A whitepaper discussing the three key publishing business models publishers are using to take advantage of mobile devices, notably the iPad (and also the iPhone).

1. iPad Publishing Solution Comparison
Whitepaper
Robert Elding
Marketing Director
YUDU Media

2. iPad Publishing Solution Comparison
Whitepaper
Introduction
The launch of the Apple iPad has ushered in a new era of electronic
publishing. The sector had already been solidly expanding with
devices such as the Amazon Kindle and iPhone capturing the public’s
imagination.
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3. Indeed, the time may not be far off when ink-on-paper versions are
overtaken by digital versions, something which was indicated in the
February 2010 report released by the Association of American Publishers
(AAP). The report brought into focus the fact that eBook sales figures in US
went up by as much as 339.3% for the month, whilst paperbacks published
for children and young adults were down by 15.5% less over the same
period.
The launch of the iPad has, however, propelled ePublishing onto a whole
new level - it could best be described as a ‘game changer’.
With European roll-out delayed twice, Apple has itself described demand
for the new device as ‘overwhelming’ with one iPad sold every three
seconds.
Publishers, who have previously either been slow to adopt ePublishing or
have resisted the evolution of printed media into online content, are now
scrabbling to adapt their offerings to mobile internet devices. The question
is how can they do so in a way that makes their content both accessible
and profitable? Moreover, how can they do so in a way that protects and
enhances their publishing brand?
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4. The right ePublishing formula
Getting the balance right will be essential,
not just to monetise content but also
to retain customer loyalty. Pioneering
publishing houses are currently not finding
it easy, with muddled positioning, confused
accessibility and risky pricing structures.
One well-known US magazine, Popular Science, has admitted that, “it is
searching for what the publishing market will bear”. With its iPad version
retailing at $4.99 per issue, customer reaction has been downbeat,
especially as the printed version retails at only $12 for a whole year’s
subscription. The huge price differential has resulted in loyal customers
not being shy in registering their dissatisfaction.
Book publishers themselves are also coming in for criticism and are now
having to defend charging $13-$15 for eBooks. Consumers who have
become accustomed to $9.99 eBook pricing from Amazon have “unrealistic
expectations,” industry representatives have said.
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5. Publishing for iPad: an outstanding opportunity
With Apple having already sold 2 million iPad units in just over 2
months since its April 3rd launch, and with pre-launch demand
in Europe greater than that for the iPhone, Apple’s iPad offers a
tremendous opportunity for publishers.
The first ever consumer device to register $1 billion in sales (after just
70 days), the iPad represents a whole new era in publishing whereby
consuming media in digital format is now as flexible and portable as
printed content.
Within a short period of time, consumers will simply wi-fi the latest issues
of their favourite magazines and eBooks straight onto their iPad’s to read
on the move. As technology develops, airlines might carry digital libraries
on board their planes for users to download various magazines and
newspapers whilst in-flight. The possibilities are endless.
There are drawbacks, however. Chief amongst them is that publishers must
pay Apple a 30% fee of all revenue generated via ‘apps’ and any content
sold to go in them. This has led publishers to closely examine how they can
make titles accessible and inexpensive yet, crucially, also profitable.
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6. To achieve this, some publishers are offering an app for each title - making
publications easily searchable and providing ‘standout’ - whilst others
are attempting to circumnavigate the Apple Store charges altogether by
offering titles that operate via a newsstand, which makes the titles harder
to find and also directs the reader away to another website to complete
the transaction, therefore adding another layer of complexity to the
purchasing model.
This whitepaper will look at the three key publishing business
models publishers are using to take advantage of mobile
devices, notably the iPad (and also the iPhone).
Just as with any new publishing frontier, some models will prove
to be more popular than others, giving publishers a key advantage
over their competitors. With the iPad proving to be an unheralded
success getting it right at the outset will be imperative.
This whitepaper will therefore dissect the various business models
on the market before giving its final verdict and conclusion on the
versions likely to prove most successful.
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7. 1 The Branded App Based
Model
This model involves
purchasing a single
branded ‘app’ per
magazine title, which
houses all the editions/
issues of that title. The
ePublishing partner
manages every aspect
of developing the
branded app for the
publisher and the
submission of each
title to Apple and the
App Store.
The advantages of this model are clear. Firstly and arguably the most
important advantage is:
It allows publishers to take advantage of the App Store’s success.
Once the app has been approved it is added to the App Store which is the
only online store for all Apple devices and the largest online App store on
the internet and already boasts 46,000 separate publishing titles. Apple
also heavily promotes its Store in a similar vein to how it propelled iTunes
into the largest online music store in the world. The App Store therefore
offers the largest potential global audience and so publishers can utilize its
success to help increase their own.
