Marko Karppinen

I make digital magazines profitable at Richie.
You should also follow me on Twitter here.

The problem with your digital edition is not what you think.

I often speak to publishers whose tablet publications are in trouble. (Most tablet publications are in trouble, so this should surprise no-one.)

The typical trouble is simple, yet devastating: no readers at all. None, or a figure that rounds down to none. Less than 1% of the publication’s print readership is very common.

Invariably the publishers in this predicament blame the product; most often the technical aspects of it. Should they switch to Maggio (the publishing platform I make)? If they’re our client, should they switch away from Maggio? Should they incorporate more interactivity? Or less? Video? Audio? What?

But none of that really matters. When the problem is an inability to convert readers from print to digital editions, the pertinent product quality metric is simple: is the digital product better or worse than the print edition?

Well, is it? Here’s a list of key factors to evaluate:

Simple stuff. But, let’s say that you have a digital edition that measures up quite nicely against the criteria above, yet still doesn’t sell any copies.

What then?

I’ll bet anything that you have a sales problem. Not a product problem, a sales problem.

Adding a photo gallery, or an interactive infographic, or a set of video clips will not make your digital readership grow tenfold. Nor will swapping out your app platform or working on your long-neglected Android version.

If you have 200,000 print readers and 1,000 digital readers—these are not atypical numbers—the most likely problem is that you simply haven’t pushed the digital product much at all.

Sales. You need sales. Here’s a list of sales-y things to focus on:

If you’re like most people working on digital editions, you have spent countless of hours thinking about how to improve your product. Next time, think about how to improve the way it is sold.

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Whither IAP, or, what Apple Pay could mean for In-App Purchases

The App Store’s In-App Purchase mechanism is one of the defining features of the app economy, responsible for the bulk of Apple’s $10-billion-a-year payments to app developers.

IAP seems like a simple quid pro quo: in return for 30% of revenue, Apple makes available to you, the developer, the crown jewels of the iTunes ecosystem: 800 million accounts with credit cards, all ready for one-tap purchases.

Traditional publishers have always balked at that 30% cut, though, and changing their minds has been a part of my job description for the past five years.

Sure, I’d say to the publishers, 30% is a steep price, but the friction that IAP removes from the purchasing process would have been an even bigger cost. I’ve seen the appalling conversion rates of most payment funnels; cutting out a few steps is worth a ton of money.

The thing I also thought, but kept to myself: the key consumer benefit to IAP is the ability to transact with publishers anonymously. It’s an uncomfortable truth, but most publishers can’t be reasonably trusted with personal information like email addresses and phone numbers.

I’ve rationalized the 30% price tag with these benefits, but at the end of the day, it’s just a rationalization: Apple charges 30% simply because they can. They set the rules of the iOS ecosystem, and one of the rules is that you will use IAP.

Apple Pay, announced yesterday, is an interesting contrast to IAP. The optimist in me sees it as a sign of things to come.

Apple Pay comes with the key benefits of IAP: frictionless transactions, strong privacy protections for the consumer, and a user base that will soon number in the millions. It is backed, in part, by those same credit cards on file at iTunes.

The big difference is that Apple doesn’t charge anybody anything for the use of Apple Pay. That’s because Apple sees Apple Pay as an end-user feature of iPhone 6, not as an independent revenue source. (Update: According to Bloomberg, Apple is charging banks. But that is coming from the fees paid to banks by merchants, so the thesis about this being free for both merchants and customers still stands.)

Here’s Tim Cook yesterday, explaining why attempts at creating a mainstream mobile wallet have failed:

It’s because, as it turns out, most people that have worked on this have started by focusing on creating a business model that was centered on their self-interest instead of focusing on the user experience. We love this kind of problem. This is exactly what Apple does best.

Now, let’s take In-App Purchase and Apple Pay and compare them in a practical scenario:

A newspaper’s iOS app can sell print subscriptions using Apple Pay, get all the conversion benefits of the one-tap payment, and pay 2.9% (to Stripe or some other credit card processor) for the transaction. But if the paper offers the same content digitally, within the same app, Apple will charge 30% in IAP commission.

