Experimenting in the App Lab: Exploring Mobile Content Models

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Article ImageFor some, it might be hard to remember what life was like before smartphones, tablets, and e-readers. How did we ever survive? We had to wait until we were settled in front of our PCs to check our email and watch the latest episodes of our favorite TV shows on our TVs (gasp!). We even had to buy GPS navigators for our cars to find our way to new destinations. Mobile devices and the apps that live on them have certainly made our lives easier-and maybe even more exciting-but they have also had a significant impact on the publishing industry.

Recently, many publishers have shifted focus from paperbacks to ebooks, ink-stained fingers to touchscreens, and curbside newsstands to app stores. And there is good reason for this. With the Apple App Store and the Android Market offering more than 500,000 apps each as of March 2012, there's ample opportunity for publishers to take advantage of the mobile application platform and find new ways to distribute content. While some publishers are sticking to the tried-and-true content delivery methods, others are branching out and experimenting with different, and possibly trendsetting, mobile content models.

It's an Apt Time for Apps

Steve Smith, EContent columnist and new media consultant, explains that apps have given publishers an entirely new way to monetize content. "There were a thousand ideas online for selling content, none of which really worked. That was one of the things that mobile helped do to change the equation. Traditionally, people had been used to paying for just about anything extra on a mobile phone, everything from extra messages to extra minutes to even the rudimentary applications that even feature phones used to have. The app model had the benefit of coming on a platform where people were already used to paying for content."

But are the profits really there? In February 2012, ABI Research, a market intelligence company specializing in global connectivity and emerging technology, released a report titled "Mobile Application Business Models" that aimed to determine which mobile application revenue models-in-app purchases, pay-per downloads, subscriptions, or in-app advertising-were seeing the most monetary growth. As Mark Beccue, senior analyst for ABI Research, explains, the report found that the total app revenue from these four models will grow from $8.5 billion in 2011 to about $46 billion in 2016, and more specifically, the in-app payments model, in which users pay for content from inside the app, had the highest revenue numbers. "Clearly that is a model that is growing in popularity, but it remains difficult to draw general conclusions about it. What we found was that the revenue associated with in-app purchases is driven by a very small amount of mobile subscribers that are enthusiastic game players," says Beccue.

Gamers aside, the prospect of making bank on the mobile app, a model that, depending on how fancy a developer wants to get with the content, costs relatively little to create, has many publishers scrambling to break into the mobile market. According to Bluecloud Solutions, a web marketing company, an iPhone app with a base-level design can cost anywhere from $500 to $10,000 to create. Considering ABI Research's revenue numbers, this doesn't seem like a bad deal. But even though all signs point to now being the right time for app creation, consumers don't want to invest in sub-par, low-quality apps. So are publishers doing enough development-wise to keep the cash value of the app model growing?

Old Dog, No New Tricks

It seems that the most successful app content models aren't necessarily that new or that exciting. For instance, popular apps such as comiXology, a digital marketplace for comics, offers freemium pricing apps-or apps that are free to download but require users to purchase additional content-for Android and iOS devices, as well as for the Kindle Fire. Once inside the free app, users have to pay to access comic issues. Essentially, the app acts as a storefront for comiXology's purchasable content, a technique many publishers have found works best to engage users.

Is the comiXology in-app purchasing content model cool? Yes. Is it groundbreaking? No. Martha Stewart Living Omnimedia, Inc. employs this model as well, offering free apps for its Everyday Food and Martha Stewart Living magazines for the iPad, with which users have the option of downloading specific issues of the magazines for free or subscribing. In addition, Martha and her magazines have taken advantage of the app "upsell" technique by providing individual niche apps such as the Martha Stewart Cocktails app and the Smoothies app for iPad and iPhone, which can be purchased individually for 99 cents each. Here, publishers "use the broad reach of the free app to gather a large audience, and then they start parsing down into individual niches, and once they identify a particular taste, then they will sell to that," says Smith.

Another model mentioned in ABI Research's report is the subscription model, which despite initial criticism of Apple's policy-which entitles the company to a 30% cut of the subscription profits-has many publishers jumping from print to digital. Most popular magazines offer subscription pricing through the Apple App Store (the Android Market, now known as Google Play, does not have a subscription policy in place), and some have even expanded their purchasing options to other venues. For example, The New Yorker allows readers to buy a digital-only subscription directly from the Apple App Store, Amazon Appstore for Android, Barnesandnoble.com, or Next Issue Media. The New Yorker has also taken a nod from the success of the freemium pricing model by giving users who download Kindle Fire and NOOK editions of the magazine a 14-day free trial and Galaxy Tab users a 30-day free trial.

Many magazines also allow print subscribers access to the digital version for free. "One of the ways that magazines are leveraging mobile is authentication, to extend the value of subscription to digital. Some of the people in the magazine industry are telling me they're seeing a benefit in renewal rates. When someone is getting both [versions] subscribing to People, one of the benefits is to either read it in print or on the iPad. It is making the value of the print version greater," says Smith. Sure, it's nice to have options, but do these subscriptions really offer anything we wouldn't get in print or on the web (aside from the pretty touchscreen)?

("Erlenmeyer flask" image courtesy of Shutterstock.)


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