"Apple takes a 30 per cent cut of an app's cover price"
Saving the whole of the newspaper industry is a big ask, even for a "magical and revolutionary" device, but there might just be hope for the magazine business. The rapaciously-priced ($4.99 for this month's issue) iPad edition of Wired has comfortably outsold the somewhat cheaper print edition, and it's not even ad-free. On the …
Retailers take a chunk (about 25%). Distributors take a chunk. (From 10-25%—and sometimes more.) The printing costs take a sizeable chunk too, assuming it's not done in-house (and it often isn't).
Even the minimum-wage serfs who shovel leaflets and other junk into the print magazine get paid.
That's *way* over 30%, no matter how you slice and dice it. By traditional standards, getting 70% of the sale price is pretty bloody good, regardless of the industry.
Research: it won't kill you.
Yes, but how legitimate is a comparison of Apple's margins to the bricks-and-mortar retail and press-to-warehouse-to-store distribution business? As others point out, subscriptions to magazines are substantially cheaper, especially for US-originating publications. You might argue that 30% is a reasonable price to ask for hosting applications and associated content, but it starts to sound a bit like the music industry behemoths claiming that it costs as much to provide a download as it does to get the CD into every outlet worldwide. Everyone knows that the economics have changed the game.
And it's not as if Apple lets publishers host such stuff themselves - the equivalent of getting people to subscribe directly. Apple's closed application store model translated to the print world would be like forcing publishers to get their publications into retail outlets or not being allowed to sell them at all.
Great piece. It does miss one thing though: a teardiwn I read of the Wired app said it used around 4-500MB to store each copy of the paper as it used nothing more than a load of massive jpegs. With that kind of footprint, you're not going to want to subscribe to a year's worth on your 16GB jPad...
"It does miss one thing though: a teardiwn I read of the Wired app said it used around 4-500MB to store each copy of the paper as it used nothing more than a load of massive jpegs. With that kind of footprint, you're not going to want to subscribe to a year's worth on your 16GB jPad..."
Well, that's raises big question. How are consumers going to get their hands on the software? Since there's no Ethernet or USB on the iPad, wouldn't most people have to rely on their local phone companies' 3G network? How much would they charge anyone trying to download the 400-500M App? More than the money they paid for Wired in the first place...
@AC - That's the same slice that Google take on the Android Marketplace as well. I think it's a bit steep, but seems to be the standard rate for things like this. Given that they handle everything from credit card fees to hosting for you I can kind of see why though.
I'm also not surprised that people who are willing to spend at least $500 on an iPad would be happy to spend $5 on the magazine, at least as a one-off. If you've got that much money sloshing around in your wallet then you'd probably not notice $5. Not sure it'll work long-term though.
Personally I don't see the benefit, but then if you are buying Wired on a regular basis you are probably not that bright.
The costs of electronic publication, compared to paper, get argued about a lot. Many people expect a huge cost saving.
Printing is only about 10% of the cost of a book. By the sound of it, there's a bit of extra work in making this version: ensuring links in the adverts work when a user clicks on them, for instance. And there are often unexpected hassles in the ebook business. Often, there's a complicated exchange of information between the retailer and the publisher, so that a DRM-protected copy, a unique file, gets created under the publisher's control, and delivered to the purchaser.
Aguably, the publishing business suffers from broken thinking on the topic, but there's more to the problem than unimaginative corporate oversight. Conde-Nast might be in a better position than most, and this may be an indicator of the differences.
I can see a future of girls reading Vogue etc on their iPads, its just a bit smaller than the slimmed down magazine size and the option to have embedded movies, make up demonstrations, linking straight to where to buy / reserve new clothes etc will be a win. Instead of cat walk photo shoots you can get a little movie with sound of the latest bit of flutter.
It's cute. I had a demo version which I was looking at in a pub before they were released in the UK and all the surrounding girls loved it's cuteness.
Afterall it's perfect for a handbag no ?
I am sure there will be applications for us guys too but I can just imagine the excitement of my magazine devouring GF at this. OMG ! many magazines all on my iPad in one place with the latest stuff, the old stuff I can read *whenever I want* over and over and look ! Movies of clothes !
happy for less coffee table clutter.
