Are Apps the Saviour of the Publishing Industry?

1 June 2010

Tim Smith

General Manager, Digital

020 7938 7722

Tim.smith@standard.co.uk

The Challenges Facing Old Media

The challenge facing analogue publishers

• Businesses that have made huge sums for years via mass communication in print now having to navigate a hugely changed media universe

• Publications changing hands or re launching to face up to the greatest challenge of their lives

• Metropolitan dailies in the US, one a week going into bankruptcy or cutting way back

• Digital Revolution

• This is drying up their life blood = Advertising and Circulation revenue

The response of some publishers has been a move to free model

• Evening Standard sold by Associated Newspapers to an individual named Alexander Lebedev

• Growing sense of entitlement in the minds of consumers around content being for free

The Challenge of Maintaining Paid for Circulation

April

778,273

June

781,744

(+0.3%)

789,995(+1.5%)

Essence of Evening Standard Strategy

• Commercial Imperative to have a long term sustainable model

• Retain the character of a paid for Newspaper

• Premium content = quality audience

• World’s first quality free newspaper

• Investigating which other channels offer promise – getting interested in devices

Revenue Models

Mobile Applications

• Previous generation = price wars and battles for celebrity scoops

• New battle happening in reader’s pockets

• All the big news groups are investing in downloadable smart phone applications

• New readers, direct revenues and advertising spend

• Could mobile apps be the answer to finding a sustainable future for publishers ?

Uptake of Smartphone Apps

ComScore data from 2009 showed that:

• 23 per cent of all UK mobile phone users had a Smartphone, and 3.5 per cent an iPhone

• 80 per cent of iPhone users and 48 per cent of smartphone users access news via their device

• Some 56 per cent of iPhone users and 22 per cent of smartphone users had downloaded an application to access News

• More smartphone users had used their phone to read news than had done so to access email(35 per cent), listen to music (40 per cent) access a social networking site (29 per cent) or find out about the weather (26 per cent)

Paid for Content

• Only FT and Times charging to access their web content

• Most of the other publishers have no such shyness when it comes to mobile applications

• Smart phone users are prepared to pay. One piece of research shows that Apple App stores 56 Million users spend an average of $10 (£6) per month on apps – of which one third retained by Apple

Case Studies

Direct Payment - Guardian

• 70,000 downloads in the first month

• £167,000 gross revenue in first month

• Excellent navigational structure and ability to tailor the parts of the paper that you want to read

Direct Payment – Guardian

• More paid for niche apps planned

• “Your website is not necessarily going to be the fastest growing way that people access your content, we definitely think that it is going to be device driven”

• “It’s a new revenue stream but I’m cautious of saying that apps are the saviour – we all remember the crest of the wave that was WAP”

Emily Bell, GNM

Free to User – Sky News

• It used to live off other things we did, a by-product. But now its increasingly becoming a core publishing platform, there’s no doubt in my mind, it’s a big growth area

• “We’d sooner have 1 million iphone users with a free app than 10,000 of a paid one”

• Key focus revenue generation via ads and sponsorship

• Also works hard to promote Sky’s subscription marketing campaigns

Chris Birkett, Sky News

Evening Standard

Evening Standard

• Free to user – mirror print strategy

• Developed by Handmark

• Commercial model – revenues from sponsorship and advertising

• Features include share to social networks, mini picture galleries and widget (android)

• Plan to launch with relatively simple application and then develop over time

Case Study – Evening Standard

• Sponsor deal with British Airways

• Sold by ES in house sales team bought by Zenith

• Multi platform opportunity key

• Deal includes sponsor mention in press and online ads to support launch

• Creation of city guide to find out more about destination cities

Case Study – Evening Standard

• Press ads to support Nokia Ovi launch

• Full page placed in Times and City AM

Insights

Insights

• Users are heading towards devices and so publishers have to be where the audience is or they could lose out

• Can lead to renewed profits either by direct payment or by sponsorship and ad funded models (most publishers will have a mixture of both)

• Convenience is king. Some research from Forester is suggesting that many users are more interested in the convenient delivery of content, even over actual quality of stories

• Not just about iPhone