2011/02/04

Will millions of people pay for iPad news?



Media companies are making big bets on tablet-friendly newspapers and magazines -- even as they bleed cash chasing a still-tiny audience.
"I've never seen anything quite like tablets taking off. I don't think you can afford not to make those investments," said Scott Ellison, mobile/connected platforms analyst at IDC.
But the investments are hefty, and fishing in a tablet-only pool is limiting. Apple sold 14.8 million iPads last year, and its nearest rival, Samsung's Galaxy Tab, shipped 2 million devices. That means there's 17 million potential readers at the moment.
Forecasts are bullish for the coming year: Tech companies have a staggering 100-plus iPad rivals in the works, and research firm eMarketer expects total tablet sales to hit 44 million in 2011. In 2012, it predicts tablet sales will top 81 million.
"Clearly the media industry is in need of a transformation, and they see tablets as an opportunity," said Allen Weiner, media analyst at Gartner. "We're about to enter a period of extreme experimentation."
The iPad-only newspaper: The most extreme example is The Daily, the iPad-only publication that News Corp (NWSFortune 500launched on Wednesday. CEO Rupert Murdoch committed around 100 staffers and an investment of $30 million to get it launched, and will spend $26 million a year to keep it running.
"Look at the massive investment News Corp. is making -- how many newspapers are willing and able to do that?" Weiner said. "The Daily is kind of a pilot program that everyone else will look to."
The Daily costs 99 cents a week, or $40 for a yearly subscription. To break even on its operating costs from subscriber revenue alone, The Daily would have to sell more than 650,000 subscriptions -- and that's without accounting for the cut Apple (AAPLFortune 500) takes for selling The Daily through its App Store.
Drawing more than 600,000 subscribers would be a gigantic feat, putting the publication among weekday subscription figures for big newspaper stalwarts -- somewhere between The Washington Post's 550,000 and The New York Times' 913,000.

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