Nobody can claim that In-App Purchase is a failed technology. But in this comparison, IAP sure looks a lot like the “business models centered on self-interest” that Tim Cook says have doomed mobile wallets until now.

IAP has done damage in the past. Apple has repeatedly waged battle over IAP terms with companies like I can’t tell which company “won” when Amazon ended up removing In-App Purchases from the Comixology app in April, for example, but it’s the user experience that lost.

Apple’s overall business would be well served by dismantling of the IAP monopoly on iOS and allowing Apple Pay to be used for the payment of in-app goods and services. Specifically:

Then again, the Ferraris don’t buy themselves. The iTunes revenue streams, no matter how orthogonal to Apple’s primary business, may simply be too addictive for the company to wean itself off of.

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In the past year, the iPad platform grew 72%.

The big news today, a day after Apple’s quarterly results, is that iPad sales were flat in year-on-year terms: 14.1 million iPads were sold this quarter, compared to 14 million in the year-ago quarter.

Looking at the figures this way makes a lot of sense for Wall Street, as the primary interest there is the trajectory of Apple’s financials.

But for us in digital publishing, it makes sense to look at these numbers differently. After all, we’re not that interested in Apple’s financials per se. We care about the iPad as a platform for our businesses.

As a platform, iPad keeps growing at a tremendous pace. In just three months, the cumulative number of iPads sold grew 9%. Over the past year, the platform grew a whopping 72%.

In other words, a year ago Apple had sold under 99 million iPads. Today that figure is over 170 million. The platform is now 72% bigger than just 12 months ago.

This is a huge deal for publishers. Compared to the situation just one year ago, the economics of publishing on iPad are now completely different.

But wasn’t the story that the iPad is losing market share? That’s true only if we see the market as including low-end Android tablets. But Benedict Evans makes a compelling case that it doesn’t, not really: low-end tablets form a separate market, with different vendors, selling to a different audience that uses their tablets for totally different things.

Publishers’ experiences support this view. Every publisher of paid tablet content I’ve talked to says that iPad represents over 90% of their tablet business. For them, the low end Android tablets might as well not exist. Their impact has been zero.

Every data point we have points to the same conclusion: iPad is still the market—essentially the whole market—for tablet publishers. Many publishers would have hoped for more vendor diversity by now. That has not happened, not yet anyway.

But perhaps the addressable market going from 99 million to 170 million iPads in the span of a year makes for some small consolation.

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In iOS 7, the final straw for Newsstand

With the introduction of iOS 7, we’ve decided to no longer recommend Newsstand to our Maggio publisher clients. We recommend publishing non-Newsstand iOS apps instead.

Before I dive deeper into why our recommendation has changed, bear with me as I quickly go through what Newsstand actually is. It is very common in our industry to have misconceptions about Newsstand. Even people who are absolutely certain that they know all about Newsstand often don’t.

Newsstand is a section of the App Store intended for periodicals. You need to publish at least quarterly to qualify. Newsstand apps are “real” apps just like their non-Newsstand counterparts. The difference is that the publisher has decided to list them within the Newsstand section of the store.

Apps in the Newsstand section get seven unique behaviors:

That’s it. Those seven things are the only differences between Newsstand apps and apps outside the Newsstand section. It’s worth noting what’s not on the list. Many people think that automatically renewing in-app subscriptions are a Newsstand feature. They’re not. Any app can offer auto-renewing subscriptions.

Back to our decision to recommend publishers skip Newsstand in favor of regular apps, presented outside the Newsstand section.

It’s all about this bit:

Once downloaded, Newsstand publications are hidden away within the Newstand app.

This has always been a downside of Newsstand for publishers, but with iOS 5 and iOS 6, most publishers begrudgingly agreed to the bargain. Apple pushed Newsstand in their marketing, after all; perhaps that rising tide would lift all boats. The automatic downloads were genuinely useful. The free trials seemed like the way to go.

