People.com Releases Pay-To-Download App; One Of Several Attempts To Tap Alt Revenue Sources
This story was written by David Kaplan.
Major news sites are falling all over each other to release their own iPhone apps lately. Many hope to get some incremental ad revenue now, with the hope of charging for the app later. People.com is trying to do both at once, with its $1.99 app being released today on the iTunes Store. Since the weekly mag generally asks print subscribers to pony up roughly $100 a year, Mark Golin, People.com's suggested that the Time Inc. online mag isn't really asking for that much. The app will also be ad supported. Packaged goods marketer Unilever is the launch sponsor. Overall, People.com views the debut of its app as just another part of an exploration to develop other sources of revenue in addition to advertising.
Why not charge?: "If you stop and think about it, in the midst of of everyone complaining that they've been giving everything away for free online, It's so hard to get people to pay, this is a perfect starting moment to do it the other way," Golin said in an interview with paidContent last week. "The way we look at it, People is a premium brand. Readers will pay more for it on the newsstand, they'll pay an average of $101 a year for a subscription. We always hear the same thing in focus groups. 'Even if I do read something somewhere else, I always go to People to see if it's true.' So, we felt, why not charge for it?" More after the jump
Other revenue sources: In general, the mag site sees little downside to charging. Fran Hauser, president of Digital, Style & Entertainment Group at Time Inc., said that if adoption is low, "we can always convert to a free model. But it's really tough to start free and move to a paid model." This summer, Apple (NSDQ: AAPL) will unveil a subscription format for apps, which will let providers and developers gain more than the small amount of advertising and one-time download revenue. People.com is actively considering creating a second app that its users would pay for on a recurring basis. Apart from that, People.com is looking to ramping up e-commerce offerings through its affiliate sales partnership with ShopStyle, which has so far netted it $6 million in revenues in the past year. And in Q3, People.com will launch a fuller gaming program. The site is working with Big Fish Games and will host a rotating collection of 40 games, some of which will be sold for download with prices as high as $19.99.
Scaling mobile: Apart from the various revenue share programs People.com has going, advertising will remain central, Hauser said. Although Unilever has been a reliable online advertiser for People.com and other sites, most marketers aren't ready to match their digital ad spend, especially in the case of mobile. Hauser: "Mobile is a really nice edition to a media plan. But it's not an attraction. For the mobile advertising business to scale, a couple of things need to happen: Consumer adoption needs to scale, and we're making progress getting there. The other thing that needs to happen are more sophisticated products around things like couponing, QR codes and location-based technology. Once we start really seeing those kind of tools come into play, that's when mobile advertising will really take off as a business in its own right."
By David Kaplan