Blog Post

Is the app economy killing online publishers?

A few months ago I tweeted this: “If I were a publisher I would either: a) pull my app from the App Store or b) invest all available cash in Apple (s AAPL) stock.” The latter piece of advice was probably pretty solid, if not very practical — Apple’s stock has been performing like no other in recent history.

But my former piece of advice for publishers – to pull their apps from the App Store – doesn’t seem to have resonated much, as many publishers keep pushing out their respective iPhone and iPad apps. That said, I’m betting this trend is a short-term fad that will eventually reverse, and here’s why:

The fragmented app world is a drain on development resources

The beauty of the Web is that it standardized access to information across machines, operating systems, and browsers. No more rewriting code to be Mac-, PC- and Unix-compatible, etc. Publish once on the Web, and the information will be accessible by all of humanity regardless of any configuration they might use to access it. Recently, the various app stores have again started fragmenting a world that had largely become defragmented. A fragmented dev world imposes costs and headaches on those that choose to support the various apps. That might not be a huge tax on tech companies, per se, but for publishers, supporting multiple apps will become a headache and a totally unnecessary tax, which leads me to my next point.

For most websites, the ROI of an app is unclear

A native app is a great way for developers to create functionality that’s not possible with a web page (or that might otherwise require the use of Flash in a web page). Games are a perfect example of this. For a publisher whose product is words and pictures, it is unclear what additional functionality an app can provide that a well-designed Web page cannot. Sure, it’s always possible to slap some artificial stuff on an app (and The Daily is a great example of things that can be done on a publisher app), but the question is whether those things are done because it’s possible to do them, or because they are actually useful.

I’d argue that the most useful mobile reading experience is on Instapaper, which is a clean presentation of the text with proper typography — attributes that are all perfectly achievable in a well-designed mobile website. The only two exceptions here might be: a) video and b) offline reading. The gap on both is closing with HTML5, and soon even these “app excuses” won’t be a valid reason for justifying development of proprietary mobile apps.

You can’t link — or, at least, link easily — to apps

When deciding to publish content in an app rather than a mobile website, it’s important to understand that the value of links, as we know them on the Web, is greatly diminished. Because an app is a standalone program, not a part of the open Web, linking to other pages is clunky at best. You cannot link to content on other apps. And links to websites, while possible, require switching the user to another application (AKA a mobile browser) and disrupting the user experience between articles.

You’re being held hostage on someone else’s platform

Lastly, and possibly most importantly, is the ownership of the platform on which you publish. No one owns the Web, and therefore no company can impose new rules, pricing, censorship or other surprises along the way (FCC regulation aside, of course).

When developing a mobile app, a publisher technically becomes a node within someone else’s platform — namely Apple or Google (s GOOG) — and is bound by their rules and whims. Apple’s decision to impose a 30 percent tax on all publisher subscriptions done within apps is just one example of this. The Financial Times created a lot of buzz with their decision to fully withdraw from the App Store and go all-in with their mobile Web app. Developing an app for someone else’s platform might give the illusion of a new marketing channel, but in reality it means becoming a node in someone else’s business model.

All that said, a mobile app can be a decent marketing channel, and there is value for publishers in having a presence inside the various app stores. But if you peel away all the other layers of what an app can be and focus on it exclusively as a marketing channel, then the conclusion is that an app for publishers is basically a bookmark on people’s phone screens. That’s it — a reminder to consume the publisher’s content, and a quick link to do so.

I urge (and predict!) that publishers stick to these principles after the “we need to have an iPhone/iPad/Android/WebOS/Win7/etc. app” hype passes:

  • Use limited dev resources to build a single, great mobile Web version of their website.
  • Submit a bookmark version to all the app stores of an app that launches the Web browser with their mobile Web site.
  •  Use services specific to mobile, which provide readers a superior browsing experience, tailored for the mobile Web.
  •  Alter monetization strategies for the mobile environment, opting for revenue generators that are perfected for mobile consumption.

Mobile is putting pressure on publishers to quickly adapt and successfully deliver. In a “sink or swim” environment, the hype of apps is ultimately going to weigh publishers down. There is no real reason for publishers to spread their dev resources thin, supporting multiple proprietary apps that break links and really serve someone else’s strategy more than their own.

Yaron Galai is the CEO and co-founder of Outbrain, a web-based recommendation engine. 