The segregation of Newsstand apps into the Newsstand folder wasn’t ever a positive aspect of Newsstand, but we were optimistic and thought that perhaps readers would form new habits around it. As an industry, we decided to give it a go. Apart from some early successes, attributable to a first-mover advantage, that was a mistake.

In 2012, John Gruber said that Newsstand is a place where apps go to be forgotten. Today the Newsstand app is much worse. The folder-like design in iOS 5 and iOS 6 has been replaced with an opaque app icon. The end result is so horrible that it’s hard to avoid thinking it was done maliciously: if someone was tasked with hiding away a set of unwanted apps, they would be likely to come back with a design that was something very much like the iOS 7 Newsstand.

For years, I’ve argued that choosing Newsstand is the best thing—the right thing—to do when publishing periodical content within the Apple ecosystem. But with the redesigned app, and with automatic content downloads no longer a being a Newsstand exclusive, the balance has finally shifted.

We think publishers should skip Newsstand and publish their iOS apps as regular non-Newsstand apps instead.

There is one final reason for this recommendation. If you publish your app outside the Newsstand section, you can always switch to Newsstand later. The opposite is not true.

Choosing to be outside Newsstand is temporary, but, as many disappointed publishers have found out, choosing Newsstand is forever.

Update: an older version of this post mentioned an eighth Newsstand-specific feature: €0.99 and €1.99 in-app price points in the Eurozone. Thanks to @teilweise and @jhogervorst for pointing out that this is another feature no longer unique to Newsstand: all apps got access to these new price tiers in June.

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The trend of unbundling is the trend of media websites sucking

The cliché that people don’t read online is wrong, but it’s true that actual long form content—the kind that requires you to spend half an hour instead of half a minute—doesn’t fare well on the web.

This is a notorious problem for print publishers whose businesses are often based on lean-back reading—the kind of long reading sessions that seem to be impossible to migrate from print to the web.

Many explanations have been offered for why this is. At the top of the list, next to the endlessly shortening attention spans of kids these days, is the idea that online readers are now crowdsourcing curation and in so doing end up rejecting professionally curated content bundles like newspapers and magazines.

In other words, when a reader follows a link to a newspaper web site and reads one article instead of the whole paper, that reader is actively rejecting the concept of content bundling and professional curation.

I have an alternative theory that is much, much simpler. It goes like this:

Media websites have simply gone so horribly wrong that nobody is going to willingly spend more than a few seconds on one.

Hence the single story—preferably a short one—as the unit of content consumption. Hence the concept of unbundling. Hence the impossibility of charging readers for this content. And on and on and on.

Benedict Evans, in a tweet, this past Sunday:

The 2 strongest trends in content are atomisation/unbundling and sealed silos within apps. This is contradictory

Atomisation is the trend on the web because it’s seemingly the only thing that works. The contradiction Benedict identified is this: bundling is alive and well in apps. Why?

I think the reason is simple. In my theory, unbundling is largely the result of a horrible amount of friction in the user experience of media websites. That friction causes huge pressure on session lengths / dwell times at typical online media properties. Make the user experience of your site nasty enough, and your articles-per-session metrics will never creep past one. Unbundling accomplished.

Native tablet apps offer a clean slate. They almost never carry the kind of user-hostile display advertising that’s typical online. They usually expect readers to pay for content. And the gestural navigation, when done right, echoes the simplicity of print.

The difference is staggering. Dwell times on native magazine apps equal or exceed those of print editions. In news apps, article views per session are often measured in three figures. Advertisers in native apps see engagement metrics that are unheard of online. The list goes on.

The web and the atomisation it brings to online content is here to stay. But publishers must not think that the transition from print to digital always implies a corresponding transition from bundles to atomic content.

Apps offer an alternative path: one where bundles and lean-back reading are looking more healthy than ever.

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If your digital magazine business isn’t the better magazine business, what’s the point?

How can you pull off a successful transition from print to digital? A good first step is to make sure that you are moving towards a business that’s actually better.

