September 29, 2011 6:31 pm

Magazine publishers pin hopes on Newsstand apps

When Apple unveils its Newsstand application next week, many magazine publishers are hoping it will mark a turning point as they seek to increase digital sales through the new wave of tablet computers.

Newsstand will collect a user’s digital magazines and newspapers into one place on their tablet, and offer a new storefront to browse and buy single issues or subscriptions. Publishers see the arrangement as a big improvement from the status quo, which has individual titles each sitting in their own application, or on the web where they have struggled to charge for content.

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Apple’s Newsstand will mirror in form and function the feature of the same name included in Amazon’s new tablet computer, the Kindle Fire, announced on Wednesday. Amazon’s Newsstand app will also organise newspapers and magazines and allow users to shop for new titles.

Taken together, the new Newsstand apps point to a new phase in the sometimes contentious relationship between magazine publishers and technology companies.

“A year ago this was experimentation, today it’s a business for us,” said John Loughlin, executive vice-president of Hearst Magazines.

Hearst, publisher of Cosmopolitan, Popular Mechanics and Esquire, is now selling more than 300,000 digital issues a month on platforms including iTunes and the Barnes & Noble Nook ereader. That number has more than doubled since the start of the year.

Mr Loughlin said the Kindle Fire, with its low price of $199, heralded the introduction of the mass market for tablets, and he expected it would spark new digital sales of Hearst titles. “I certainly think we’re going to see another lift,” he said.

The big hope is that the Fire will broaden the market. Monica Ray, executive vice-president of consumer marketing at Condé Nast, publisher of Vogue, Vanity Fair and the New Yorker, said she expected the Kindle Fire to appeal to female readers because it was smaller than the iPad. “I think it will give a big boost to our female titles,” she said, adding that Condé Nast titles now have a combined monthly digital circulation of more than 500,000.

Publishers have also signed on for Apple and Amazon’s billing services, allowing the technology companies to sell annual digital subscriptions to most titles for $19.99 each. While publishers privately gripe that the 30 per cent commission taken by the vendors is excessive, and that they do not share customer data easily enough, companies like Hearst and Condé Nast have few other options if they wish to reach tablet users.

Magazine publishers have yet follow the few news publishers, including the Financial Times, that have launched HTML5 web applications as a way around Apple’s store.

“We are at a new juncture,” said Ms Ray. “When we started 18 months ago we could only sell single issues, we couldn’t sell subscriptions.”

But not all publishers are content with the new regime. Time Inc, the largest magazine publisher by circulation, is not selling subscriptions through Apple or Amazon.

Analysts say publishers should focus on selling bundled print and digital subscriptions. “The real opportunity exists among individuals who currently have print subscriptions or are regular newsstand purchasers,” said Bruce Benson of FTI Consulting. Ms Ray said that strategy was proving successful for Condé Nast.

Publishers also note that so far, customers are not cancelling their print subscriptions in favour of digital offerings. “Ten years down the road, I don’t know what’s going to happen,” said Ms Ray, “Right now we haven’t seen that happen.”

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