. Some key insights to take with you:
Readers are reading and spending more on Newsstand
If the past five years of change are anything to go by, the next 12 months will be a big year for the publishing industry. The technology behind tablet, smartphones and app stores provide publishers with a more efficient way to reach their audiences – the question is, can they adapt their business models to capitalize on these trends?
Remember, keep yourself informed of the latest market data to ensure youâ€™re ahead of the curve.