For magazine and newspaper publishers, Apple's Newsstand is a sure bet

by Chuck Lenatti

March 12 2012

Five months after its release, TabTimes checks in on Apple's Newsstand. Conclusion? It's already having a profound impact on magazine publishers' single copy sales and subscriptions.

Right now, about 37% of leading U.S. publishers are behind the Newsstand. That's up from 10% at the end of October, said Rebecca McPheters of industry analyst firm McPheters & Co. "The proportion has increased substantially,” she said.

As the chart below indicates, the U.S. ranks fifth globally in the percentage of publication apps in Newsstand. The UK and India are far in front of the market with 72% and 63% of respectively.

The rapid rate of adoption has certainly not slowed down for iPad magazine apps from Bonnier's Mag+, a platform that helps convert magazines to iPad-native apps.

“The steep growth curve at the launch of Newsstand has been maintained; it really hasn't leveled off,” said Mag+ Chief Product Officer Mike Haney. Mag+ points to the dramatic increase in the popularity of its Popular Science iPad app once it became available on Newsstand—and it's not alone.

“All of the titles we've talked to are mirroring the trajectory of Popular Science. The growth curve for Popular Photography and Outside magazines is almost identical. Everybody has maintained that steep growth,” Haney said.

Discovery is key

The key, Haney said, is disoverability. “Before the Newsstand, it was like walking into Wal-Mart and not knowing if you would find Popular Science by women's underwear or over by the lawnmowers. This is the first time in the app world where you had a real newsstand like a Barnes & Noble or Hudson,” Haney said.

“The content that people want on that device is all gathered in one place. As the number of iPads rise, people are looking for these kinds of experiences. Apple must have realized that as well, which is why they introduced Newsstand.”

McPheters agreed that the success of Newsstand has been related to the rapid adoption of the iPad, which doubled between early December and early January. “Those people downloaded a lot of apps, and publishers were a segment. The Newsstand caused the publishers' share of the most downloaded apps to increase.”

With a few exceptions, including the Time Inc. titles, most of the top-grossing publishers are behind the Newsstand, said McPheters, and larger publishers have benefitted the most.

Among the top 20 highest grossing magazine apps, 80% are in the Newsstand, she said.

Large titles that haven't embraced the Newsstand have been hurt—at least in terms of relative App Store revenues. Since their digital subs are bundled with print, those revenues are not measured in the App Store.

Some publishers are worried that digital sales will cannibalize print, but that hasn't been the case with Mag+, said Haney.

“Our clients have seen that there's almost no overlap between digital subscriptions and print. Pop Sci has around 60,000 subscribers now—and 97-98% of those are new to the brand. Not only are they not paper subscribers, but many are not even former subscribers.

"It's an opportunity for brands to attract new audiences and ideally pump up their (iPad) rate base and take down their print rate base so that their revenue goes up even more, since they're saving from the print side.”

So what's working best? Haney said the magazines that feel “native” to the iPad do the best.

“Several of our clients have had or continue to have more of a PDF replica version, and they're typically seeing better traction with the Mag+ designed version.

"It's less about the bells and whistles and video and audio and tons of interactivity, and more about creating an experience that feels native to the device.

"Outside magazine doesn't put in a lot of extra stuff, but the design feels like an iPad app and not like you're looking at a picture of a magazine. That seems to be something that users appreciate.”

How many free downloads convert to paid?

Downloading the app is one thing, but how many people actually pay for magazines once they have the app?

“It ranges a lot across titles,” said Haney. “We've seen everything from 15% and up and in some cases 30-40% that actually followed through. And in more cases than not, [purchasers] actually followed through to a subscription.

"Because of the price break a subscription offers, some magazines are seeing more subscriptions than single-copy sales. Those conversions are worth even more. Obviously, everybody would like to get that up to 80-90%, but if you compare it to the kinds of conversions you get in the print world, 10-15% is a pretty decent number.”

Newsstand has exceeded Mag+ expectations, Haney said. “We knew it was going to be important and big, but as we look at some of those growth trajectories and in some cases the sheer numbers that have been added, it's been an absolutely crucial development for this industry.

"It's hard to remember a time before it was there.”

Chuck Lenatti writes about digital media, marketing, and advertising. He lives in Pacifica, California.
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