Analysis by Tim Dawson.
News International’s announcement last week that digital sales of its Times/Sunday Times products had grown by 3% over the past three months dispel for the moment suggestions that Murdoch’s paywall strategy is bust. With 111,000 subscribers, and growing, it is quite possible that News International’s online customers will over take the daily sales of some print editions before long.
That does not mean, of course, that this constitutes a sustainable business. Times digital editions are being so extensively marketed at the moment, that it would astonishing if they were not making sales. But as Murdoch has shown time and again, he is more than willing to invest over the long term to achieve a position of market dominance. Indeed, it would be rash not to think that Times digital subscribers might not outnumber buyers of The Independent reasonably soon.
Which element of the digital offering it is that is driving sales is not easy to unpick from NI’s figures – but it is fair to assume that the much admired iPad edition is a significant factor in the success.
It is by no means the only iPad add success either. The New York Times now offers a $20 app, the Daily Telegraph is now offering its app to it 330,000 print subscribers.
And while magazine iPad editions are not yet a significant part of the UK market place, the rush of US magazines to tablet editions suggests that this won’t be the case for much longer. The Newstand feature of iOS5, which groups newspaper and magazine apps together in the App Store, appears to have prompted a rush to launch digital editions. Meredith Corporation, publisher of Better Homes and Gardens, Parents and Fittness magazines announced iPad editions this week, joining Martha Stewart’s Living and a host of other US newsstand staples.
The extent to which consumers are willing to pay for tablet editions, remains subject to dispute. Joint research by the Pew Centre and the Economist Group found that 11 per cent of US adults now have a tablet computer, of whom 77 per cent use them daily, for an average of 90 minutes. Just over half of users told the researchers that they used their device to access news, 14 per cent said that they had paid directly for content, while 23 per cent had pre-exiting subscriptions that gave them access to digital content.
“If news organisations are more successful at finding a way to reap revenue in the tablet environment than they have on the Internet more broadly, the movement toward tablet consumption could be quite promising,” the study concluded. “The likelihood of that, though, is uncertain at best.”
Not all crystal ball gazers agree, however. A new report from Juniper research predicts that annual revenue from eNewspapers will exceed $1.1billion by 2016. While some publishers will struggle to adapt, it observes, modest subscriptions charged for access would soon outweigh initial losses from online advertising revenue.
Whether Dr Windsor Holden, author of the Jupiter report, is right or not, you can be sure that larger publishers will be aiming a great deal of their product development spend on tablet editions for the foreseeable future. It is a situation that will place some smaller players in a quandary. The window of opportunity for self-funded iPad start-ups like Sailracing will not remain quite so wide open for much longer. It will always be possible to start a tablet publication relatively cheaply, but once the market is crowded with expensively produced titles, it will be a lot harder to gain a foothold.
Even more significantly, the market for the kind of skills necessary to bring such products to market will be a good deal hotter than has been the case till now. Many will choose the guaranteed returns of working for major publishing houses than the uncertainties of their own ventures.
Fundamentally, though, it is good news for those who worry about journalism’s future. Even if the public’s enthusiasm for paid-for table content proves to be illusory, the scale of investment that it will take to conclusively reach that point will be enough to tide a great many editorial workers over until the next great hope – whatever that might be.