Apple's Newsstand boosts magazine sales, but threatens lock-in

Apple’s recent mobile operating system upgrade, iOS 5, brought with it a feast of new features,including Newsstand,a folder which helps you manage your magazine subscriptions. It boasts automatic new edition downloads, cover views and a magazine ‘shelf’ so you can see what’s available to read. Newsstand offers not just access to big-name magazines and newspapers such as Wired, The Guardian and Harper’s Bazaar, but also smaller titles such as How It Works and the iOS magazine Tap!. Although it has only been available for a week or so, publishers are already claiming that it has significantly boosted sales. According to PaidContent, UK consumer magazine publisher Future reports that: [caption id=“attachment_112877” align=“alignleft” width=“380” caption=“Newsstand offers not just access to big-name magazines and newspapers such as Wired, The Guardian and Harper”]  [/caption]

Consumer spending [is] well in excess of normal monthly revenues. Future has sold more digital editions in the past four days through Apple’s Newsstand than in a normal month. 

And Exact Editions, which publishes about 10 percent of the titles available in Newsstand reported that “Downloads of freemium sample editions jumped by 14x in just a few days”. Co-founder Adam Hodgkin said:

Sales across the board have shot up, more than doubled the normal daily sales rate. Some magazines have experienced a 150 percent increase in sales. This appears to be continuing beyond the launch weekend.

Reporting an even more impressive jump in sales is PixelMags, which provides publishers with a content distribution platform. BizReport says that PixelMags is seeing “better than 1,000% growth since the release of Apple’s Newsstand:

“We quickly started to realize just how big of an impact Apple Newsstand was having on our business when, on the morning after launch, I received a phone call from our server company wonder if we were under attack. I told them that we were for sure - from all the new iOS5 users who wanted to download magazines from us,” said Ryan Marquis, COO and Founder, PixelMags.

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So, what does Newsstand mean for news organisation’s own news apps? The big draw for Newsstand is that it is seamless — the user simply has to subscribe to interesting titles and all the downloading is done automatically. That’s a tough act for standalone news apps to compete with, says the Knight Digital Media Blog:

Standalone news apps may look cool, but cumulatively they’re also a hassle for users who mainly just want access to content, not special interactive features. Users must find an app, download and install it, and remember to use it. That’s a problem, since recent Localytics research found that 26% of apps are only opened once — and only 26% are ever opened more than 11 times.

But by nailing their colours to Apple’s Newsstand mast, are publishers taking a risk? Apple has shown itself to be disturbingly mercurial when it comes to the App Store. Its policies around in-app subscriptions have clashed with publishers’ desire to have control over their customer data. And publishers have found the 30 percent cut that Apple takes from in-app subs to be unpalatable. This led to the Financial Times spurning Apple and producing its own HTML5 web app, which is available via a browser rather than the iTunes App Store. Whilst HTML5 can’t perfectly replicate the experience of a native iOS app, using it as the basis for an app-like website does make it easier to repurpose content for a different platform such as Android. So publishers have a choice to make. If they categorise their apps as Newstand app, they will see them featured in the special section of the App Store where subscribers are more likely to find them. But they can only submit native apps, which means ceding subscriber data and coughing up 30 percent to Apple. Their apps will only be displayed inside Newsstand and will not be visible on the user’s home screen. But they are likely to see a bump in subscriptions and readers. Or they can stick it out with a standalone web-based app using HTML5 to replicate native iOS functionality. This allows them to control their customer data and receive all of any subscriptions paid. But they have to hope that people care enough about their content that they will look outside of Newsstand to find it. At least some publishers are concerned about Newsstand’s potential for lock-in. According to Poynter:

Earlier this year Apple required publishers to use iTunes for any subscription or issue sold through an app. Now it is hoping to hook consumers on Newsstand as a centralized place to buy and store all their news content. If that happens, it will be even harder for any individual publisher to break away. Resisting this, a group of eight French newspapers and magazines has banded together to boycott Newsstand and instead launch their own digital kiosk.

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Newsstand is not necessarily the silver bullet that saves the news industry. Apps still need to be compelling, as does content. And the impressive subscription figures we’re seeing may tail off as the novelty value of Newsstand wears off. Ultimately, publishers need to weigh the pros and cons of native iOS apps against HTML5 web apps: loss of control and 30 percent of revenue but possibly more subscribers, vs. total control and all revenue but possibly fewer readers. That’s a tough call to make at this stage. The wise publisher might do well to sit back and watch for a while to see how the situation develops.