At the end of last year, we predicted that 2010 would be the year of the eReader (see WW 44/45 2009, p. 28f). With the hype surrounding the iPad, this prediction has come true, although another related phenomenon is actually more significant for the media world: apps. These small customized programs are omnipresent on smartphones and tablet PCs. This apps fever represents a new development on the Internet: Unlike on the free web, where content is financed by advertising wherever possible, the reader market is the main focus here.
Apps are available in different levels of maturity, whereby roughly speaking these categories can be distinguished:
Web freebies
Existing web portals are optimized for use on smartphones or tablet PCs, but offer hardly anything new in terms of content. Without significant additional services, they can only be provided free of charge, which at least increases their reach. Since the iPhone came onto the market in summer 2008, such apps have become commonplace not only for media offerings, but also in retail, for example: Swisscom alone has sold around 600,000 iPhones since then, and SBB has recorded almost as many downloads of its apps (530,000). And other companies, such as Coop and Migros, the online bank Swissquote or the book reviewer getAb-
stract report more than 100,000 downloads of their apps. The boom is only now really getting going: Almost every second mobile device sold by Swisscom in the first half of 2010 was a smartphone, and so apps are increasingly becoming a matter of course: as a sales channel, for advertising and for brand management.
Print-Paid
Since the market launch of the iPad, screens in particular have become larger, the content of print products can now be published on them. Readers appreciate the additional ease of use and global availability. And publishers are happy to have finally found access to the reader market in the online world. At present, hardly a week goes by without a publisher announcing that its print title is now also available as an iPad app. So, driven in equal measure by providers of corresponding software solutions and by revenue prospects, the last Landpostille will soon be available on Apple's latest miracle device and the upcoming tablet PCs from other manufacturers. Because "there is already very strong demand from our readers for the iPad", the NZZ is preparing a paid e-paper app, as Peter Hogenkamp, Head of Digital Media NZZ Group, explains on request. At Tamedia, both 20 Minuten and Newsnetz have free news apps for the iPad, which are rounded off with TV applications for a fee. A paid app was launched for the SonntagsZeitung at the end of August, which will be followed by an app for Das Magazin. A paid iPad version is being planned for the Tages-Anzeiger, "which will offer additional content to the news app closer to the newspaper", as company spokesman Christoph Zimmer explains. Ringier is currently clarifying whether there is money to be made in the reader market with news apps. A new version of the Blick app was launched at the end of July, which costs CHF 4.40 to download (once) and includes the newspaper as a PDF and a free monthly subscription. Since August 23, the people magazine Schweizer Illustrierte has been available on the iPad for CHF 4.40 each. In addition to the content of the magazine, there are additional picture galleries, background information, 360-degree views and videos for selected topics. The Blick TV application and a simple solution for Il Caffè have already been available for some time. Apps for "other titles in German-speaking and French-speaking Switzerland will follow shortly," reports Thomas Huwiler, Head of Digital Media Ringier Switzerland.
Huwiler adds that advertisers are interested in "appearing in the applications as sponsors or advertisers and trying out new forms of advertising". For example, Schweizer Illustrierte offers full-screen ads that can contain multimedia elements for a fixed introductory price of CHF 4,500. iPad technology opens up further attractive forms of design, such as location-based information, device position recognition, interaction with the user, etc.," says Huwiler. Huwiler is therefore certain that "hybrid and possibly also performance-oriented models will follow" as the advertising market and technical possibilities develop.
Eye candy premium
Simply displaying conventional print products more or less elegantly on mobile screens is reminiscent of the time of the first automobiles, which for a long time still looked like horse-drawn carriages. Smartphones and flat computers are independent media genres that are characterized by a special user behavior and therefore only come into their own with products that are designed appropriately for the media and are consistently accepted by consumers in the long term. In this supreme discipline, which exploits the potential of the tablet PC, text, image and video, illustration and animation are orchestrated into a multimedia firework display. According to Huwiler, this is where Ringier is heading: "When deciding between speed and quality, we decided to pay special attention to the aspect of innovation." Ringier has clearly spoken out in favor of a leading role in the entertainment business (concerts, radio, television, ticketing, etc.) and in the digital business in general, and it is "to be expected that we will have corresponding offers ready here", with which we will "also open up new markets". This assessment is shared by Christoph Zimmer at Tamedia: "We expect that not only the existing brands will appear on the iPad, but that new content will also emerge thanks to this innovative platform." And at NZZ, Peter Hogenkamp reveals that a second iPad app with additional functions is planned for the end of the year, "but I can't say anything about it yet". Meanwhile in the USA, media mogul Rupert Murdoch, head of News Corp, is planning a national digital daily newspaper, which could launch as early as the end of the year according to media reports. The paid-for service is aimed at users of tablet computers such as Apple's iPad and aims to attract a younger audience in particular for paid content with short, brash articles. And in order to be better equipped for the emerging competition for the news business on cell phones and tablets, USA Today announced a far-reaching reorganization at the end of August, shifting resources away from print and towards digital products.
