The business model of tablet publications is broken.
It's not sustainable and it's not profitable. Even when the best of the best try.
In theory, it should work. The tablet appears to be the perfect medium for news, after all. A screen between seven and ten inches is great for reading. The devices are light and thin enough to comfortably hold in one's hands. They can access the internet to deliver real-time content. The multi-touch gestures are much tidier than fiddling with a mouse or thumbing through dozens of pages. And a tablet can deliver rich media like galleries of high-resolution, full-colour photos and streaming videos in ways print cannot.
Yet for all that, the tablet has so far been a terrible place for media companies to place their dwindling financial resources.
CASE ONE: THE DAILY
The Daily launched in February 2011. Run by the News Corporation, which worked with Apple to ensure the publication was iPad-optimized, it was hyped to be groundbreaking. The Daily was the world's first tablet-exclusive newspaper and it boldly demanded that readers give it money in order to access its content ($40 for a one year subscription).
The move was daring but News Corp. had the budget for it and, obviously, an appetite for risk. A year and a half later, The Daily has more than 100,000 subscribers, which translates into a revenue of roughly $4 million or more. Not bad in isolated terms. But with some context—such as how The Daily is currently bleeding $30 million annually, according to reports—and you realize how awful the balance sheet really is.
To stem this bleeding, The Daily had to lay off nearly one third of its entire workforce, dropping its headcount from 170 to 120. As a result, the daily paper is significantly reducing the quantity of its original content (for example, it now leverages partnerships to generate sports content) and making other compromises (it's now only available in a vertical format, which has already angered a great amount of users who argue that landscape is more important to have that portait. But I digress.).
With these changes, the News Corp. publication hopes to be more "nimble editorially." Editor-in-chief Jesse Angelo affirms that "our standards will not diminish as we move forward, nor will our enthusiasm for creating an outstanding digital publication."
USA Today called the newspaper "visually dazzling" when it was first released, while TechCrunch had high hopes that The Daily would "truly bring journalism into the 21st century." But it appears that before that can happen, a sustainable business model must exist. The Daily is apt to still lose money for the foreseeable future unless it magically quadruples its subscriber base in a short period of time.
CASE TWO: HUFFINGTON
The Huffington Post, famous for its decidely succinct methods of pseudo-journalistic regurgitation, caught many pundits off guard by recently launching Huffington, a weekly long-form news magazine available exclusively on the iPad. Surprisingly, the magazine was impressively well done, with rich, long, engaging articles.
It had only one problem: it cost money.
Huffington cost $0.99 per issue or $20 for a year. In the five weeks it was running on this system, it managed to gain over 100,000 subscribers. Sounds incredible, but keep in mind that the publication was offering a full month free. And because Huffington has now revealed it will now be free moving forward, we'll never know what the true subscriber count could have been (judging by the fact they changed it, the prospects were obviously dull).
So Huffington will be completely free content now, and rely on advertising to pay the bills, like how its parent The Huffington Post has done since the beginning. An interesting and drastic pivot, especially this early in the game.
The backstory to the magazine is also peculiar: it was just in late June that executive editor Tim O'Brien told reporters that Huffington is "a premium product and it deserves to carry a price with it in order to access all the value we're giving people." But at the same time, the publication was first conceived as a free product in 2011. Which stands as evidence that the executives behind media companies just don't know how to monetize their own stuff.
It's easy for the public to say executives "are doing it wrong," so to speak. But the media industry is a particularly perplexing one in the Internet Era. Advertising, subscriptions, paid content, free content, traffic, social media, cross-platform, real-time, longform, web, smartphone, iPad… I could go on, but it all blends into a really odd tasting concoction that seemingly refuses to be sustainably profitable. And trust me, these people are trying.
Tablets remain an amazing medium for media and news consumption, but not exclusively. For the present time, they remain best served as an extension of print and web-based publications. When that may change is anyone's guess.
Real journalism is not cheap, and cheap journalism is not real. And most consumers don't appear willing to pay anything for either anyway. Throw in the fact that online advertising seems to have lost its lustre—banner ads are selling for less and less on many major sites and inventory is no longer overflowing—and you have a perfect storm.
Media was one of the first industries to be affected by the Internet Era and again by the explosive emergence of tablets and smartphones. And, honestly, it will probably be one of the last to adapt to both.