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8. Then there’s visibility.
Readers can search the App Store for a title, and easily find the title’s app
and all publications for that title within it. This makes a publisher’s titles
more widely and openly available to the hundreds of millions of App Store
users, thereby helping to increase circulation and sales.
Another key benefit of this model is that the publisher retains
control over its brand image and intellectual property.
In addition, because the app is owned by the publisher they receive all the
marketing data supplied by Apple at first hand, not to mention the kudos
of being seen to be ‘important’ enough to have their own dedicated app -
and not just being seen as yet another title on a crowded newsstand.
View offline.
Another key advantage of using branded Apps
for publishing on the iPad is that one can view
the editions at any time - even when offline. This
makes the iPad a truly ‘mobile’ device and not
reliant on the vagaries of the strength of internet
connection of wi-fi hotspots. It also gives readers
a greater sense of having ‘purchased’ the title and
not just ‘access’ to a remote online url - which
generates additional loyalty.
Branded iPad apps are also lauded for being ‘iPad specific’.
This means that the publishing title’s app has been designed specifically
for use on the iPad. Consequently, the quality is often higher than if
accessed just via the internet and more importantly the reader experience
is smooth and harnesses the iPad’s true capabilities.
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9. Using YUDU’s branded app model, a publisher can expect to retain
65% of the revenue, after Apple takes 30% and YUDU just 5% to cover
transactional costs. This represents a much lower revenue share than other
iPad publishing models, so the publisher will retain more sales income.
Below, the Chairman and CEO of YUDU Media, Richard Stephenson discussing
the YUDU iPad solution and the App Model.
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10. Building a branded app
How do publishers obtain their own branded app?
The ePublishing partner will build the app for the publisher using the files
provided, as well as putting forward the app submission to Apple and the
App Store. This takes any burdens away from the publisher and allows
the ePublishing partner to utilize its skills in creating the highest quality
apps possible for the publisher. Although there is a one-time build cost
for the branded app, going through a publishing partner is much more
cost effective than hiring app developers for a custom-built app - typically
around a third of the price - App developers are in high demand at the
moment and are demanding extremely high prices.
With YUDU’s approach, once the app has been approved by Apple,
publishers can either self publish all their digital editions onto their
branded app or contract YUDU to do it all on their behalf using YUDU’s
bureau service.
Downloading a branded app from the App Store
Once a reader has downloaded the publisher’s app from the App Store (the
publisher can decide if it is a free or paid for app), all publications relevant
to that publisher can then be downloaded onto the mobile device directly
via the Apple Store.
Every time a new iPad edition is available for that publication, the reader
will receive a push notification to let them know. For publishers charging
per title, the readers will be able to see the front covers of each issue within
the branded app, but only those that have been purchased can be opened
and read. This is a great way to encourage readers to purchase more issues
as they can see all the issues that are available as well as those they have
purchased.
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11. 2 The Browser Based Model
The browser based model involves the user accessing digital edition titles
via the iPad’s Internet browser, using a Wi-Fi connection. Essentially the
title is hosted online and a user accesses any one single title as they would
a website - by clicking on the URL. The model therefore involves reading
digital titles on mobile devices in the format that they would be read on a
PC or Mac, and only when they have connection to the internet.
The one advantage of this model is that the publisher does not need
to build an app for the App Store, meaning the process of making a
publisher’s titles accessible via the iPad is faster and cheaper.
The publisher also avoids the 30% transaction fee from Apple. Instead, the
publisher must have their own digital rights management (DRM) system in
place and sell the digital titles either via their own online publishing store
or via links within their own website.
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12. Two ePublishing vendors who have gone down this route are Nxtbook ,
Texterity. Whilst titles using the browser based model are commercially
simpler and quicker to bring to market, they have a number of distinct
drawbacks:
A Because they are streamed, digital titles only become available
if the iPad (or iPhone) is connected to the internet. This means
that if the wi-fi connection is poor, slow or haphazard, reading a
digital title can be an extremely frustrating experience.
For instances where there is no internet connection, for example
on the move, be it by metro/tube, train or plane, streamed digital
editions will not be available - almost negating the reason for the
iPad’s creation (a truly mobile reading device).
B Perhaps one of the main drawbacks of browser based iPad
titles is that they aren’t available on the App Store. Publishers’
potential revenue can therefore be seriously affected given the
size of the potential market available to those publishers who’s
titles are for sale in the App store.
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13. C Browser based digital titles are hampered because they are not
created specifically to be read on an iPad or iPhone. Not only
does this mean that streamed digital titles are unable to harness
the iPad’s full potential, it also means that the quality of the
viewing experience is lower.
