Tuesday, December 4th, 2012

Flashback, 2011: Newsstand and the Ipad Are "A New Dawn for Publishers"

"Apple’s Newsstand launched with the release of iOS 5 on October 12th, and by any measure, it appears to be a big win for Apple and for publishers alike. Since the iPad took the technology world by storm 18 months ago, it’s been an interesting time for publishers with several notable App Store rejections, industry confusion about how to implement tablet subscriptions, and a fair amount of criticism of Apple’s 30% revenue share. It appears now that Newsstand is the real deal, delivering on the iPad’s promise of a new dawn for publishers. Huzzah!"

That was from November 29th, 2011, just over a year ago, and it came with the headline The Future is Bright for Newsstand Publishers.

And the American Journalism Review, under the headline "Apple's Gift to Publishers," from about the same time, said this: "News Corp.'s iPad-only publication, the Daily, vied for first place with National Geographic for gross revenue generated in the Newsstand section."

Let's actually look at some "math."

"The Daily" had 80,000 subscribers at the beginning of this year, and shuttered with what they said was 100,000 subscribers.

100,000 subscribers at $40 is $4 million dollars a year. After Apple's 30%, that is $2.8 million a year. Let's round that down to a fairly delicious $52,000 a week, or $200K a month, because some subscribers cancel and Apple refunds them, and because you should always be conservative.

So, let's say you plan to break even basically, so you don't have to pay taxes. To do that, you'll want to "spend all your money," so then say your tech team and related costs are $30K a month (haha, that is "1.5 developers and some other stuff," so that should probably be higher, because "dealing with Apple" is almost a full-time job, but hey), then you have five junior reporters, which is $30K a month if you don't give them health insurance.

Then maybe you have two editors, who are also "art directors," and a hefty freelance budget, and also someone to promote stories and the app because subscribers are your bread and butter. Then you will probably have "an executive," because someone has to do the Quickbooks and fire people. But make that executive a part-owner, so you can pay them half the amount they would really want. And probably also give equity to the tech heads and the head of ad sales, so you pay less salary and get more devotion.

Because right, you'd want an ad sales team. You could get four really cheap hardworking ad people for probably a total of $50K a month, and they could have benefits, because they will not work otherwise. There. Done. You have a successful, amazing, exciting iPad magazine, for $200K a month. Maybe. Give or take.

And you have a staff of about 15 people. Probably you could afford 17 people maximum.

You probably can and SHOULD do this! Perhaps "start small."

Until July, "The Daily" had 170 employees—ten times that number.

And yes, when you have subscriber attrition, and a big burst of your early one-year subscriptions runs out, and they don't re-up, you just lay some people off. And then you get to play the game of "try and keep growing, but with less people." So in that way the "new media business" is identical to the "old media business."


Today, "The Daily" slot in Newsstand has been taken over by "How It Works." How does it work? You tell me.

14 Comments / Post A Comment

hershmire (#233,671)

All this work done without paying for office space, computers, or whips to keep your depressed employees from dying where they fall!

NinetyNine (#98)

If only there were an article somewhere in the Awl network that was openly discussing freelancer pay rates.

Matt (#26)

If we were not part of this network, and if we had not already made an agreement with Summer of Megadeth not to divulge all of our backchannel-y information, I would be happy to share our spreadsheets with you.

NinetyNine (#98)

Really sort of takes all the "fun" out of afuncular, doesn't it?

Matt (#26)

I hope the comments over here didn't catch that nasty Tumblr bug!

deepomega (#1,720)

@Matt So which of you is the Laurel and which of you is the Hardy?

NinetyNine (#98)

BRB, doing rock/paper/scissors with Matty to see who gets to make the Burn Notice joke.

Matt (#26)

No, no, no. You're not paying attention! The second baseman's name is *What*!

NinetyNine (#98)

Dude, if you think I'm going to Google that to reply correctly, I have a website I'd like you to contribute to for nothing. Hands over whitewash brush.

Matt (#26)

Maybe I shoulda said DiMaggio?

NinetyNine (#98)

Does 'nothing' even require an understanding of basic algebra?

Matt (#26)

Say! Would you happen to know who's on first?

Markham (#237,905)

I don't think you'd want to "At least break even so you don't pay taxes" – because if you turn a profit you're still ahead after taxes. Plus you need some positive cash flow in case you want to expand, handle one time expenses, etc.

Either way this just points to the new online models for selling content are often unprofitable for the providers, and only good for consumers and marketplace operators.

At some point, something has to give.

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