Unfortunately, when I’ve asked magazine publishers about their efforts to steer print readers towards their digital editions, the single most common answer is this:

Oh, we’re not doing anything to get our readership to go digital. In fact, we’re doing the opposite. Print makes us more money, so that’s where we want our readers.

This is the kind of answer you’ll get when a publisher’s digital per-reader economics are worse than in print. If you are in charge of a digital product and find yourself in this situation, fixing it is your job number one: trying to build a successful digital business when all your internal incentives point the other way is impossible.

Per reader, your digital edition needs to be a better business than the print magazine. The economics of this are an interplay of three things: production costs of digital, subscription pricing, and advertising revenue. Let’s look at each to see what a profitable digital edition looks like.

Production costs

When talking about print and digital editions, I am assuming a common source of content for both. The difference in production costs, then, is the difference between the cost of printing and shipping the print magazine and the cost of the chosen digital distribution mechanism.

The baseline to consider is the digital replica edition: just like print, but at one tenth of the price. Our publishing platform product Maggio, for example, is just 30¢ per downloaded issue with zero up-front investment. There are even cheaper alternatives.

If you’re open to spending more, there are two possible avenues of investment. You can invest in the content, on a per issue basis, by designing tablet-specific layouts, adding interactive features, embedding videos or building in other digital content. Alternatively, you can invest in the publishing platform itself, typically by building a custom app for your magazine.

When investing in “enriched” content, remember that an issue of your magazine is a perishable good. Any investment you make in a specific issue will only generate returns in proportion to the number of readers that one issue manages to attract.

Investing in a platform, such as a custom app, would produce returns for longer—but not forever. Expect to replace a bad app after a year and a great app after 36 months. One consequence of this is that if you need to start accounting for the deprecation of this capital expenditure immediately, the economics of the custom app path become very challenging.

The publishers that choose this route are often in the lucky position of being able to have the CAPEX part funded from an R&D black hole very loosely earmarked for “digital transformation”.

My recommendation: spend what you can, but make it a point to spend less per reader than it takes to put out the print edition. If, for example, you are saving $2 on each digitally distributed issue, even very modest digital circulation numbers will save you enough to cover the cost of a professionally designed, tablet-specific layout.

Subscription pricing

A big reason for my previous recommendation—spend less on digital distribution than you do on print distribution—is that your readers will expect you to. What’s more, they expect you to pass your savings on to them.

If a subscription to your digital edition costs the same as a print subscription, your readers will complain. If it costs more, they will simply laugh at you.

In digital, you are also competing against other digital entertainment that’s often very cheap or free. This is not to say that offering paid content is a doomed endeavor; far from it. But it does mean that the price point that maximizes revenue is lower than it is in print.

A side note: Many people blame Apple’s 30% cut on in-app payments for the lousy economics of their digital editions. Before you jump to this conclusion, you need to carefully review your own customer acquisition and servicing costs, including the transactional costs of the billing methods you support.

If Apple’s (or Google’s, or Microsoft’s) solution ends up being significantly more expensive than your own costs—and that’s certainly not a given—you should account for that in the pricing you offer through these channels. Nothing prevents you from offering better deals to customers you acquire directly.

My rule-of-thumb recommendation on pricing is simple: split your production cost savings with your readers. If you save $20 on printing and shipping, sell subscriptions for $10 less.

Advertising revenue

Full page rich media ads are more effective than their print counterparts. Per reader, they are worth more money.

Unfortunately, it does not follow that you can actually charge more per reader than you are currently charging in print. Because print advertising is so hard to measure, it’s possible that you have gotten away with overcharging for it.

Another challenge is the question of critical mass: when starting from scratch with your digital edition, it’s hard to make ad sales work in CPM terms. The transactional costs can simply be too high both for you and for the advertiser. Emerging rich media advertising standards like MRAID are changing this, but progress has been slow.

Luckily there is a simple and effective way to guarantee that your advertising revenue is at least on par with the print product: just include the print ads you’ve sold in the digital edition.

