Media organisations turn to mobile phone applications to raise revenue

Financial Times, Radio Times and Spectator join the race to make money out of 'apps'

Richard Wray - The Guardian, Monday 5 October 2009

Apple iPhone

The number of apps for iPhones and other smartphones is rising rapidly. Photograph: Manuel Balce Ceneta/AP

In the two years since it appeared the iPhone has transformed the mobile phone industry and now its effect is being felt in the media world. But it is not the device's successful introduction of the touchscreen into daily life, nor its stylish looks that have the media world in a spin. It is the fact that iPhone users are personalising their phones with applications – 2bn so far – and amid all the downloadable games, maps, pint-glass emulators and fart generators, some of the "apps" that are proving particularly popular are news.

Crucially, in a world where commercial media organisations are desperate to wring a return from the millions of pounds they have poured into digital content, a sizeable chunk of iPhone users are proving willing to pay for news apps.

Last week the Association of Online Publishers produced its seventh annual census of members, which include major Fleet Street names as well as broadcasters such as Channel 4 and the BBC. It highlighted a dramatic increase in interest in the potential the mobile phone as a content platform.

The bandwagon that Rupert Murdoch started rolling earlier this year, when he pledged that more of his online content would be moved behind some form of paywall, has attracted a lot of passengers with the survey showing that nearly 70% of respondents plan to charge for content in the next 12 months. A large chunk of that charging is likely to take place in the mobile sphere ,with 56% saying they expect to develop "paid for" apps in the next 12 months. These will not just be aimed at iPhone users, but BlackBerry, Nokia and handsets running Google's new Android platform too. The number of smartphones – devices that can download apps – sold worldwide each year is expected to increase from around 165m this year to 423m in 2013, or just under a third of the total handset market, according to the market research firm Wireless Expertise.

Many of the early news apps to emerge after Apple opened its store a year ago have been free to download, relying upon advertising revenues to make a return, and are little more than pretty shop windows for what is essentially content already available on websites. Obvious examples are the free apps from Time magazine, the Telegraph, Daily Star and Sky News and from popular blogs such as the Huffington Post and the influential Dow Jones spin-off AllThingsDigital. Some publishers, such as The New York Times, have gone further, adding tools that allow users to save favourite stories or send stories by email; Thomson Reuters allows users to track their favourite stocks in a customisable portfolio and has rolling share index updates; while the home page for the Independent's free app gives a constant snapshot of the number of unread stories in each section.

But a new generation of apps is appearing which are aimed at generating their own circulation or subscription revenues. While the iPhone app for the Financial Times is free, the content can only be fully accessed by subscribers, with the casual reader given three free articles per month. It launched in July and Rob Grimshaw, FT.com's managing director, said it has already been downloaded by more than 120,000 people – equivalent to a quarter of the FT's global readership – and it has had a rather remarkable effect, it is driving subscriptions.

"With the application we were taking some thing of a shot in the dark," he says. "But we feel that we have been vindicated … we know there are people who are signing up to become FT subscribers purely because of the application. It is providing a regular stream of subs.

"The iPhone app is not going to make a huge impression on our bottom line in the next year but I can see much more potential in mobile now than I could 18 months or 2 years ago", thanks to the iTunes apps store, he adds. Later this month the Wall Street Journal will move its app content behind a paywall, offering three months free access for anyone willing to register their details. But other publishers are demanding payment for the app itself, either because it offers a wealth of content not available online for free or because the app offers a service that is tailored for mobile. Earlier this year, BBC Worldwide launched an app for Radio Times, asking TV viewers to shell out £1.79 for what is a very easy to navigate TV listings guide. Since then it has raised the price to £2.99.

Last week the Spectator magazine appeared on the iPhone, charging 59p for a week's subscription and following its launch it was the third most popular paid-for iPhone news app in the UK, although Apple's emphasis on new products can meanthis success is shortlived. As a sign of how fledgling the market is, the top two apps last week were basic news aggregators. The Spectator offers a pretty basic application – little more than a photostat copy of the magazine, but it is an "interim version", says Ben Greenish, the managing director at the magazine's owner, Press Holdings. A fully digitised magazine app will be launched in about four weeks with a hybrid payment model that asks users to keep paying.

Greenish says: "Our prime ambition is to broaden our reach and make it easy for people to get it. To date we have sold a substantial number of subscriptions, apps, digital subscriptions etc – all giving confidence that people will pay for content of the Spectator's quality."

The Guardian is also developing its own paid-for app. Part of the reason many in the media hope they can persuade mobile consumers to part with some cash, even though they expect to get everything for free when using the internet, is that consumers are already used to paying for lots of things on their mobile, according to Tim Faircliff, the general manager of consumer media at Thomson Reuters and co-chair of the Association of Online Publishers.

"People are used to paying something for content and services on a mobile phone, whether it's a text message or a download or ringtone or wallpaper," he says. "There is a comfort factor. In that medium people are more aware of the need or requirement for some sort of payment." The media industry is increasingly hoping it stays that way.

http://www.guardian.co.uk/media/2009/oct/05/mobile-phone-applications