This can be particularly true from a layout perspective as well as
a reading perspective - functionality, navigation, text and image
clarity being the main problems.
D Browser based digital titles can feel unrewarding from a
customer viewpoint because readers never feel like they ‘own’ a
publication that sits in their iPad for whenever they want to read
it - they just have ‘access’ as they would online. When that access
is denied or cut off through poor wi-fi connection, customer
dissatisfaction rises appreciably.
E Flash cannot be used on either an iPad or iPhone. As one of the
most popular web-based software solutions, present in most
online digital edition technology, this can create huge difficulties
if browser based digital titles are not configured or reformatted
for the iPad or iPhone.
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14. 3 Third party Newsstand
Model
This model enables publishers to get their titles on the iPad via
a third party newsstand style app, instead of the publishers own
branded app.
For example, take a theoretical title called ‘Popular Steam Trains’. If this title is
held within a third party newsstand app you would have to access it through
the ePublishing specialist’s own app.
When a reader searches for this title in the Apple Store they will only be
directed to the ‘The ePub Specialist’s App’, to then find the title, not directly
to the magazine’s own branded app or title itself.
The key advantage of this model is that there is no need to purchase a
branded app for a publisher’s title and you avoid paying 30% transaction
commission charges to Apple. Theoretically this means that it should be
a cheaper way to publish on the iPad. However, this is not always the case
and third party app owners often charge high revenue shares themselves,
meaning that the newsstore route may not be as beneficial in the long term.
The main drawbacks of this model, however, are as follows:
A Your brand or title cannot be found in the App Store. When
readers search for your title, instead of being taken directly to
it, they will be confusingly directed to the third party branded
newsstand app. If a reader downloads this app, they would then
have to search within the app to locate the title.
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15. B Titles are not sold directly though the App Store and so
publishers cannot take advantage of the tremendous power
and reach that it holds. Publishers must obtain access codes and
purchase from the third party websites or payment portals. This
procedure adds another layer of complexity to the purchasing
process and could affect customers’ overall experience. This
comes at a time when iPhone and iPad users are increasingly
expecting to access and buy products easily, directly via the App
store itself, not through ‘broken up’ and dislocated purchasing
routes.
C The publisher’s brand is diluted with the presence of the
newsstand’s brand and so the publisher’s title may suffer
from being seen as lower quality than those with their own
dedicated app, the result being that the title’s brand image
may suffer accordingly. It’s also harder to control how your
brand is portrayed if your titles sit within a third party branded
newsstand.
D Digital titles within a third party branded App will sit alongside
competitors and other titles. This means that the title has little
‘standout’ and is lost in a sea of other publishers’ titles.
E Many titles viewed in third party newsstand apps are not
designed solely for the iPad, therefore quality of the iPad titles
can be lower using this model.
Revenue shares vary but can often be surprisingly biased towards the app
provider. Zinio, for example, splits the revenue 50:50 between itself and the
digital title publisher, despite the fact it cuts out Apple’s 30% commission.
because they aren’t sold directly through the App Store.
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16. Conclusion
Even before the iPad had launched, digital magazines and eBooks
were making serious inroads into mainstream culture. GQ magazine,
for example, sold 7,000 copies of its December 2009 issue for the
iPhone alone, yet since the launch of the iPad the total number of
digital GQ sales for Apple devices has soared to nearly 60,000.
To take advantage of the iPad phenomenon (and all the ‘me-too’ mobile
devices yet to be launched) publishers now need to carefully evaluate all
the different publishing models available to them before settling on their
chosen route.
For each publisher this will be an immensely important decision because
As well as protecting their brand, they must choose the model that will
help to increase circulation and profit.
The eventual success of one content model over another has happened
many times before, whether it has been VHS over Betamax or MP3 over
Mini Disc. Now is the time to decide.
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17. The reason YUDU chose the branded app model is
because it allows publishers to portray their brand in
the best light possible with their own branded reader
app of the highest quality. Add to this the fact that the
branded app model enables publishers to fully utilize
the power of the Apple Store, as well as harness the
true capabilities of the iPad and offer the best reader
experiences, then the branded app model has a very
high chance of succeeding over others.
However, it’s by ensuring that revenue is biased
towards the publisher that makes YUDU media’s
approach unique.
After all, it’s the publisher who creates the content so
YUDU believe they should be the ones retaining the
profit.
For more information on YUDU’s iPad solution email
ipad@yudu.com or visit www.yudupro.com/ipad
US Tel: 1-888-FOR-YUDU UK Tel: (+44) 870 760 9258

18. Branded iPad Apps from