Like the whole idea of replica editions, this approach simply feels wrong to many people. And indeed, including print ads at no extra charge can make the sales of digital-only advertising more challenging. But the benefits clearly outweigh that single downside:

To recap, I’m advocating keeping costs down, sharing the cost savings with your readers, and basing your digital media product on your existing print advertising business. Yes, this approach is boring. No, it will not disrupt the market or win you awards for the most innovative tablet execution. But it will make you money.

Now, there is a thing to be said for the opposite route: the one where you come up with something entirely new and as a consequence need to start with huge costs and zero revenues.

Here’s the thing. Yes, you can try to foster and nurture disruptive innovation. You can create the kind of skunk works environment where it is known to emerge and pave the way.

What you can’t do, though, is to plan and execute a transition from your current business to a new, disruptive one. Innovation just doesn’t work that way.

Whether you’ll work on disruptive innovations in the digital magazine space or not, one thing’s for sure: your bread and butter magazine product should be helping, not hurting, your business.

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10 blog posts on digital magazines

This weekend meta-post is a sort of table-of-contents to this blog’s posts on digital magazines, including a couple from 2012.

On audience development and magazine sales

On advertising

The essence of a magazine

Technical underpinnings

That’s it for the weekend!

I’ll get back to publishing actual content next week.

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On mobile, responsive design is often anything but

On the Mac, when you resize a Safari window as small as it will go, the content area (with standard settings) will be 392x192 pixels in size. Make the window as big as it will go on a 27-inch iMac, and the content area expands to 2560x1346 pixels.

This freedom to size the window however you like means that there are 2.5 million possible browser window sizes on a standard iMac alone. Multiply that over all computer makes, models, displays and browsers and the number of permutations is endless.

This reality has shaped the whole infrastructure of the web. Specifically, it is the reason why all web content has to be laid out by the web browser, dynamically and in real time: the browser is the only component in the mix that can adequately respond to the users’ window-resizing whims.

This is what makes web design hard. As a designer, you are not laying out pages — you are programmatically specifying rules that browser engines will use to lay out pages in your stead. This is tricky because, relative to the ambitions of web designers, those browser engines have never been flexible enough, fast enough or indeed bug-free enough, and still aren’t.

But we manage. We think of HTML, CSS and JavaScript like Churchill thought of democracy: it’s the worst, except for all the alternatives. We put up with browser bugs, complicated markup and long render times because it’s the only real way we can get our lovingly handcrafted pages onto those millions of differently-sized browser windows.

But new post-PC devices are changing the equation. Your first impression may be that they just add to the already endless number of browser permutations, but that’s not really true. There’s one huge difference: tablets and smartphones have full-screen browsers, so they have much fewer possible window sizes.

Where a single Mac had 2.5 million possible browser window sizes, iPads—all 150 million of them—only have two: the landscape size and the portrait size. That’s it.

Let me repeat that. To cater for a single iMac user, you need to make sure your content works with 2.5 million possible browser sizes. To cater for 150 million iPad users, you need to support just two.

To me, this fundamentally changes the math on whether complex, responsive HTML layouts make sense. Mobile browsers are slow and that’s not changing any time soon. A complicated responsive layout can take seconds to render on an iPad. Seconds!

In a world where 100ms of latency cost Amazon 1% in sales, where half a second of delay caused Google a 20% drop in traffic, we are happily spending seconds, on each and every page view, just figuring out, dynamically and in real time, the size of an iPad’s screen—a constant that’s almost literally set in stone.

Proponents on HTML say that time will solve this issue, that devices will soon be fast enough to remove any performance disadvantage of on-device layout. I’m not holding my breath. For our products—the Maggio tablet publishing platform and the Richie Ads advertising platform—we’ve decided not to wait.

In tablet publishing, we’ve developed our own fixed-layout file format that renders orders of magnitude faster than comparable HTML. The difference is significant, even on the fastest devices. And because the layouts are fixed, we are able to accept input in fixed page formats such as PDF. It’s a huge win.

