Publishers See Apple Newsstand Sales Surge, But Ad Sales Slow To Follow

Condé Nast is the latest publisher to claim a boom in digital magazine sales from the launch of Apple’s Newsstand two weeks: the publisher of Glamour, The New Yorker, Vanity Fair and Wired says that new subscription sales, per week, across all nine digital editions, was up 268 percent, with single copy sales up 142 percent compared to the previous eight weeks.

If other publishers are seeing the kinds of lift that Condé Nast is — and there’s no reason to think that there is something particularly unusual about Condé Nast’s titles compared to rivals like Hearst Magazines, at least at this point in Newsstand’s existence — it represents an initial validation of the demand for a separate area for periodicals, away from games like Angry Birds or social media apps like Instagram and Foursquare.

“Putting all the magazines in one place just makes the most sense, in terms of allowing easy discovery for consumers,” Monica Ray told paidContent in an interview last week. “Furthermore, the update from iOS 5 is terrific, especially the background loading. We have a lot of features embedded in our titles and they take time to load. Background loading helps ease the wait-factor. But for the most part, before, the App Store represented a wide-ranging bazaar. Now, it has clear aisles to make it simple for consumers to browse.”

The consumer numbers have been pretty strong, though it’s a long way from what the print versions of the titles do.

It’s also important to note that Condé Nast has an “all-access” plan that gives existing print subscribers free access to the tablet versions across Apple’s iPad and Google’s Android systems. Late last month, around the time of Amazon’s release of its Kindle tablet, “Fire,” Condé Nast said it had a 500,000 digital circulation, with a subscriber/authenticated print reader ratio of 50/50.

The most recent figures from Hearst Magazines show it had exceeded the number 300,000 in paid distribution for its digital editions across iTunes, B&N Nook Color and the Zinio Newsstand as of the end of September. That amount includes a combination of monthly digital edition subscriptions and single copy sales-a 10-fold increase from September last year, Hearst said.

How much will of this ultimately mean for publishers? As everyone is careful to note when announcing yet another sales milestone, the iPad is only a year-and-a-half old and these devices are hardly mainstream products. Last year, Next Issue Media, the digital newsstand joint venture backed by the major magazine publishers, produced a study on the value of tablets to magazine and newspaper publishers, and concluded that the aggregate revenue could be $3 billion by 2014. That number is considered conservative now, but it’s probably a valid estimate.

But the study was also focused strictly on subscription revenue — it did not attempt to examine the impact on ad spending, e-commerce, single copy sales or other potential revenue streams from digital mags and newspapers. So the question of how to drive ad revenue will follow the surging consumer purchase activity on tablets is now going to become a more serious consideration for publishers.

Right now, the business of tablets is mostly driven by consumer purchases, not ad sales.

“Tablets were an experiment 12 months ago; today it qualifies as a business,” John Loughlin, Hearst Magazines’ EVP/GM, told me last week. “It is a consumer-driven business, however, not an advertising business, though there is clear interest and incremental revenue that’s growing consistently.”

As standards for buying and selling on e-editions paradigm gets better established, Loughlin said he fully believes that ad revenue will be significant. “For example, I see versions of print ads joined regularly with commerce,” he said. We’re looking at how to you marry our content experience with a tablet experience and enable commerce along with the kind of premium brand advertising print is known for. The bottom line is that when you have tens of millions, as opposed to tens of thousands, buying e-editions generally, that’s when the ad dollars will be there. I’d like to say it would take 12 months, but it will probably be a little while longer than that.”

Ensuring that these rising consumer sales of digital magazines and newspapers remain steady and not just a novelty is the key for publishers’ hopes to turn it into an ad business, as print magazines’ ad pages remain flat or slightly down. There was some concern on the part of publishers that as Apple’s Newsstand grows, titles could again get lost in the shuffle, though that’s more of a fear among smaller titles. Still, by playing along with Apple and appearing on Newsstand, publishers do lose the magazine’s recognizable standalone logo on consumers’ iPads as the iTunes showcase only features actual newspaper and magazine covers.

In the meantime, Condé Nast, which publishes 18 consumer magazines, four business-to-business titles, 27 websites, and more than 40 apps for mobile and tablet devices, currently has nine digital editions available on the iPad: Allure, Brides Glamour, Self, GQ, Golf Digest, The New Yorker, Vanity Fair and Wired. The publisher is prepping iPad replica editions for Condé Nast Traveler, Bon Appétit, and Vogue will launch between now and early 2012.