Early data about tablets appeared to show great promise for news organizations. A few months after the first iPad went on the market in the spring of 2010, the Associated Press reported that Gannett Co. was getting $50 per thousand page views for iPad advertisements—or five times the price it was getting on its websites. Condé Nast initially said visitors were spending an hour with each of its iPad issues—far more than the three or four minutes per visit its websites draw and close to the overall print magazine average of seventy minutes. David Carey, president of Hearst Magazines, said in March 2011 that the company would end the year with “several hundred thousand subscriptions in total” sold through digital publisher Zinio, Barnes & Noble’s Nook e-reader, and Apple’s iPad. He predicted that as much as 25 percent of his company’s subscribers will be on tablets “in the next five years.”
But making predictions based on early and volatile sales is tricky. The data on usage of tablets and smartphones come from products—and a competitive environment—that are in transition. Many buyers are early adapters to technology, a group whose behavior does not reliably predict the greater population who will eventually buy the gadgets. (Of the 66 million smartphone users in the U.S., only about a third have used the browser or downloaded an app, according to audience measurement company comScore.)
Wired, a magazine with a tech-savvy readership, sold 100,000 single copies via the iPad in June 2010, but that number dropped to 22,000 by October; in 2011, its single-copy iPad sales have averaged 20,000 to 30,000 per issue. Wired’s average monthly circulation of 800,000 still consists mostly of print subscriptions and single-copy sales; a small number (27,000) are sold as PDF-based digital replicas. It’s likely that the high price and one-issue limit of Wired’s iPad version have hindered sales; one copy costs $4.99—the same as a copy sold at the newsstand—while an annual print subscription starts at around $12 a year. And the froth has settled throughout its parent company: In April 2011, a Condé Nast publisher told AdAge that the company’s iPad strategy was slowing: “They’re not all doing all that well, so why rush to get them all on there?”
One issue is Apple’s own pricing strategy. The company announced in early 2011 that it wants a 30 percent cut of any subscriptions paid through the iTunes store. More important, when the user pays with a credit card stored in iTunes—and Apple had about 200 million registered users in 2011—the user’s name and address don’t have to be shared with the publisher, unless the customer agrees. Without this information, publishers have a handicap: They can’t find out the particulars of their subscribers’ reading behavior. Google is pushing an alternative tool for subscriptions called One Pass, in which the company will charge publishers 10 percent of revenue and share subscribers’ names and information. Some publishers, such as Time Inc., have built their own payment and collection systems for selling their own apps from their own websites so they don’t have to share any information or pay any fees.
For most magazines, neither the replica digital copies nor the iPad versions of their magazines count in the “rate base,” which is the number of readers publishers guarantee to deliver to advertisers. So, for now, publishers tout it as “bonus” circulation they can’t really charge for.
Some news organizations are optimistic about the economics of mobile devices. In March 2011, Dow Jones announced that it had 200,000 paying subscribers who access to The Wall Street Journal via some sort of mobile device. The company did not say how much additional revenue this brought in, so many of these readers could be like Michael Harwayne—digital subscribers who signed up for mobile access. (The Wall Street Journal’s total reported average daily paid circulation is about 2 million copies—1.6 million copies in print and 430,000 electronic copies.)
Time Inc. announced plans in February 2011 to give Time, Fortune, People, and Sports Illustrated subscribers the ability to access those magazines’ content on multiple platforms. Sports Illustrated has been particularly aggressive in digital expansion; to introduce its digital package as widely as possible, it has given access to all 3.15 million of its current print subscribers. For new customers, it is promoting an “All Access” subscription plan, which includes the print magazine, plus access via tablet, web, and smartphone; in March 2011, the price for All Access (including a bonus windbreaker) was $48 per year. A digital-only package with no magazine and no jacket costs the same. That pricing scheme helps protect the print edition and provides the biggest possible digital audience.
Some publishers are willing to invest a lot to gamble on an unknown future and avoid sitting on the sidelines.