We are closely tracking the development of iPad magazine and newspaper apps, and the impact this will have on Online Content.  Where consumers used to feel empowered to demand content for free, the trend has shifted and now, suddenly, consumers will slowly be forced to decide which information they value enough to pay for.

Basically, the argument is that by providing a paid digital version of their publication in the form of website or iPad app, publications are justified returning to paywall models online.  And, effective immediately major publications such as Time and the New York Times have announced they are returning to paid content models.

Pricing Models

For sure the magazine or newspaper ipad app is an evolving story both in technology and business model.  The fundamental issue, from a business perspective, is pricing for issue versus subscriptions.  Currently, most iPad apps cost the same per issue as the newsstand version.  For example, Time and Popular Science both cost US$4.99 for app or print versions.  Subscriptions, however, are the true heart of the publishing revenue model, and cost the consumer far less per issue.  In this case, .35 cents per issue for Time and $1 per issue for Popular Science.  The critical part of the subscription model is customer data.  For each subscriber, the publisher has a name, address and credit card number- all the tools needed for cross-selling, up-selling and promotions.  In the iPad model, so far, subscriptions and customer data are major hurdels to be overcome.

The Coming Digital Newsstand

It all feels very similar to early discussions about online music distribution.  All the more so because, as iTunes found a solution for online music sales, the iTunes "Newsstand" appears poised to tackle online subscriptions as well. Most reports indicate that the iTunes newstand will launch latest 2011.  Discussions with publishers are ongoing, but several critical issues remain totally unresolved.  Currently, iTunes takes a cut of 30% of revenue sales from the iTunes store.  And iTunes is the sole holder of the consumer data.  They know, who is purchasing an app or song, but have no obligation to share that information.  Although it is likely some concessions will be made on both sides, it "seems" likely that publishers will seize the opportunity to reach the 160 million iTunes customers, and the ability to develop content for the iPad.

Major US publishers such as Conde Nast, News Corp., Hearst and Meredith have also banded together to launch an alternative to the iTunes store called Next Issue Media.  Developing digital content for non-apple devices, which are quite promising.  The advantage is clearly the control over content, sales and customer data.  Still, the barriers to creating a new online store, driving traffic and convincing consumers to give up credit card information are huge.

Reaching New Audiences

Combining the "App Advantage" with social media tools, gives publishers huge opportunities for expanded reach.  The biggest example remains the NY Times who has over 750,000 fans on their fanpage.  This is, of course, tremendous reach, which gives the NY Times a huge platform to experiment with what people will choose to pay for online.  Equally interesting is the report that 10% of the traffic to the NYTimes.com is generated by Twitter.  Via the use of custom short url's they are able to track all readership and pass along.  Linked in with the new paywall meter, and soon more readers will have to make the choice to pay for NY Times articles.  While many will no doubt choose not to, the greatly expanded reach that social media affords "may" well balance in the NY Times' favor.

What has not yet been adequately addressed is how Twitter could or should be compensated for facilitating this site traffic.  What is the difference between a Twitter keyword or hashtag search and a Google Keyword which is paid?  

I have a reading list of articles related to digital publishing here: Instapaper