The BBC announced the imminent release of several iPhone apps at Mobile World Congress. Price? Free. A workable monetization model for a bloated, government funded organization, however this got me to thinking about established commercial publishers. Almost all UK newspaper organizations have offered up their app “free” as well. Clearly, publishers need to play a role in the mobile space and must build an audience. However, “free” or what has evolved into “freemium” in the online space hasn’t solved the corporate revenue problem so why readily swallow the same poison pill for mobile? Are there really no options beyond weak kneed ad-supported and freemium monetization models?
Before we dig into that question, let’s enrich our perspective on the news category and paid market within as of March, 2010 for the UK market. The average price point is £0.52, which remains relatively stable from December at £0.55 when we began tracking this information. This indicates very few publishers are shifting their business model and deploying in-app purchase subscriptions, as there is no apparent downward pressure on the initial paid fee. The £0 – £2.99 price grouping includes 99.8% of all news apps. This is the highest concentration of any category, which means even differentiated, niche content players are reticent to experiment with higher price points. Oddly enough, the “other” publishing category books have the lowest concentration at 87.4%. Book publishers are acting significantly bolder in their pricing strategy.
There are 4027 news apps available in the UK store as of March 2010; 3542 non-brand (88%) and 485 brands (12%). A brand app is defined as any organization or company that is using the iPhone as a vehicle to extend their existing messaging and/or positioning. Basically, an existing business outside of the app world. A more explicit definition is provided below. The majority of brand apps are free 349 (71%) versus paid 136 (29%). In contrast non-brand apps are primarily paid 1,977 (56%) versus free 1,565 (44%). No surprises here. Brands are attempting to create additional stickiness with customers, build an audience and funnel users to (hopefully) monetize outside the app world; whereas Johnny Appleseed developing in his bedroom needs to monetize inside the app world.
Let’s clarify “free” for a moment. Here are the brand app monetization models to-date;
Free. This includes; ITN News, Daily News and Thomson Reuters.
Free + Digitized Print Ad supported. Metro UK. Is it just me or is digitizing your print newspaper and sticking it into an iPhone app ridiculous?
Free + Mobile Ad Supported. This includes; Sky News, NYTimes and The Independent
Free + Sponsored. The Telegraph, which includes placement that is subtle, distinct and clean; initial splashscreen and click-thru list box item presented at the bottom of the main dialogue. Time Mobile, which simply includes banners at the top and bottom of content.
Free + Ad Supported + Paywall (Metered Access). FT Mobile. Similar to the online site you can access a few articles “free” a few more with a “free” subscription and gain access to all content with a “paid” subscription.
The “pay wall”; freemium or metered access have largely not been effective online. The online Financial Times have a global conversion rate from “free” subscribers to “paying” subscribers of less the one percent (.75%) netting 120,000 users as of October 2009. Not great. Especially poor considering FT content is largely unique and can’t easily be found elsewhere. In any event, FT Mobile is simply an extension of a failed monetization model. Content is queen; folks generally won’t pay for premium, niche or extra access.
The Guardian broke ranks with a paid app, which sold 70,000 units in its first month at £2.39 in the UK. It has ranked on average 46th in the top 100 paid and 33rd top 100 grossing over the last thirty days.* Units shipped far surpassed most competitors despite the fact that it was a straight-up paid app. Sky News leads the “free” brigade sitting at #1 in the News category and 61st on average in the top 100 free apps category over the last thirty days. So, why did folks pay $$$ for news that is available free from competitors? The stock response is The Guardian has differentiated content. True, however consider that the same Guardian content is available free online; PC or mobile. Indeed, the Guardian mobile site had approx 500K unique hits from iPhone users a month prior to the launch. So, you could realistically state their conversion rate at an impressive 14%. Why did folks pay $$$ for the same content that is otherwise free? The answer is the app. Most analysts have lauded the app or “reader” for setting a benchmark in user experience. According to Wired, it’s “a smart, flexible and stylish way to access (the content)” Simply download Sky News and The Guardian app and the difference in the “reader” experience is obvious. Reader is king; people will pay a one-time fee for an amazing user experience.
*Note: We track the last 30 days trailing only
The King and Queen need to join metaphorical forces. Charge a subscription for the reader itself. Or more accurately stated, a subscription for the reader to access the entire set of content. All or nothing. Period. No metering, no special content, simply open the reader and access the lot or return nothing if the user decides not to renew their subscription. The industry has proven that only Johnny Booknerd will bother with “premium” content subscriptions and the like. Likewise it has also proven mobile folks will pay a one-off for a user experience that makes great content come alive. So, the monetization experiment waiting to happen is; maybe they will pay for a two-off? maybe once a year? twice ? A less subscription oriented model (and perhaps more subversive method), may be to require the user to pay for the reader again based on an iPhone OS upgrade.
Definition: Brand App
Any organization or company that is using the iPhone to extend their existing messaging and/or positioning.
The organization must be the owner or otherwise responsible for the authorship of the application, which includes software consultants working on their behalf. This excludes companies re-purposing other organizations content without their consent. The organization primary product or services must be targeted to B2C or B2B “real world” markets outside of the iPhone or mobile applications marketplace. This excludes companies or individuals dedicated to the iPhone or mobile applications marketplace. It also excludes web design, software consulting companies developing dedicated applications for the iPhone marketplace where the application represents an idea or business unto itself not related to their or any other organizations primary products and/or services. Finally, all non-English language organizations are excluded.
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