Publishers keep their edge as content migrates to mobile applications

With the explosion of sales of the iPhone and iPad, as well as smartphones and tablets in general, an increasing number of users are getting their information by accessing publications from their mobile devices. Even though the penetration is rather limited, media experts seem to agree that none of the media groups can afford not to offer their products in a mobile-device friendly format, as they risk missing out on an appealing segment of the market.

Otilia Haraga

News reading is the second most popular activity on an iPad , with 61 percent of users getting up-to-date on the latest headlines on their device. Only exceeded by games (84 percent), it outranks social networking (56 percent), accessing music (51 percent), reading books (46 percent) and shopping (42 percent), according to a survey by Google Admob. The global market for digital newspapers will skyrocket from USD 96 million estimated for this year to nearly USD 2 billion forecast for 2015. This translates into an annual combined aggregated growth rate (CAGR) of 84.7 percent, according to the Global Entertainment & Media Outlook Report 2011-2015 published by PwC.

The PwC report indicates that in Romania, estimated revenues from digital newspapers publishing will be no higher than USD 2 million in 2015, “which may not be very appealing to editors,” Gabi Mustea, director of consultancy for management at PwC Romania, tells BR.
“The explosion of smartphones, tablets and e-book readers, combined with the increase of mobile internet connections’ speed and affordability, will definitely lead to an increase in the number of people consuming media on such devices,” says Mustea. “The efforts made by mobile device hardware and software developers to offer media portals, allowing not only easy access, but also timely delivery of the digital newspapers along with the hard copy publication and in a mobile-friendly format, are also facilitating the growth,” he adds.

Keeping up with the increasing number of mobile devices and the emerging demands of consumers who use them, more international publishers are coming up with their own applications. Among the flagship publications mentioned by Szabo Erik, deputy CEO of Carnation Group, are CNN and Sanoma. In Romania, two of the local publishers who have invested in this area are MediaPro and Adevarul. “What is indeed spectacular is the interaction that these applications allow – the video content, connection to social networks and the simple interaction with content that so far has been static and all of a sudden becomes tailored to one’s present needs,” Szabo tells BR.

He adds that global online players such as Facebook, Google, Microsoft and Yahoo have already developed such applications for mobile phones and tablets and have optimized their websites for mobile phones. “There are already websites, even in Romania, that do this; HotNews is a good example,” he says.

Another such instance of a publisher that has launched applications to facilitate the access of iPad and iPhone users to its content is the Intact media group.
Gazeta Sporturilor, a group title, launched at the end of May a special edition for the iPad, which has been downloaded by over 15,000 people since its launch. The application can be downloaded from the website of Gazeta Sporturilor, Gsp.ro. The edition for the iPad can be downloaded from the Apple store.

The application is being distributed free of charge. Approximately 1.5 million monthly visits are made by users from their mobile phones, of which 450,000 visits from the iPhone and 100,000 visits from the iPad. The daily editions can be downloaded only via subscription of 1, 3 or 12 months, or by payment per edition. Each edition offers promotional space for advertisers.

The total cost of developing the applications, which also includes the promotion, was approximately EUR 250,000, Robert Popescu, director of development at Convergent Media, which edits Gazeta Sporturilor and GSP.ro, tells BR. The project took six months to complete.
“The revenues that result from using these applications for publishers are small, but prospects are very good even on the short and medium term,” says Popescu.

The main issue is to convince the ever increasing number of people who consume the content on these devices to pay these services, he says. Which raises two questions: how can publishers capitalize on these applications? And secondly, are they worth it?

To answer the first question, BR talked to a developer of such applications. Sebastian Vaduva, CEO of Appscend, the company that produced the applications for the iPhone and iPad platforms for TVR Info and 0-100.ro, a partner content site featured on HotNews.ro. He says the two applications were developed on the company’s own platform Appscend. This platform is especially devised for publishers so that it brings the time required to develop these applications down from several months to a few days. Moreover, he says this platform also offers all the instruments for administrating and valuing the content money-wise.

The applications 0.100.ro and TVR Info have been downloaded by over 15,000 users. They can be downloaded from the Apple App Store, available on any device with iOS such as iPhone, iPad or iPod Touch.

The process of developing an application is similar to the process of developing any software product, says Vaduva. One starts by setting the targets that the publisher has in sight and that should be met by the respective application, Next comes the part when the interface of the application is constructed, which includes graphic elements, colors, images as well as the structure in itself. There follows the part regarding the inter-connection of the data basis, the CMS used by the publisher with the mobile application so that the content on the mobile device can be instantly updated when new articles are uploaded onto the website.

“The most common price for an application for the iPhone or iPad in Apple App store is USD 0.99 but most publishers prefer to distribute the applications free of charge so that the number of downloads is considerably higher. In order to get revenues, publishers can adopt alternative methods such as inserting advertising or selling the premium content by using In-App-Purchases, the Apple service dedicated to acquiring virtual goods within mobile applications,” says Vaduva.

The PwC report forecasts an annual CAGR of 14.9 percent for digital publication advertising between this year and 2015 in Romania, as opposed to 8.4 percent for printed advertising. The estimated annual CAGR for mobile advertising is 24.6 percent. The revenues will however remain low, at approximately USD 5 million in 2015, jointly from mobile advertising and advertising included in digital publications.

“There is more than the classical mobile internet to smartphones and tablets. Users of these devices have understood they must pay more for various services. They are ready to pay USD 1.2 for an application, for content, which they did not do on their old PC. So these developments can be better valued than classical internet,” says Szabo.

The first step for publishers in capitalizing on this direction is paid access for added services or advertising space within applications. Still, turning digital content into revenue “remains a challenge,” and the market is “less than attractive,” Mustea says. “Successful examples of newspapers or magazines available in digital format, at global level, for paid subscription only, are far from the rule. However, providing the publications in a mobile friendly format may be an incentive for the consumers to pay for them. One thing is certain, not being present in the mobile ecosystem will do more harm than good to the media companies.”

otilia.haraga@business-review.ro

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