Why Publishers Don't Like Apps

By the time Apple released the iPad in April of 2010, only four months after Steve Jobs first announced his “magical and revolutionary” new machines, traditional publishers were gripped by a collective delusion. They had convinced themselves that tablet computers and smart phones would allow them to unwind their unhappy histories with the Internet.

For publishers whose businesses had evolved during the long day of print newspapers and magazines, the expansion of the Internet was terribly disorienting. The Web taught readers that they might read stories whenever they liked without charge, and it offered companies more efficient ways to advertise; both parties spent less.

Smart phones and tablets seemed to promise a return to simpler days. It was true that digital replicas of print newspapers and magazines (most often read inside Web browsers) had never been very popular, but publishers reasoned that reading replicas on desktop computers and laptops was an unpleasant experience. The forms of the new smart devices were a little like those of magazines or newspapers. Couldn’t publishers delight readers by delivering something similar to existing digital replicas but suitably enhanced with interactive features? They told themselves that the new digital replicas would be better than their Web-bound kin because they would run in “native” applications on mobile operating systems like Apple’s iOS, and thus would possess the dazzling functions of true software.

For traditional publishers, the scheme was alluring. Because they were once again delivering a discrete product, analogous to a newspaper or magazine, they could charge readers for single-copy sales and subscriptions, reëducating audiences that journalism was something valuable for which they must pay. Software vendors like Adobe promised that editorial created with their print-oriented copy-management systems could be “seamlessly” transferred to the apps. And as for software development … well, how hard was that? Most publishers had Web-development departments: let the nerds build the apps.

Publishers also expected to revive the old print advertising economy. The Audit Bureau of Circulations (ABC), the industry organization that audits circulation and audience information for magazines and newspapers in North America, said the replicas inside apps would count toward “rate base,” the measure of publications’ total circulation, which includes subscription and newsstand sales. Rate base had been the metric for setting advertising rates in publishing before the emergence of online banner and keyword advertising, where electronic arcana like click-throughs and ad impressions are the accepted currencies. Apps would return media to its proper, historical structure: publishers could sell digital versions of the same ads that appeared in their print publications (perhaps with a markup if the ad had interactive elements), valued with the old measurement of rate base.

People lost their heads. One symptom of the industry’s euphoria was a brief-lived literary genre, the announcement of the iPad edition. In late 2010, the New Yorker’s editors gushed: “This latest technology … provides the most material at the most advanced stage of digital speed and capacity. It has everything that is in the print edition and more: extra cartoons, extra photographs, videos, audio of writers and poets reading their work. This week’s inaugural tablet issue features an animated version of David Hockney’s cover, which he drew on an iPad.” Giddiest of all was the chief executive of News Corp., Rupert Murdoch: he lavished $30 million on the launch of The Daily, an experimental iPad-only newspaper with a $39.99 subscription price.

Unpacked in this fashion, the delusion is clear enough, but I succumbed myself—at least a little. I never believed that apps would unwind my industry’s disruption, but I felt that some readers would want a beautifully designed digital replica of Technology Review on their mobile devices, and I bet that our developers could create a better mobile experience within applications. I liked the idea of bundling inside an app all the editorial we produced, including the daily news and video we post to TechnologyReview.com. So we created iOS and Google Android apps that were free to download: anyone could read our daily news or watch our videos without charge, but they had to pay to see digital replicas of the magazine.

We launched the platforms in January of 2011. Complimenting myself on my conservatism, I budgeted less than $125,000 in revenue in the first year. That meant fewer than 5,000 subscriptions and a handful of single-issue sales. Easy, I thought. What could go wrong?

Like almost all publishers, I was badly disappointed. What went wrong? Everything.

Apple demanded a 30 percent vigorish on all single-copy sales through its iTunes store. While publishers were accustomed to handing over as much as 50 percent to newsstand distributors, the depth of the cut smarted because it was unexpected; many publishers responded by not selling single copies in Apple’s store. Then, for a year after the launch of the iPad, Apple couldn’t work out how to sell subscriptions in a way that satisfied ABC, which requires publishers to record “fulfillment” information about subscribers. When Apple finally solved the problem of transferring fulfillment data to publishers, it again claimed its 30 percent share. That hurt more than the vig on single-issue sales: publishers have always hated sharing subscription revenues with third parties, a business they associate with shady resellers who traffic in notoriously disloyal readers. Starting in June of last year, Apple did allow publishers to directly fulfill subscriptions through their own Web pages (a handful of publishers, including Technology Review, had enjoyed the privilege earlier), but the mechanism couldn’t match iTunes for ease of use. Google was more reasonable in its terms, but Android never emerged as a significant alternative to the iPad: today, most tablet computers are still Apple machines.

