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Summary:

The Guardian’s new subscription iPhone app, which we reported on last week, has arrived in iTunes Store, joining its counterpart Mail Online…

The Guardian‘s new subscription iPhone app, which we reported on last week, has arrived in iTunes Store, joining its counterpart Mail Online in trying to eke subscription income from mobile readers…

Title Mobile web 6mth app 12mth app

Guardian

Free

£2.99

£3.99

Mail Online

Free

£4.99

£8.99

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But how much success will they have with this strategy? The Guardian has devalued itself on mobile to between four and 12 percent of its equivalent print subscription price…

Guardian format Ad hoc 6mth 12mth

Newspaper

£1 per day

£154.34

£308.69

Mobile app

Free (3 stories)

£2.99

£3.99

Mobile web

Free

Free

Free

Web

Free

Free

Free

zebra_table();

With its higher price on mobile, the Mail has reduced itself to about 17 percent the cost of its annual subscription

Mail format Ad hoc 6mth 12mth

Newspaper

50p per day

N/A

£187.20

Mobile app

Free (60 days)

£4.99

£8.99

Mobile web

Free

Free

Free

Web

Free

Free

Free

zebra_table();

Whilst that makes mobile more attractive on price than a print sub, print subscriptions are rare in Britain (only three percent of Guardian readers and one percent of Daily Mail (LSE: DMGT) readers, according to recent O&O research.

The greater potential effect may be in cannibalising ad hoc daily print sales, says Enders analyst Benedict Evans…

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{tweet_id=”24476596459012096″}

Guardian News & Media says its V1 app retains 164,000 active users from the 214,000 people who had paid a one-off fee for it in the last 12 months – a high proportion.

Let’s assume it converts a similarly high 100,000 of those to pay again per year – this would result in an additional £399,000. Nothing to be sniffed it…

The Guardian sold an average 209,934 print copies per weekday at full cover price in 2010, according to *ABC* – that’s about £55 million a year. Suddenly, mobile looks like a modest, albeit incremental, portion of the publisher’s paid income.

The extent of any lost advertising-exposed eyeballs, caused by any migration from print to mobile, may become more of a concern, and the papers remain steadfast in their free web strategy.

NB. The new V2 app is free in the U.S., where The Guardian is trying to build its audience.

Disclosure: Our publisher ContentNext is a wholly owned subsidiary of Guardian News & Media.

  1. “But how much success will they have with this strategy? The Guardian has devalued itself on mobile to between four and 12 percent of its equivalent print subscription price…”

    The above statement is true, but it misses the fact that bulk of The Guardian’s revenue from print subscribers didn’t come from the subscription price….In other words, I’m curious about the ad revenue in the app under the subscription model…

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  2. I’m a little puzzled by the maths in this piece. The Guardian publishes five days a week and sells an average of about 280,000 copies a day (most, but not all, at full cover price). 280,000 times 260 days is a lot more than 2.51m, and thus a lot more than £2.51m. Am I confused, or have you mistaken the daily sale for the average daily sale during a given month?

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    1. Joe- the latter. Corrected.

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  3. Clearly the Guardian is leading a race to the bottom on mobile. You would have thought that newspapers would have learned from the web experience where every paper has totally devalued their content so that punters expect it all for free. News Corps a valiant exception but a bit late in the day. Mobile users are arguably much less price sensitive (certainly those paying near £500 a year for an i-phone) and you would have thought that even the Guardian might have cottoned on to the fact that this is a last chance to migrate print revenues to digital and retain at least some vestige of gross margin

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  4. Paper papers and the web are different.

    What’s the cost structure of maintaining the app vs the paper?

    What are the publication costs?

    Is there room to upsell or cross sell in the future?

    Can the app be leveraged else where in the future?

    It’s early days. IMO the app is valuable even if it only breaks-even.

    …And as for cannibalisation of the paper at a low price. Consumers set the price, not businesses!

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  5. Another very useful article, thanks Andrew. As it happens, the research paper I’m working on right today (based on three years data of UK regional newspapers’ actitivities online and on mobile) indicates that many other news organisations are also repeating the often-discredited “shovelware strategies” that many follow/ed on the Web. This, as Benedict points out (and research in Sweden and elsewhere confirms), has encouraged certain consumer segments to substitute one channel for another. With that in mind, discounting new mobile products in order to build audience size is certainly a risky approach; The Guardian’s annual reports shows that growing online audiences doesn’t necessarily lead to concommitant increase in revenues. Perhaps it would be prudent for newspaper publishers to consider both complimentary strategies (such as those followed by IPC magazines, such as Living Etc) for free mobile products, while offering (premium) products that could lead to substitution/ displacement at price that fully considers the costs.

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  6. I used to buy the Guardian most days, cost to me of let’s say £200/year.
    I bought the app a year ago and now buy the paper on avg. once a fortnight, cost to me let’s say £40/year.
    I suspect the core users of the app are pretty much all former regular buyers of the print edition. Looks pretty unsustainable to me.

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