In rich media ads, we implement the emerging, HTML5-based MRAID standard. And so, for better or worse, we are stuck with HTML. Being stuck with something doesn’t make the problem go away, of course: HTML rendering is still unacceptably slow on mobile devices, and it’s our job to make things work for both the readers and the advertisers.

Our workaround is a pre-rendered, device-specific screenshot of the HTML content. We start with the screenshot as a preview, then crossfade to the HTML once it’s rendered. Our previews are typically pixel perfect, so the only difference users see is the seemingly improved rendering speed.

So for both tablet publications and rich media ads, our secret sauce is a server providing fixed, device-specific layout data. This is the technological opposite of responsive design. It works beautifully.

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The Ritual

If you think about it, a print magazine hitting your letterbox is one hell of a push notification.

Afterwards, you collect the thing, deposit it on the side table, and glance at it regularly as you go about your week.

The magazine sits there, reminding you to make time for it sometime soon. And before long you do, you pour that glass, sit down and spend an hour or two of the quality time that we celebrate magazines for providing.

All of that seems wonderfully antiquated and not just a little bit romanticized, of course. Aren’t magazines in trouble precisely because the above scenario isn’t being repeated any longer?

Well, no—not really. Most of the people who do subscribe to magazines have maintained their habit. The problems are elsewhere.

But the transition to digital is looming. That could be bad for The Ritual. A key ingredient is at risk of being lost in translation.

Digital frees us of the physical limitations of print. That is the whole point. We can do things we couldn’t do in print and we can do it all faster, better, cheaper.

But the physicality of print has an important role in The Ritual. And no, I’m not talking of a sentimental-slash-hipsterish longing for the smell and feel of paper and ink. My point is more functional than that. It’s about that time the magazine spent on your side table.

You see, as far as reminder mechanics for magazines go, physically occupying a small portion of the space you call home might be the absolute, unparalleled sweet spot.

The magazine sitting there on your side table. It’s not unsolicited. It does not feign urgency. It makes no claims about importance. But it is persistent. You placed it there, and you will see a tiny glimpse of it, every day, until it’s time for The Ritual.

We have nothing like that in digital. Nothing. After a simple push notification (if you’ve allowed and enabled one), most digital magazines are simply out of sight, out of mind, lost in the Newsstand folder, never to be seen again.

This, I think, is one of our key challenges. Because when you look at the way magazines make money, the way they engage and inspire us, and the way they do these things better than any online alternative, you’ll find The Ritual at the center of it all.

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If you hate yourself and your readers, measure pageviews

Be careful what you measure, the saying goes—it might get improved.

Today, online media is mostly measuring pageviews and, accordingly, optimizing for them. Josh Sternberg wrote about the downsides of this at Digiday yesterday, but the three examples of user-hostile design in his article are just the tip of the iceberg. He could just as easily have listed thirty different ways publications are destroying user experience, all in the name of pageviews.

People wouldn’t be doing this unless they attributed value to pageviews. But pageviews only have inherent value when advertising is sold on a per-view basis—a practice that both publishers and advertisers agree has outlived its usefulness.

Traditional web display advertising, paid per view, is like Wile E. Coyote off the edge of a cliff. The fall is past due and everyone can see it—even the coyote himself.

In our tablet magazine product Maggio, essentially no advertising is sold on a CPM basis and because of this we have no reason to optimize for clicks or pageviews. Instead, we optimize for time spent. It is a much better proxy for true reader engagement.

The interesting thing here is that the actions you take to optimize for time spent vs pageviews are often exact opposites. Like Josh’s article detailed, optimizing for pageviews can and will be damaging to user experience. Endless links and extra features obviously drive clicks and pageviews, but they also drive people away.

When per-view pricing goes away, pageviews as a performance indicator will go with it. It is simply an irrelevant data point—even as an editorial vanity metric it does more harm than good.

When you methodically optimize for a measurement, the danger is always that you are climbing towards a local maxima rather than the highest peak out there. But if the basis of measurement is all wrong, like it is with page views, the danger is much worse: you can discover that instead of climbing at all, you have spent years digging yourself deeper and deeper into a hole.

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