Nieman Foundation at Harvard
For a brief time, starting in 2010, the news industry convinced itself that it could put the toothpaste back in the tube, and Josh Quittner counted himself among the most optimistic. In April of that year, Apple began shipping the first model of the iPad, and before even the first unit sold it was already being hailed by some as print media’s savior. With the iPad’s high-quality screen and app-based ecosystem, publishers were actually going to have a platform on which to charge for content — and readers, unaccustomed to this new device, could be retrained to pay for their news. The consensus on this was so strong that Rupert Murdoch announced that his News Corp. would invest millions in launching an iPad-only publication called The Daily. Public relation flaks for magazine companies, after years with little good news to promulgate, furiously launched press releases announcing shiny new magazine apps that readers could soon purchase and download.
At the time, Quittner was director of digital editorial development for news, sports, and business at Time Inc., and he was placed in charge of leading the stable of magazines into this new digital frontier. “The first iPad magazines were Time magazines,” he told me recently. “I’m very much one of those people who believed that apps would give us another bite at the apple, that we could control the user experience to a far greater degree than we could on the web and that we could bring high quality advertising back.”
But even before the first issues arrived on the app store, he began to grow worried. Within Time Inc., there was a heated debate between the editorial product team and the business side over how to price the app. The business side, which ultimately won the argument, wanted to charge $4.99 per download, the newsstand price for the print issue. “What I believed was that we should totally charge for it, but we should charge the smallest amount possible,” he said. “Because this wasn’t even a beta technology — it was an alpha technology. We didn’t know which ways pages should turn, whether there should be a scroll or pagination. There were so many questions we didn’t know the answer to, and they were compounded by the fact that the download sizes were huge.”
Readers, Quittner believed, would treat these news apps as a novelty, and though Time could probably sell a fair number of $4.99 issues early on, that novelty would soon wear off and normal market forces would apply. It would then have to compete with every other available app, magazine or otherwise. “We were also competing against Angry Birds, which was popular at the time. Angry Birds was hours of entertainment, and a magazine, even a great magazine, offers maybe a half hour of entertainment. It just didn’t seem like the math worked out.”
The iPad wouldn’t just allow publishers to charge for content — it also offered an opportunity for more ambitious design, something that the web, where the focus was geared toward generating clicks on more content, had denigrated. At first, magazine designers were delighted that they could work on a print-like product. “Initially what happened was that the magazine would put in the extra hours to conform Time to the iPad,” Quittner recalled. “It was just another 15 percent effort — 15 percent more time to make an iPad version.” But then they decided to launch a version for the iPhone, and then device makers launched the first Android tablets, and soon they were having to adapt each issue to multiple screen sizes and operating systems. Eventually, Time needed to hire more designers to meet the demand, which then placed more pressure on the apps to generate revenue.
In 2011, Quittner took a job as editorial director for Flipboard, the news aggregation app that pulls in content from hundreds of media partners, and it was then that he came to the conclusion that Time’s attempts to build and maintain its own mobile app was futile. “It was like a lightbulb went off in my head,” he said. “Why are we in the publishing business spending so much time doing technology when what we should be doing is what we’re great at, which is finding and packaging truth.” A news company attempting to innovate within tech, he analogized, was akin to CNN deciding to build HD televisions just because it happened to be a television network. “This stuff is just moving too fast, and it’s really hard to do…My god, I work at a company with the smartest technology people in the world, and it takes every bit of intelligence and skills on their part to keep up” with the fast-moving mobile ecosystem.
It would seem that much of the news industry has evolved to agree with Quittner’s assessment. Though it’s not uncommon for a news company to produce and maintain a mobile app, there’s certainly been less emphasis on these individualized products in recent years. (I remember a few years ago attending the New Yorker Festival, which constantly broadcast a commercial starring Jason Schwartzman that promoted the magazine’s iPad app.) According to the Alliance for Audited Media, digital replicas of magazines made up just 3.8 percent of paid circulation in 2014, up only slightly from 3.3 percent in 2013 — not exactly exponential growth. And in December 2012, less than a year after the launch of The Daily, News Corp announced its shutdown, citing lackluster sales.
Meanwhile, news companies are consistently inking deals with aggregation apps like Flipboard, agreeing to allow their (expensively produced) news content to live within its app in exchange for a cut of ad revenue. Last year, Flipboard announced it surpassed 100 million users, and even The Wall Street Journal, which maintains one of the most successful newspaper paywalls, has inked a deal to appear on the app.
Traditional publishers have always leveled a skeptical eye at aggregation outlets, and many within the industry openly balked at the news that Facebook hopes to host news content on its mobile app for a share of advertising revenue. So why are they risking control of their content — and brand — by appearing on these outside apps?
