At least some readers are upset at the high prices magazine publishers are charging for iPad versions of their publications, while the publishers try to “see what the market will bear.” An AdAge article backs this up and goes on to state other reasons for the high prices:
Publishers might be offering more aggressive iPad subscription discounts if it weren’t for factors like the recent recession, said Terry Snow, CEO of Bonnier. “If this were 2005, you might find everyone a little more aggressive on single-copy prices and subscription prices,” he said. “It’s like, ‘Let’s be careful on our new venture not to price ourselves too low to have a business model.'”
Meanwhile, some good arguments have been made about why that price will be a lot lower.
So in my view, there are three main reasons we see the pricing we do:
- “OK boys, don’t blow it again. We screwed ourselves with free content on the web, it looks like people will pay for apps, let’s get us some of that revenue. Oh, and let’s start high because those nitwits will probably pay, and if they don’t we can drop it later. And advertising, well…”
- “We’ve made advertising on the web really suck – it’s ineffective, lives in ad ghettos, and most people ignore it except for the chain-smoking, lottery ticket buying, slots playing 0.01% who click on them. How can we have faith that our ad sales people will be able to articulate why in app ads are way better, better even than print, and should cost as much as print? And how do we stop marketers from measuring the effectiveness of their ads by, well, whatever they can measure, relevant or not? Better charge readers a lot in case advertising doesn’t work out.”
- “Man it takes a lot of resources to build one of these app things. Every time we do it it’s like starting from scratch. It’s really expensive – we better charge a lot.”
I’ll call the first reason price experimentation. It’s a good thing to do, as long as you don’t ruin your market by going too high, which we must be close to. I don’t know for certain that the third point is true, but reports would suggest that. The Wired app weighed in at 500 MB, perhaps largely because it’s a bunch of images. This is not sustainable. Publishers will have to create flexible templates that can be reused because otherwise yes, it’s going to cost a lot for each issue.
It’s the second point, though, where I think publishers are selling themselves, and the device, short. On the iPad, ads are exciting and glamorous again which also means they are way more effective than online. They can contain beautiful video and graphics, allow e-commerce in the ad, and provide an experience only dreamed of in print, much less online. The ABC has begun counting publishers’ apps as part of their print circulation, meaning that app ads are being priced like print ads – a very good thing. Ultimately, quality publishing is more dependent on advertising (or some other brand revenue source) than subscriptions. As I’ve said before, subscriptions are no silver bullet and while I think publishers should experiment with charging, they’d be better off spending most of their time redefining the advertising model.