We’ll discuss the app economy, its rise and possible fall, and the opportunities presented by HTML5 at our annual Mobilize event in San Francisco, September 26 and 27th.

Image courtesy of Flickr user Sean MacEntee.

17 Responses to “Is the app economy killing online publishers?”

  1. All this talk about web vs native is simply based on fears for income losses. Webdesigners hate native app programmers, app programmers hate webdesigners, print designers hate digital guys, … it’s all about money, not at all about what consumers want.

  2. Anne Giles Clelland

    Thought-provoking post, Yaron. Are you open to sharing more specifically what you mean by “Alter monetization strategies for the mobile environment, opting for revenue generators that are perfected for mobile consumption.”?

  3. Offline apps like the Universal Number Generator (Android) is valuable because it is accessible through offline native app content. Not everything has to be connected through the web. However i agree that most server/client native apps can threaten or at least compete with classic online content

  4. Joakim Ditlev

    Please provide the names of 3 publishers who would need high-end features such as camera access? Features are overrated for publishing.

    What publishers should focus on is to get their content out there and make it easy-to-read on any platform. Apps – and the app store business model – have not proved it’s worth to many publishers. Yet, it looks like a lot of them are still going for that strategy – the promise on keeping a price tag on the content probably has a lot to do with it.

  5. Quote:
    “When developing a mobile app, a publisher technically becomes a node within someone else’s platform — namely Apple or Google”

    That might be true for Apple. >ou can always publish your .apk for Android Smartphones yourself. There’s also the Amazon Appstore. You’re not bound to use the Google App Store and obey Googles rules.

  6. JeffreyGarcia

    This is precisely why I only sell my apps through GiveMeApps because there I get 100% of my download revenue. Why give up any of my revenue if I am the one who created the app!

  7. In my opinion, the main reason for an app store’s existence is to provide the ability to charge people for content / apps. Today predominantly on the web, content and apps are free, are free. We are all used to it and there is no chance we will pay for it, but on an app store, it is ok. Especially content.

  8. Ouriel Ohayon

    So Yaron, you were talking indeed about mobile apps on twitter…and i must disagree with many of your points, the bottom line being Publishers need both native and web apps with a strong focus on native, but only for fast growing OSes

    So here is my answer to your points

    1. Native vs Web for publishers apps: a web app does not come as close to a native app even for simple actions and even if web apps allow partly the same. Just take your Phone compare. There is absolutely no doubt a native app is way better in every way to web apps: speed, caching, offline/rich content (you mention but it is not a secondary factor), ease of use. This is particularly clear when you want to go beyond just reading (interacting, like sharing, commenting, publishing,…). HTML5 may get there one day but publishers can’t wait tomorrow. they have to start learning today and native is the place to catch attention
    2. Can’t link to Apps: yes you can. It is called URLscheme and part of the native SDK provided by Apple. you can open an app from another app. No problem at all to do that. So from Mobile Safari you can point to your app and if you don t have it to a download page. Oh, yes links were good for native SEO but SEO does not work on mobile. you need to manage marketing differently. You need to acquire your user base differently like with any new platform (like paper vs web)
    3. People spend lot more time on native apps rather than web apps. You need to flow with user behaviors/not against. People want native apps. Why? they perform better, they are easier to get access to (app store) and they “feel” right even for very simple actions that can be performed via the web. The app store/market is the best delivery platform for mobile content. Searching, bookmarking on the home screen is still and will still be more painful than clicking an icon of a native app [every click matter 10x more on mobile than on the computer] The iPad is mostly used for news consumption and the news category is immensely popular. not being present there is leaving the space to agregators or competitors. do not ignore it.
    4. It is not an either/OR or do it all strategy. you need to have both native and web apps. You can use SDKs that allow you to port one to another if you want. the right ressources have to be allocated to at least iOS and Web app first then Android.

    The other ecosystems do not matter at all for now. No need to spread. Just focus on the 2 fastest growing OS. Most serious publishers can do that today and can afford that. Kindle will matter and needs to be looked after but it is likely to run on the same as Android.

    • Yaron Galai

      Ouriel – I agree partially with your #3 point – publishers should be in the App Store, so that they can get discovered there. That’s why I said, they should submit an app that is basically a bookmark to their mobile site. I recommend they put 0 development effort beyond that into the app.

      On all the other points you made, I think you can draw a similar conclusion for the PC. Would you rather download and install a native CNN application to your Mac (and one for every other publisher you read), and use those software applications to read the content instead of via a browser? A native Mac application should absolutely be better at: speed, caching, offline reading, sharing, commenting, publishing, etc, etc.