“I think that publisher after publisher is seeing that the user does not want to go to one single source for all their information needs,” said Rich Jaroslovsky, the VP of content at SmartNews. “They want to take advantage of the greatest diversity of voices available.” Mobile apps, unlike the open web, do not allow for frictionless discovery, and therefore publishers are forced to place their content where the users already are. And in 2014, many of those news consumers are opening up aggregation apps, not individual mobile versions of magazines and newspapers.
SmartNews, which only recently launched in the U.S., originated in Japan and has built up a base of 5 million active users. As detailed in a recent Fast Company article, its cofounder Ken Suzuki noticed while riding the subway that his fellow passengers were glued to the mobile games on their phones. Because Internet access is near impossible underground, these passengers didn’t bother trying to access the news. SmartNews tried to tackle this problem.
Jaroslovsky, a longtime managing editor of the Wall Street Journal’s website, was hired to forge agreements and partnerships with U.S. publishers. The draw for users and publishers, he argued, is SmartNews’s selection algorithm, which sorts through 10 million URLs a day and chooses about a thousand stories, based on a number of social and other algorithmic cues, to be displayed. Smart personalization and the ability to tailor what’s seen to the user’s interests is a prized feature on many of these aggregation apps.
Roman Karachinsky, the CEO of News360, told me that his company conducted research a few years ago, prior to launching its app, on user news consumption. “They spend half the time filtering and half the time reading and consuming,” he said. “And we thought that was completely lopsided. People don’t want to spend half their time looking at headlines and deciding, ‘Do I want to read this or not?’ They want to see headlines that are all interesting. The research showed that only about 20 percent of the headlines in your feed during the day are something you’re interested in, while 80 percent was stuff that you needed to filter out.”
Allowing the user to pick what topics she’s interested in is only half the battle, he said, because users are notoriously bad at articulating their preferences. With News360, every action you take — whether it’s more passive signals like opening and scrolling through a story, or more active indications like giving an article a thumbs up or thumbs down — affects what content you see. And it’s the ability to serve up the most relevant content to an individual user, Karachinsky believes, that will differentiate one aggregation app from the other: “Once you get past the initial hurdles of having a great UI, having enough content partners — those are not super difficult to achieve — the thing that’s going to set each of us apart is the algorithm.”
Karachinsky may have been underestimating the role of which content these apps have access to and how that content is displayed in determining how valuable the app truly is. Because most of these companies are only a few years old, there’s still no standard approach to how a news aggregation app handles content and how it pays for it. Some host nearly all their content within the app itself, while others just produce headlines and summaries and link directly to the news website. Others straddle the line between copyright infringement and fair use by allowing the user to choose a stripped-down version of an article within the app.
Nearly all the apps I researched for this article offer some kind of revenue share to their partners, rather than paying a set fee to license it. SmartNews, for instance, turns over 100 percent of ad revenue that appears on article pages to the publisher and plans to make money for itself by placing ads on the channel sections (where the headlines are displayed) of the app. News Republic, a France-based company, offers a 50 percent cut of ad revenue to publishers.
Sasha Pave, vice president of marketing at News Republic, told me that, because the user experience is better in these mobile aggregation apps, they can offer higher engagement numbers than a publisher can achieve in its own standalone app. News Republic has about 3 million monthly users — a relatively small number compared to the desktop audiences of many major news outlets, but these users consume over 300 million pages a month and flip through an average of 15 to 30 pages per session. Most publishers consider themselves lucky if they can get their website bounce rate below 80 percent.
Pave explained how working within the app stores — where every change, no matter how minor, must be approved — makes it difficult to iterate and test out new ideas. The Huffington Post, in its early days, was famous for rolling out new features the same week they were thought up. A site built on WordPress is extremely easy to modify and test out new features on the fly. Not so for mobile apps. “The app market is really unique,” he said. “There are a million apps on iTunes and many more on Google Play. It’s a tough, tough environment. You can have a huge outlet like TechCrunch develop a mobile app, and it just gets buried. They can be the top of the world on the web, but on Google Play and iTunes, it’s hard to get visibility, and it’s hard to retain users. It involves a lot of coming back to very iterative development where you have to publish and deploy QA” — quality assurance testing — “whereas on the web you can do things much more quickly.”
But for those that have managed to develop that audience, it doesn’t take much arm twisting to make publishers understand the value of it. “Let’s put it this way,” said Quittner. “I don’t have to do very much convincing in my job. I can’t remember the last time I had to actually convince someone to come on to Flipboard.”