Paris cos she's cute too.
She probably has the Art of War on hers.
So you don't fancy the idea of it looking like you're working when actually you're reading a mag? I also think that the "active content" will be fantastic, even if it is only videos (think about a "car mag", or "footy mag" or "gadget/tech mag" - well pretty much any mag you read really, bit dull if you're a caravaner... but you get the idea).
I think mags on the iPad are inspired.
It's practically unusable.
Navigating around the magazine is a horror as its sometimes completely impossible to work out if an article has more than one page - when you flick up to bring up the next page, or if it is one of their quirky pieces that just suddenly stops - in which case flicking up does nothing and you have to flick left. Wired's pages are so busy that there are graphical doohickies that might be clues as to where the next page might be found, or they might just be the flourishes of someone buggering around with InDesign - certainly they're not consistent.
There's no bookmarking of interesting stuff so you can refer to it later and no search - pretty basic stuff for a reader application. It's like they put all their effort into jazzing up adverts for crappy American cars rather than what the reader might want.
As a demo of what's possible it is a blinder; as something actually useful - well that 500Mb install per issue is the least of its problems.
I agree with everything you said. Most of the pages with multiple levels have at least one design element that bleeds off the page (I'm tempted to say all, but the ads are one exception, and there might be others). The lack of searching is because the text is actually a picture of text, not actual text at all. I also think the lack of zoom is weird too.
But this is v1.0, and as such I think it's pretty successful.
Hang on, arent most paper Mags over £3.50 month these days. I have once computer mag on my desk that was £6 (with crap cover disk, not buying again). I dont think there will be much consumer difference in term of price sensitivity between paper and Tablet especially if there is good multimedia content (INCLUDING ADS)
You need to appreciate the difference - make that significant difference - in cover price between the UK and the US. For example...
I subscribe to an American magazine 'Model Airplane News' and for $60 I get airmail delivery of the magazine for two years. That's 24 copies or $2.50 a copy - about £1.50. The equivalent UK magazine charges £75 for a two year subscription or £3 a copy (the cover price is £4).
I've not bought a single copy of any UK modelling magazine for over 5 years. All the good kit is distributed worldwide so I don't miss any reviews and the magazines are less in the pocket of the kit manufacturers so reviews tend to be more objective.
Seems to me Wired was self-destructing long ago.
I can hardly buy the print edition in Malaysia or Singapore despite hunting for it every month. I subscribe to about 5 monthly magazines from USA in electronic format using Zinio. If I could do the same with Wired then they would make money & I could get my monthly fix for a sensible price. The cost of posting the magazine for an International subscription is horrendous! Not to mention the senseless waste of energy sending a pile of paper half way round the world.
... not a serious exploration of a new business model and a new settlement between readers of single issues, subscribers, advertisers and the publisher.
Old habits die hard? Sorry, but old habits are dead. I live in London and have a devil of a time finding a well-stocked newsagent (though those damn Wired bills are everywhere). Borders closed last Christmas and who actually wants to browse anything at Smiths?
I love the magazine culture that arose in the US and Britain in the early 1800's, but surely it's as dead as a doornail? The distribution points will inexorably diminish for quality titles and the whole notion of a printed volume circulated every month will fall away. Frankly, it has already.
Conde Nast should pour their gazillions into a technology news and features offering that publishes limited content on the web and sell subscriptions to "magazine"-quantity feature pieces on everyone's favourite iOS device.
Without a strong editorial POV and quality writing, Wired is just a passé POS.
I'm subbed to the UK paper edition of Wired and it works out as £2 per issue regardless of your subscription length. So 12 month paper subscription is £24.
Never mind, just checked the site and it is indeed offered for $10 per year - however, that's without VAT added. Still, it strikes me that if Wired are struggling to get an audience to pay $1 per issue of the paper magazine, something's a bit wrong...
"Still, it strikes me that if Wired are struggling to get an audience to pay $1 per issue of the paper magazine, something's a bit wrong..."
When I worked as a journo - in my previous life - we had a saying that we could offer the magazine for free because distribution pretty much takes all the money (what's left wasn't even enough for printing cost) but then people couldn't see the value...