      Should CNN start developing reading software for the Mac and PC? Should GigaOm?

      • You typically don’t use your Mac or PC where there is no internet access. On the other hand 70% of my iPad usage happens on the NYC subway — what conceivable use would be an app that points to a website? I would simply that reading that publication and move to ones with true native apps and 100% local content storage. And looking around on the subway, there are many, many others like me.

        You are living in a fantasy world, where your customers do what’s convenient for you, rather than what’s convenient for them.

      • Yaron Galai

        Ted T – to the best of my knowledge, HTML 5 provides pretty robust page caching capabilities. If applied properly, I believe you should be able to consume a publisher’s mobile website on your subway commute.

        As for your last comment – my opinions above have nothing to do with “what’s convenient for me”. I have no skin in that game nor any hidden agenda. This is just my opinion as it relates to publishers adopting shiny new objects without fully understanding the pros and cons.

    • Ouriel Ohayon

      Yaron . it is impossible to compare the PC and the mobile. A PC does not have the same hardware capacity and is used in sedentary mode. The only best reason to have at least a native app is speed and comfort. no matter what they say on HTML5 native is still way better than web app. And it will take a while until this is different.

  9. I had been in the computer business already for several years when an upstart Microsoft paired up with IBM and introduced the first IBM PC. We thought it was a joke. What could you ever do with 5 1/2 inch floppies (no hard drive) and a word processor for a whole lot of money? That being said, the market changes, we change with it or we end up with a factory full of buggy whips. I had to change from COBOL to DOS to BASIC to HTML to iOS. Life goes on. I want the convenience of a product that I can download from almost anywhere in the world and read on vacation. I also want the convenience of selling my iPhone App to anyone who can download it from anywhere in the world. I can read **online** papers from USA, England, India, China, Pakistan etc and get a whole lot more perspective than the local fish wrapper (which has a decidedly liberal bias). Why do I need that bias? Just give me the facts. Newspapers in the USA have left their first love of “just telling the facts”. Maybe people just have gotten tired of it, and it isn’t the fact that the App is available, ti’s that the papre has tried to “change the world” (just visit any college journalism class) instead of just reporting the facts!

  10. Elizabeth Boylan

    I agree with @gokam, but I also thoroughly agree with much of the points made by the author. Apple’s stock is the only stock going up on Wall Street, it’s as good as any precious metal.

    Developer resources for maintaining multiple apps began to introduce diminishing returns with the introduction of the iPad. Anyone considering the app market in this economy should weigh this decision heavily if they aren’t doing the development themselves and a web based solution would work just as well.

    I started designing and coding apps in 2009, and although I was making consistent income from a couple of these apps, I would have had to invest financially in order to introduce more content, pay for publicity and advertising to get them beyond the $400.00/month earnings mark. My profit margin ‘might’ have been non-existent with the risk of competing with corporations that would eventually just release a competing app. I pulled a total of 6 apps over the past 2 years. These 6 were great for learning the market and understanding what choices to make on direction.

    For games, Apple and iOS remain an awesome platform to work with since there are so many users and the code can be transferred to the Mac App Store. But to be honest Apple was inconsistent in April 2010 changing significant terms in the developer agreement about what tools a developer could use in order to get their app approved. We wanted to work with Unity3D and the CEO of Unity was not sure how these terms would impact their product. As a developer it didn’t feel so great to be at the mercy of this contract. In hindsight we should have said f’it let’s just go for it. Not so easy when you have to cover your over head costs while developing a product. Then we worked with Cocos2d just to switch back to Unity.

    We’ve now made the shift away from focus on the platform to the product. We’ve downsized to 1 free app for iOS, ‘ArtCards by Elizabeth Boylan’. It’s an accelerometer driven note pad with custom ArtCards, and websites can’t do what it does as seamlessly in the context of mobile. ArtCards serves as an art portfolio piece and preview of the artwork that will be used as game content for @BigTopBallet our game.

    On a positive note, because it’s a tough economy the best apps will prevail created by developers and teams committed to creating apps people value ‘pushing native capabilities’ as gokam mentioned.

  11. You cannot match the quick response and graphical features of a native app. Can you access the camera, iCloud, etc. Web apps are great for just an “ok” experience. Apple will keep pushing native capabilities beyond what the web app abilities.