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Pricing Magazine Apps

Publishers take experimental approach as platform, technology develop.



By Bill Mickey
05/27/2010

For now, publishers are merely experimenting with pricing for full magazine apps on smartphones and tablet devices. A baseline at this point is still a moving target. On the one hand, publishers don't want to get trapped in devaluing digital content again, and with all the production work involved in the versions that are not simply digital edition repeats, but have added content, robust pricing is the name of the game.

Pricing is generally hovering around the cover price for a newsstand copy, but we're nowhere near a standard approach, however. Publishers caution that pricing will evolve as technology, access and device adoption change. Wired's editor-in-chief, Chris Anderson, recently tweeted exactly that on the occasion of Wired's iPad launch at $4.99 on Wednesday: "For all asking about Wired iPad app pricing, it will evolve as we build new ecommerce methods. Freemium is in our future ;-)" (A spokesperson declined to elaborate on exactly what Anderson meant by that.)

A 'Variety of Price Points'

Conde Nast, which also has iPad editions available for GQ and Vanity Fair, is testing two price levels. First-time buyers of GQ get the app for $2.99, subsequent "in-app" purchases are $1.99. Vanity Fair has a $4.99/$3.99 price point, which Wired has yet to implement.

"Since we are in an R&D phase and we are looking at the consumption of both iPhone and iPad users, we have been actively looking at a variety of price points to see what the consumer response is," says Bob Sauerberg, group president, Conde Nast Consumer Marketing, and Next Issue Media board member. "We are setting the prices for what we think are early adopters. We want to see how print parity and consumer behavior looks."

At Rodale, which has been busy churning out 41 apps to date, pricing runs the full range from free to $5.99—largely dependent on the app's level of utility and content. The majority, 33, of the apps are paid. The rest are free, says John McCarthy, senior vice president of customer marketing.

Most of Rodale's apps are branded offshoots, but the richer the experience and content, the higher the price. The "Eat This, Not That" and Men's and Women's Health magazine apps are $4.99, for example. "You don't want to price it below the product you're selling," says McCarthy. "We're not just driving the cost up because of business considerations. It's a dramatically different experience and we need to see how, as the iPad moves from an early adopter audience to a mass audience, what the impact will be on pricing."

The Impact of Data and Access

So far, the GQ apps combined have been downloaded 63,000 times for iPhone and iPad. Wired's iPad app hit 24,000 downloads in its first day. Rodale did not immediately indicate what the Men's and Women's Health figures were. To put perspective on that, GQ averages about 192,000 copies on the newsstand and Wired averages about 82,000.

Beyond that, publishers don't have much else to go on as they examine price points. "You don't have a ton of data when you're selling through iTunes," says Sauerberg. "We're getting download data on volume, money, page views and time spent—so, we have some rudimentary engagement metrics."

Focus groups conducted by the Next Issue Media consortium have shown that a significant proportion of readers want print and digital subscription bundles, which triggers another set of pricing factors: an easily accessible and usable storefront, user authentication and account access and management.

Technology has yet to allow for easy bundling options, but Sauerberg says this is the way to go. "As important, if not more important, is testing a variety of subscription models. That gets us into an ongoing relationship with the customer who is paying a monthly price and, at some point, getting access to print and digital products."

For now, Sauerberg is testing all the concrete data he can get his hands on. "We're going to test price points on first-time buy and second-time buy, and gather knowledge on different price points and different levels of commitment to products and use that to inform our longer-term pricing strategies."

By Bill Mickey
05/27/2010







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