NEW YORK (AdAge.com) -- Can the Jesus phone resurrect print's hopes for paid digital content?
Several players, from ambitious software developers to arcane auditing bodies, are suddenly converging this spring to hasten the arrival of a long-awaited "iPod for print." It might just be the iPhone.
So far magazines and newspapers have built applications chiefly for the iPhone -- and the surprisingly popular iPod Touch -- that riff on their core editorial missions. Witness Condé Nast Digital's Style.com app, which plays video of Fashion Week runway shows, or Lucky magazine's shopping app, which helps users find nearby stores with certain shoes or bags in stock.
The Style.com app has been downloaded 230,000 times since its introduction last August, according to Drew Schutte, senior VP-chief revenue officer at Condé Nast Digital. And it represents the first way publishers are making money from apps: by selling ads or sponsorships on them. The Style app, free to consumers, served 2 million ad impressions for marketers such as H&M in the first quarter of the year.
"Ever since the iPhone came around, it turned the mobile-advertising opportunity from something really stiff, cramped, awkward and slow into something beautiful, sexy and fast," Mr. Schutte said.
About 90,000 people have downloaded the free "Lucky at Your Service" app since its debut just two months ago. It's a brilliant brand extension, another way publishers want apps to further their business.
Some publishers also want to facilitate commerce -- in exchange for a cut of the revenue. "Certainly there's an opportunity on your iPhone, whether it's stuff like buying movie tickets or buying products," Mr. Schutte said. "We're just beginning to explore it." Lucky offers advertisers participation in "Lucky at Your Service" as added value for in-book advertising.
But many publishers would also like to turn iTunes into a virtual newsstand and subscription hub. It's immensely popular, and people like buying things there. What better place to try to give paid circulation a foothold in digital?
Selling magazines through iTunes might have promise, depending on execution, audience and other factors, publishers said. "ITunes is a great marketplace for entertainment, movies, music, TV, even books. Magazines are actually conspicuous in their absence," said Ryan McConville, publisher of the Bauer Teen Group, whose titles include J-14 and Twist. "If teens are already there buying Miley Cyrus records and episodes of 'The Hills,' it's not a stretch to think they could just as easily be buying copies of J-14."
The Wall Street Journal, for example, plans to start charging for some of the content people get from its free app, which it upgraded earlier this month. But that app pulls news content from the web. Selling digital editions of print issues, certainly magazines' chief asset, has had limited prospects until now.
On one hand are digital replicas of magazines for the iPhone and iPod Touch, which not many people like reading, even according to companies that offer apps to that end. "The digital edition as it currently exists, as a replica, has great value for some percentage of the population -- a small percentage," said Cimarron Buser, senior VP-marketing and business development at Texterity.
"We don't think that the digital-replica model is the business of the future," said Jeanniey Mullen, exec VP-chief marketing officer for Zinio.
Race to the phones
On the other hand, translating print issues into versions better suited for the iPhone also faced several hurdles.
First there was the technical heavy lifting required. But now Texterity, Zinio and a developer called Bite Sized Candy are each racing to deliver new systems to put issues in better formats. They all said they'll introduce their systems this year; Bite Sized Candy said it's shooting for summertime. "The goal is to extend the reach of publications through the iPhone via iTunes," said Parie Markowitz, managing partner at Bite Sized Candy.
Then there was the problem of the small screen, a concern even if one didn't try to sell page-by-page replicas. The apps in development, however, already look better than anticipated. "I've been impressed with some of the examples and apps that I've seen, and I didn't expect to be," said Sean Nolan, VP-online operations at Rodale, publisher of magazines including Men's Health, Prevention and Runner's World.
"Like a lot of things on the iPhone, it's tough to describe but cool to experience," he said. "Having the product load locally on the device, rather than through a wireless connection or Safari, is a big key for the user experience. It loads quickly and allows you to page through, item by item, from a standing menu. It's not as image-driven as a magazine, but then it shouldn't be."
Publishers are also worried about advertisers, whose revenue was too important to leave out of the equation.
Until recently the Audit Bureau of Circulations, the dominant referee of magazine and newspaper circulation, let publishers count digital editions toward their "paid" circulation only when those digital editions precisely reproduced each printed page. A non-replica -- with all an issue's contents but laid out specifically for the iPhone -- did not count as paid, the kind of circulation advertisers most want to buy.
This spring, however, the bureau voted to allow nonreplica versions to be reported as paid. Publishers still aren't allowed to count non-replica digital versions toward their paid-circulation guarantees, a basic metric for negotiating ad rates, but the bureau is already talking that over.
That means publishers looking to sell issues through iTunes will soon have just one hurdle left: consumer demand. If readers like using iPhones to buy the March issue of Gourmet or a year's subscription to Fortune, advertisers will come along.
"Certainly, on paper, everything that's just been talked about makes all the sense in the world," said David Leckey, exec VP-consumer marketing at American Media, publisher of Star and Shape, as well as a vice chairman at the Audit Bureau. "Whether it should go there or not, I think, will ultimately be the consumer's decision."
The potential isn't clear today, said Rodale's Mr. Nolan. "What we do know today is that, despite the rumors of its demise, print is not dead," he said. "And we also know that people are consuming more branded content, not less, which is good news for us. But the new wrinkle is how they're consuming it. It's print, yes, but also iPhone, Kindle, BlackBerry, syndication, YouTube, Hulu, Facebook widgets, on-demand web video via the PC and so forth. So our goal is to test and learn and understand what our audience wants, when they want it, and how they want it. As distribution channels evolve and change and fragment and Long-Tail, we intend to follow them and ensure we continue to deliver our premium consumer content."
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