Will paid apps on smartphones and tablet PCs become the long-awaited savior of the publishing industry in the online world? According to the participants in the WW Online survey on this topic, it will take two to three years before apps on mobile devices can generate profits in the German-speaking Swiss reader market. The following theses show that the path to this goal will be quite bumpy.
Cannibalization
Anyone who reads a newspaper or magazine on the iPad will soon discontinue their print subscription. Publishers are aware of this, as Tamedia-Zimmer confirms: "Strong growth in paid iApps will have a negative impact on newspaper subscriptions." However, the most important goal remains "that we reach our readers and that they are perhaps prepared to pay for particularly good content in a next step". Huwiler expresses a similar view: "We will play our brands on all relevant channels and do not see this as a cannibalization of our own titles."
Cut-throat competition
Apple's App Store, Google's Android Market, but also Nokia's Ovi portal, BlackBerry App World, Palm and Windows Marketplace as well as independent, cross-platform sales sites for apps: they are all virtually endless kiosks on the Internet. This increases freedom of choice: consumers can stock up on reading and entertainment material anytime and anywhere - and often spontaneously - rather than having to go to a physical kiosk. The (finite) attention of customers is vied for primarily through falling retail prices. There is a great danger that this will cause the price structure to slip across the industry. A cautious approach to pricing can currently be observed, especially with offers close to the established print prices.
Loss of range
When is a reader worth more: when they pay for the product themselves or when their attention is passed on to advertisers? Because if consumers switch to the paid offers on the Internet, their attention is lost to the free websites, thus reducing their reach for advertising. That would be the devil beaten out of them: If the new money from readers is not enough to compensate for the loss of revenue due to dwindling reach in the advertising market. There are developments in both directions: Advertising is tolerated with free offers; if readers pay for the product themselves, they will at best still accept visually high-quality advertising that is not perceived as annoying but as entertaining. Conversely, owners of smartphones or tablet PCs seem to spend money effortlessly on subscriptions, apps, games and other types of entertainment.
Foreigners win
The shrinking mini-media markets in Switzerland are too small to finance expenses for special editorial productions in the sense of the supreme discipline. Take Iconist, for example: for this digital magazine about style, culture and society with opulent photo spreads and videos, the German Springer publishing house employs a team of around 20 people to highlight a different focus in 15 stories every quarter. Because offers from major foreign providers are better made and easily accessible via the newsstands on the Internet, even more money from advertising and consumer budgets will flow abroad with the apps. Advertising windows from abroad, which currently account for around 30 percent of the TV market, are likely to spoil the apps' appeal for domestic publishers.
Pressure under pressure
It is an obvious prediction that the success of the iPad and its ilk will come at the expense of printed products. However, this will only have an impact in the medium and long term, depending on how quickly eReaders are used by the masses.
Cooperation
Codex is the name of the project in which representatives from Swisscom, Edipresse, NZZ, Ringier, Tamedia and the Orell Füssli bookstore have joined forces to explore the eReader market in Switzerland. At the end of July, a test lasting several weeks was carried out with around 150 customers. The aim was to obtain customer feedback, learn about technical challenges and clarify what possible future payment models with digital media and reading content could look like. The consortium partners will decide on the next steps in the coming days. As competition in both devices and app stores is set to increase significantly in the near future, the Codex ideas of a common range of devices and a central platform for digital content are hardly realistic. On the other hand, an American study (A New Digital Future for Publishers) with 1800 test customers is likely to be informative: among other things, it advises publishers to cooperate with each other in order to exploit cross-selling opportunities and with device providers so that the corresponding app is already pre-installed when the purchase is made. In other words, a general subscription app for access to all publishing offers. Are we ready for this?
Christoph J. Walther