Sticker price is irrelevant - if a regular magazine is betting on sticker moeny then it's already dead - their revenue source should be advertisement, nothing else.
"... Subscriptions are particularly cool from the publisher's perspective because you've got the name and address of the purchaser and the beginnings of a relationship. ..."
The beginnings of a spam-storm is more like it. Then, if you were stupid enough to give them your phone number........ :(
..is more than HILARIOUS: who was that idiot who thought the following will work:
how about after spending 5-10-15-20 years online and using clickable links, interactive HTML pages which load almost immediately now we go go @ss backward and re-create a physical magazine/newspaper format with slow-turning pages, crazy load times and buffering, all this why maintaining the awkward format and long-outdated columns, essentially turning a well-formatted online format into some sort of digital printout of our paper edition, without all the advantages of the paper one?"
STOP MIMICKING PRINTED MAGAZINES IN DIGITAL READERS - IT IS ABSOLUTELY STUPID AND ANNOYS THE HELL OUT OF EVERYBODY.
PS: since you can get a year sub of Wired around $10-20 I cannot imagine what kind of idiot would buy it $5 a piece on a broken, largely useless platform like this iPad.
The WiReD app is far faster than the web (after the download). Also the iPad (like all platforms) is as useful as its content. As a machine it feels "wicked fast" (all the time) and there is a vast number of apps coming out all the time (and some of those are bound to be "useful").
I'm sure you'll find something else to take issue with, but sloth and uselessness aren't problems I recognise with the iPad.
The problem is, a glossy magazine has always been an indulgence (rather than some "worthy necessary utility") but I for one quite like a bit of indulgence.
I find this whole "magazine in an app" thing a bit backwards. It's like all the flexibility and user-friendliness of a paper magazine without the image quality, at a higher price, requires some reasonably fragile hardware that someone would pinch if you left it on the bus, can't be read in direct sunlight, will get easily damaged in water or sand, can't be rolled up into a bag, can't be used to swot flies, can't lend it to someone else.
The only thing I can conclude with Wired (GQ and The Times didn't sell well) is that people were curious because Wired has a history of excellent design and wanted to see what could be done.
Isn't it amusing that the customer pays a subscription to get the magazine in the first place. Pay via their 3G connection for the privilege of downloading it and then if they click on an advert they've got to pay again via their Internet connection to see the advert.
Imagine if we did this with paper magazines.
I bought the app. Thought it was OK, albeit a bit thin and not enough detail -- I'd like a little more meat on the bone as it were. Yeah, a lot like a typical glossy mag which has more style than substance.
I won't be buying another copy unless it's a lot better. I'm sure I'm not alone in that sentiment.
I'm sorry to say but all of you people who keep commenting about the 30% price being reasonable, what with printing costs, delivery costs etc:
You have totally missed the point. The original quotation in the article about 30% is NOT about this app in particular, it is about ALL apps: "Apple takes a 30 per cent cut of an app's cover price".
That to my mind is totally unreasonable. If I bought, for example, a Dell PC - would 30% of the cost of every program I buy go to Dell? No of course it wouldn't.
No doubt they have also attempted to patent this method for extracting cash, so if someone else tries to do the same ...
What makes Apple so special that they can steal from every software developer that wants to sell programs for their particular hardware?
Apple is nothing special in this regard, Google charge exactly the same for developers selling via the Android Market Place, and of course both of them make no money on free applications even though they pay the distribution costs.
Your comparison with Dell is irrelevant as in this case Apple is being paid as a retailer, not as the hardware manufacturer. If you are using Dell as a comparison, then your comment should have been "If I buy my software for my Dell PC from Dell, would 30% of the cost go to Dell?" In which case you would find Dell getting more than 30%, and the developers being paid considerably less than 70% for the software they sell.
For a developer getting 70% of the retail price for their product is unbelievably good compared to any other means of distribution, especially considering they have no distribution costs and as your product is placed in the one and only app store (whether it's the App Store or Android Market Place) you have very little or no advertising costs to publicise it.