There were other difficulties. It turned out that it wasn’t at all simple to adapt print publications to apps. A large part of the problem was the ratio of the tablets: they possessed both a “portrait” (vertical) and “landscape” (horizontal) view, depending on how the user held the device. Then, too, the screens of smart phones were much smaller than those of tablets. Absurdly, many publishers ended up producing six different versions of an editorial product: a print publication, a conventional digital replica for Web browsers and proprietary software, a digital replica for landscape viewing on tablets, something that was not quite a digital replica for portrait viewing on tablets, a kind of hack for smart phones, and ordinary HTML pages for their websites.

Software development of apps was much harder than publishers had anticipated, because they had hired Web developers who knew technologies like HTML, CSS, and JavaScript. Publishers were astonished to learn that iPad apps were in fact real, if small, applications, written mostly in a language called Objective C, which no one in their Web-dev departments knew. Publishers responded by outsourcing app development, which was expensive, time-consuming, and unbudgeted.

But the real problem with apps was more profound. When people read news and features on electronic media, they expect the stories to possess the linky-ness of the Web—but stories in apps didn’t really link. The apps were, in the jargon of information technology, “walled gardens,” and although sometimes beautiful, they were small and stifling. For readers, none of the novelty or prettiness of apps overcame the weirdness and frustration of reading digital media closed off from other digital media.

The Daily’s fortunes were not atypical: the publication has found only 100,000 subscribers, well short of the half-million Rupert Murdoch said would be necessary to make it a viable business. The gloom was general. With few subscribers and single-copy buyers, there were no audiences to sell to advertisers, and therefore no revenues to offset the incremental costs of app development. Most publishers soured on apps.

The most commonly cited exception to the general bitterness is Condé Nast, which saw its digital sales increase by 268 percent last year after Apple introduced an iPad app called Newsstand. Still, even 268 percent growth may not be saying much in total numbers: digital is a small business for Condé Nast. Wired magazine, among the most digital of Condé Nast’s titles, had 33,237 digital-only subscriptions last year, representing just 4.1 percent of a total circulation of 812,434, and 7,004 digital single-copy sales, which is 0.8 percent of paid circulation, according to ABC. (Wired spins the numbers differently, claiming a digital circulation of 108,622; but that sum includes the 68,380 print subscribers who activated free digital access.) Similarly, the New Yorker, another Condé Nast publication, last year had only 26,880 digital-only subscribers among its million subscribers.

Today, most owners of mobile devices read news and features on publishers’ websites, which have often been coded to adapt themselves to smaller screens. Or, if they do use apps, the apps are glorified RSS readers, such as Google Reader, Flipboard, and the apps of newspapers like The Guardian, which grab editorial from the publisher’s site. A recent Nielsen study reported that while 33 percent of tablet and smart-phone users had downloaded news apps in the previous 30 days, just 19 percent of users had paid for any of them. Apps are good for plenty of things: you can use them to translate street signs in a foreign city, or discover the cheapest bulk source of floor wax, or, if you’re carefree and so inclined, hook up with willing partners. But the paid, expensively developed publisher’s app, with its extravagantly produced digital replica, is increasingly uncommon.

The recent history of the Financial Times is instructive. Last June, the company pulled its iPad and iPhone app from iTunes and launched a new version of its website written in HTML5, which can optimize a site for any device and provide features and functions that are app-like. For a few months, the FT continued to support the iPad and iPhone app, but on May 1, the paper chose to kill it altogether.

And Technology Review? We sold 353 subscriptions through the iPad. We never discovered how to avoid the necessity of designing both landscape and portrait versions of the magazine for the app. We wasted $124,000 on outsourced software development, a sum that does not begin to capture our allocation of internal resources. We fought among ourselves, and people left the company. There was untold expense of spirit. I hated every moment of our experiment with apps, because it tried to impose something closed, old, and print-like on something open, new, and digital.

Jason Pontin is the editor in chief and publisher of Technology Review.

This article was revised on June 16, 2012.