In-App Sales and iTablet: The Killer Combo to Save Publishing?

Apple on Thursday made a subtle-yet-major revision to its App Store policy, enabling extra content to be sold through free iPhone apps. It’s a move that immediately impacts the publishing industry, and it could pay even bigger dividends if the Cupertino, California, company indeed delivers its highly anticipated touchscreen tablet.

While the most obvious beneficiaries would be app developers, a market segment that can also benefit from the new in-app commerce model are people and companies that create content and need to set up shop in a way that doesn’t, in effect, charge someone for just walking in — like media publishers.
Newspapers and magazines are reportedly in talks with Apple about repurposing their content onto a “new device,” presumably the rumored touchscreen tablet Apple will deliver in early 2010. Numerous reports suggest an Apple tablet would have a strong focus on redefining print media. Enabling in-app commerce through free apps was a crucial move to help make this goal a reality.

Apple’s earlier in-app sales model wasn’t ideal for publishers. Previously, in-app commerce was a feature exclusive to paid apps; free apps were not permitted to sell content. Newspapers and magazines already struggle to sway readers to pay for content to begin with, and charging for apps cuts off potential customers. By allowing commerce within free apps, Apple creates the opportunity for a free media app to serve as a gateway for readers to get hooked on a newspaper’s or magazine’s content, which could help lure them into paying for exclusive premium content.
CNN is an exception: Its recently-released iPhone app costs $2. The Wall Street Journal will later this month begin charging for most of the content it delivers through its free app, and the Financial Times has an app that only offers up to 10 free stories a month without a subscription to the newspaper. But for the most part, publishers have loathed charging for an app, even if it then enabled them to try to charge for content within that point of sale. Reducing the cost barrier of that business model to zero changes things considerably. At least one small publisher, Scarab Magazine, has already taken advantage of the change.
Picture a free magazine app that offers one sample issue and the ability to purchase future issues afterward. Or a newspaper app that only displays text articles with pictures, but paying a fee within the app unlocks an entire new digital experience packed with music and video. This is an example of the “freemium” model that Wired magazine’s Chris Anderson explains in his book Free. It’s a model that some publishers, including Wired’s parent company Condé Nast, are already experimenting with on their websites. (Our sister publication Ars Technica, for example, offers its general content for free, as well as a “Premier” subscription option for readers to access exclusive content.)
If Apple does indeed deliver a tablet, the key for publishers is to create a convenient experience that readers will pay for, as opposed to the content itself. A free app would be the first step toward offering that experience. (And then the publisher will have to figure out what to do about ads, but let’s not get too ahead of ourselves.)
It’s plausible to imagine that a freemium strategy would be much more effective through a tablet app than a website. If the tablet is indeed designed like a 10-inch iPod Touch or iPhone, as insiders have described it, then publishers developing apps will be able to take advantage of features such as the accelerometer, GPS, live video streaming and multitouch to innovate the way they engage with their audience — and, ultimately, persuade them to pay.
Only now is the relevance of a touchscreen tablet becoming more clear. Scores of tablet devices have come and gone in years past, and many analysts and tech enthusiasts wondered why Apple would enter what is considered a failed product category. Clearly, Apple sees a gaping hole — the publishing industry’s lack of vision for a working digital model — and a touchscreen tablet, combined with the App Store and this new in-app sales model, would seek to fill it.
What’s in it for Apple? Primarily, squashing Amazon’s Kindle. Who would wish to read a digital newspaper or magazine on the Kindle’s drab e-ink screen if Apple delivers a multimedia-centric tablet? Wired’s Steven Levy shares my view in his assessment of the Kindle’s newspaper experience: “[The Kindle DX's] plodding menu-based interface still made navigating newspapers difficult, and the rich graphic quality that makes magazines such an indulgence is totally missing. Even the flashiest print publication looks like The New England Journal of Medicine.”
Can Apple redefine print media to save the publishing industry? It probably has a higher chance than any other tech company out there. Apple is a market-shaper, and that’s the kind of a company the publishing industry needs to resuscitate it as the traditional advertising model continues to collapse. Daily Beast editor Tina Brown believes that, thanks to the powers of the internet and technology, we’re entering the “golden age” of journalism in the next three years. Perhaps Apple’s tablet will be a crucial part of it.