"Apple is nothing special in this regard, Google charge exactly the same for developers selling via the Android Market Place, and of course both of them make no money on free applications even though they pay the distribution costs."
Apple is special because they don't let people use any other distribution mechanism, so the analogy is completely apt: if Dell somehow got a cut for every application, no matter how you acquired each application, it would be exactly like the situation with Apple's products today. And those distribution costs: no, providing hosting isn't cheap, but is 30% a slim margin? I doubt it. And of course you don't get to choose, either as a vendor or a buyer, any other venue - and thus any other fee - when selling or buying those wares.
"And of course you don't get to choose, either as a vendor or a buyer, any other venue"
That's what makes it so great for developers and customers. As a developer you know where to upload your app to, as a customer you know where all the apps you can buy are located.
I sell Pocket PC apps too but I have to upload them to all the different market places and customers probably have never heard of those market places anyway. And to buy anything you have to enter all your credit card details each time - just nasty.
If you don't like it, just go develop for Palm OS, Android or Windows Mobile. And good luck making any money.
I'm an iPhone developer. Thanks for getting all upset on my behalf over Apple's 30% cut. Thing is, as far as I'm concerned 30% is an absolute bargain for exposing my apps to 100 million users with a system so simple that users do nothing more than enter their password to make a purchase, handling all the credit card transactions, handling upgrades, handling refunds, handling credit card fraud etc... Please don't tell Steve Jobs but I would have signed up at 50%.
If you're a developer normally you have to pay money to get your app into the hands of customers, you pay money to get payment (it's a cut) and then YOU provide customer service.
Apple are doing all that for you, for 30%. They take payment, they deliver (via download from their servers), they deal with customer problems (it didn't install properly, I bought the wrong one ... that kind of thing). Nobody is going to do that for you for free.
This isn't a bit like Dell, you buy a machine from Dell. Dell do nothing to help developers get applications to you (why would they?!) So don't make anything.
Apple have a model EXACTLY like Dell's for the Mac.
If you want to use the appstore, you have to pay for the "delivery trucks" and (more importantly) a billing mechanism.
You don't have to pay Apple, however. You can use a website. Feel free to sell your subscriptions and host your applications from there.
Surely Apple's (and Amazon's) success is in the consolidation of billing which is attractive to customers and "good enough" for suppliers. I'm really surprised Google hasn't concentrated on making more of GoogleCheckout.
Also, it isn't "stealing". It is standard middle-man commission. Many retailers would expect to take 50% of the sticker price.
It'll be like threading a needle, but they can get it done. If they can rework their paper content with ads into digital content with ads, they can live, but they have to do it right.
Be easy. In a magazine the ads don't obscure the content. That popover crap has got to go. If you have to fight the thing to find the darned story, you'll Google it instead and you won't be back. Yeah, there's lots of market research to prove that blocking the content with ads are how you maximize the value of ads. This is like grocery stores that make you navigate a Skinner box that forces you through every aisle and product to get your milk to make more money. Y'know what? The grocery stores that bought that story are now out of business, and you can navigate to the milk without impediment (though they all still put it at the back of the store).
Be relevant to our interests. In a magazine the advertisers choose the magazine, and the magazine chooses the advertiser based on some convergence of style or purpose. Magazines don't take advertisers who are off-brand, even if they are willing to pay a lot. Even online this rule should stay.
Be true to yourselves. We can smell a sellout a mile away.
The value of the content has to stay high and exclusive. Duh.
Y'know what? Cool ads are content. Raise the bar on what's accepted as an ad and you'll move more units. This is probably the commonest mistake. Get it through your heads: if the ad is in your product it needs to meet the same rules of "interesting" that the rest of your content does, or even more. Win that one and it's a slam dunk.
Last time I looked, a single issue of Wired was about $15 AU which is currently around $13 US.
Even subscriptions have typically been 2 to 3x the cost of US mags and although I'm the sort of person who would qualify for a lot of free subs to trade mags if I was in the US, shipping means they never offer those deals downunder.
I'm a bit underwhelmed with the Wired mag but it was an interesting buy to see what they are delivering. I can't see me buying more issues unless it came down dramatically in price though.
Biting the hand that feeds IT © 1998–2022