Will Flipboard, RSS, etc. Kill Online Advertising?

Frédéric Filloux writes at Monday Note:

The social web’s economics are paradoxical: The more it blossoms, the more it destroys value. In recent months, we’ve seen a flurry of innovative tools for reading and sharing contents. Or, even better, for basing one’s readings on other people’s shared contents. In Web 2.5 parlance, this is called Social Reading. For this, the obvious vector of choice is the iPad: it possesses a (so far) unparalleled ability to transform online reading into a cozy lean-back experience.

Filloux goes on to talk about applications ranging from Flipboard to Instapaper that provide users with ad-free, highly curated experiences. (For the fellow non-iPad crowd, I recommend TweetedTimes with Read It Later.)

In other words, between RSS feeds aggregated by mobile apps, “Read Later” features, and ad-free web curators, you can enjoy the web without bumping into ads. Great for users, not-so-great for the publishing business.

This ad-free threat explains the bold move a few publishers just made. If readers (humans) loathe advertising and favor bare-bones reading interfaces, let’s see if we can make them pay for such. That was the idea behind Ongo. This official paid-for aggregator, backed by several news organizations, hasn’t shown a great deal of progress since I reviewed it in a previous Monday Note (see Ongo…Where?). Its nice look aside, it persists in putting on the same page a story on US troops withdrawing from Iraq next to an article featuring a murderer identified thanks to its tattoos. Some editing is badly needed here…

Monday Note: Read, Share and Destroy

At the moment, three things still hold true:

1) Very few readers use browser plugins that block ads.
2) The number of readers using apps like Flipboard and Instapaper is relatively small
3) Far from leaching traffic, social media like Facebook and Twitter (and not-so-social sites like Google News and The Huffington Post) still drive a lot of traffic to sites.

But this could change, especially as tablets become more common. I’m not yet sure what that’s going to mean for publishers. Filloux worries about reduced ad revenue, which is very possible. I think blogs and other online publications have overdone it with ads and sidebars in recent years, leading to cluttered distracted messes (I’m in the process of slowly redesigning my own sites to be less cluttered). But new devices and social sharing are important driving forces for change in how we consume digital media s well.

Some things I suspect we’ll see:

1) More ads embedded into the text of articles so that they’re harder to excise (In my interview with him, Richard Metzger also suggested we’ll see more online video that makes it harder to remove ads as well)
2) More ways of tracking reader behavior off-site to feed the data hoarders
3) More attempts at pay walls

Update: In an interesting twist of events, Flipboard competitor Zite (which received cease and desist orders from publishers) says it will stop stripping ads from content and work with publishers on monetization.

Wired iPad Edition On Pace to Beat Newsstand Sales This Month

This morning Wired editor Chris Anderson announced that, after nine days, the magazine’s first iPad edition has sold 79,000 copies.

Wired’s newsstand sales average in the mid-80,000s for an entire month, Mr. Anderson wrote. Both editions retail for $4.99.

New York Observer: Wired iPad Edition On Pace to Beat Newsstand Sales This Month

iPad Publishing Sees Promising Early Returns, Will it Last?

Last week, Wired announced that it had sold 24,000 copies of its iPad app within the first day of its release. According to the Epicenter blog, Wired’s one-day sales eclipsed the total sales of the July edition of the Popular Science app, which has sold just 18,000 total apps since launching alongside the iPad back in April. At a $4.99 price tag, Wired’s app has quickly earned publisher Conde Nast nearly $84,000 after Apple’s 30% cut on AppStore purchases.

Similarly, the blog Mobile Entertainment reported today the The Financial Times, a London-based newspaper, has sold 130,000 copies of its iPad in the first two weeks. This figure is already more than one-third of the 350,000 iPhone apps the Times has sold since its launch nearly a year ago in July of 2009. The other surprising fact is that the Financial Times’ iPad app has only been on sale in the U.S. and has yet to launch in the U.K. where the paper is published.

Is this a clear sign that the iPad has changed the way people think about reading on a mobile device? Is the smaller size of the iPhone screen to blame for poorer sales versus the iPad? Or has the iPad novelty still yet to wear off? According to Mobile Entertainment, The Financial Times’ Stephen Pinches estimated that 2010 would be the first year the publication makes more from content than from advertising – a startling revelation in the publishing industry.

ReadWriteWeb: iPad Publishing Sees Promising Early Returns, Will it Last?

iPad, but not e-paper based e-book readers, may disrupt sleep

ipad ebook reader

Devices like the Kindle, the Nook (the top part of the screen that displays books) and popular e-readers from Sony use a technology called e-paper. It simulates the look of an actual printed page and does not emit light. That means, unlike the iPad, you can effectively read in direct sunlight. (Beach, anyone?)

The iPad, however, contains a touchscreen liquid-crystal display that, like computer screens and television sets, emits light. On the plus side, you can sneak the device under the covers while your significant other sleeps beside you and flip through a couple pages of a book without a flashlight.

But staring at the screen before bed could leave you lying awake. That’s because direct exposure to such abnormal light sources inhibits the body’s secretion of melatonin, say several sleep experts.

LA Times: Reading on iPad before bed can affect sleep habits

Reading on iPad before bed can affect sleep habits

Running the numbers: the best case scenario for newspapers on the iPad

New York Times iPad app

I’ll be playing catchup on a few links today. First up:

With newspapers like The San Francisco Chronicle losing $1M per week, it’s going to take a hell of a lot to more than the iPad to save the industry. In what I consider a best case (and far fetched) scenario, 7% of iPad owners have downloaded The New York Times’ paid app by the end of 2011; the NYT is generating $200k/month in advertising revenues from the platform; and they are able to charge $15/month/user for subscription fees. In this case, NYT is still only generating approximately $20M in net revenues. This would be fantastic for any new venture launching a news-based app; but does little for a company that has around $2.34bn in annual expenses (and approximately $600M associated with print operations). As the NYT acknowledges in their annual report, “significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues.” In other words, they’re not going away anytime soon. And a $20M bump in net revenues is going to mean little to nothing.

This is, of course, what I would consider the best case scenario. It is far more likely that the NYT will be lucky to see 1% of iPad owners download the app for a $15 subscription fee—and, this figure will undoubtedly drop dramatically if they charge more than $15/month. If they are lucky enough to generate $200K in incremental (rather than cannibalized) advertising revenues, they might see an increase to net of $3.4M by the end of 2011. Not a world changer.


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