FT Declares Independence (from Apple) Day

Just as Steve Jobs was wowing the Apple WWDC with next-gen iOS plans and Newsstand auto-updating of news subscriptions, the Financial Times was putting the finishing touches on its news release. In FT style, the release itself is understated and subtle. Overall, though, read it as one major news publisher — and one of the two most successful in digital subscriptions — declaring its independence from Apple. The timing isn’t accidental: As of June 30, the FT’s ability to sell in-app subscriptions within iTunes, using its own e-commerce system, retaining all the revenue and customer data, vanishes into history. As of July 1, Apple’s new subscription policy takes effect, with the New York Times, Conde Nast and Hearst, among others, moving into the store and paying the Apple toll.

The FT move isn’t an iron stake in the ground, encased in concrete. It’s more like a moveable post. It can be moved, like a football (American) yardstick up or down field, depending on market experience.

The FT’s release heralds for its first-in-the-news-biz innovation:

FINANCIAL TIMES FIRST MAJOR NEWS PUBLISHER TO LAUNCH NEW BROWSER BASED APP FOR TABLETS

In bullet points, it then details the consumer benefits of the new “browser-based” app, including:

• “Reading offline – saving a shortcut to your home screen so you can read it offline, at any time, just like one of our existing apps

• Web browser access – no download needed

• All access – one registration or subscription will offer customers access to FT

content through a range of devices or on a PC

• Speed – the new app offers improved performance

• Automatic updates – instant product improvements with no need to download

new versions of the app

• Specific to smartphones – a completely new and improved design, inclusion of

images and FT video content, a new currency converter

• Specific to tablets – new content from FT Blogs

There are many real benefits there. What the release says between the lines, and how it will be read in Cupertino: And we no longer need Apple’s proprietary apps to build our digital subscription business, thank you.

There are two converging tech worlds here. One is the Apple world of native apps, as in iOS, which fuels iPhones and iPads. Android and HP’s (nee Palm) Web OS are similarly native apps. The other world is the emerging world of HTML5. We first heard of HTML5 as an alternative to Adobe’s Flash as Apple excluded Flash from its products. HTML 5, though, has proven to be a strong foundation for next-generation digital product development (“The Newsonomics of Apps and HTML5″). HTML5 is also the basis for web apps, and it is web apps — those browser-based apps the FT is trumpeting today — that are now providing tech and business competition to native apps.

While many major publishers are now developing both native apps — especially in iOS, given Apple’s market share — and web apps, straddling both worlds, the FT is the first to strongly favor web apps. FT.com Managing Director Rob Grimshaw told me Monday that the FT will continue to build some native apps (iOS and Android), but that the introduction of new features will be done first on the web apps and then, weeks or months later, for native apps. The FT is no longer doing parallel development; it’s betting business growth on web apps.

Why? Well, for one thing, it’s cheaper. Grimshaw says the explosion of the app world enabling mobile products is costly, with the FT increasing development costs more than 50% since the recent dawning of the age of Apple (and Android) mobile products. It can take months, he says, to build each new proprietary native app, and it will only get more complicated as the market sorts out the Apple/Android/HP/Microsoft (Windows Mobile 7)/Blackberry Rim mobile world. So, the FT’s new web app will be the main focus for the company, as it tries to convince customers that the web app experience is as good as the native app one, and offers other benefits to boot. (Other companies, including the New York Times are building on web apps first, then wrapping native app shells around them, economizing to some degree, but still doing building out both kinds of apps.)

The business benefits of web apps for the FT, and all other publishers, is already clear. Web apps, available through a browser — an open platform, after all — enable the publisher to maintain control and independence. The FT can charge what it wants for its web apps, and for all-access (including print) subscriptions, and keep all the money, not having to share 30% of it with Apple or anyone else. It can use its own much-invested-in e-commerce and customer management systems, gathering whatever data it wants from customers, not having to argue with Apple or others about it.

It sounds like a dream come true: cut costs and maintain control of the business. The risk: What will the FT — which won’t be selling digital subscriptions through Apple’s stores — miss out on? What about the lead generation Apple’s 200 million registered (with credit cards on file) users can offer? That’s one potential downside, finding its competitors, including the Wall Street Journal in iTunes, but no longer the FT. Another: what if readers — we who have been lately conditioned to believe in the miracle of sprightly presentation of apps, as compared to the mundane “online” world — don’t take the web app jump?

Grimshaw, who sportingly points out that this is a pro-FT, not anti-Apple move — “We don’t want to be seen as squaring off against Apple” — is comfortable with data that supports his decision.

First off, a little more than half of mobile users — smartphone and tablet — access the FT through the mobile Safari browser already, a number he says has been consistent over the months. That usage should be bolstered as the web app experience and presentation improves with the new launch.

Second, only 15% of the FT’s digital subscriptions — now totaling 224,000 overall, out of combined print/digital circulation of 605,402 — are currently coming directly from mobile devices, though most of them do come through Apple. Many FT subscribers add on mobile to their web or print subs. With more 85% of digital subs clearly coming from outside the world of Apple, Grimshaw believes the risk is low.

So what does the FT move mean to everyone else? That’s more nuanced.

Consider two points:

• Build-out: The FT can do what it is doing today because of what it’s done for more than 10 years. Charging for content since 2002, it’s built out impressive systems in cross-platform authentication, e-commerce, customer management, content management and analytics, coming the closest of any news publisher to becoming Amazon-like in running its business (“The Newsonomics of the FT as Internet Retailer“). Only the Wall Street Journal comes close — in some areas — to that build-out. Without that build-out, most news publishers are far more reliant on others, including Apple, to jumpstart their mobile businesses.
• Tablet-forward: Grimshaw makes the point of the FT being “ahead” of the customer, in the tablet/mobile market. The company isn’t fooling around with low-cost, “replica” tablet products. Among a half dozen top global news publishers (among those “Digital Dozen” I identified in the Newsonomics book), it is already into successive generations of tablet products — now built on the faster-to-market web app strategy — and that gives it something strong and tangible to sell to readers through the browser. Most publishers don’t have their products ready, too focused on “waiting for the market to develop,” a strategy we’ve seen repeatedly fail for news companies. If they do it again with tablets, it’s like a horror sequel; Saw 8?

At best, the FT moves acts as a counterweight in the marketplace. Given news of the Apple’s latest innovations (good visual rundown in Mashable) with the new iOS, it’s clear that company isn’t slowing down; in fact, it’s Newsstand auto-update directly blunts one of the FT web apps advantages noted in the release. Yet, the question of where paying customers, new core readers, especially among those under 50, will come from is a big one. Yes, Apple may drive them to news publications new and old, but so will Facebook, Twitter, Google and Microsoft. The FT aim: build a business with lots of partners, but maintain control of it, not farming out bits and pieces here and there, subject to the data whims and revenue share usuries that can develop. That’s a laudable goal, and once again, the company is offering the news and magazine industries both new models and new tests, with the learning valuable to all.

1. 

   david says:

   June 7, 2011 at 3:33 am

   just tried the new ftapp – works ok but do not close the browser and try and reopen from the home page icon to read offline, first message is it can not open app without internet connection!
   anyone else have this issue, it did say it had downloaded content for offline viewing
2. 

   Miguel says:

   June 7, 2011 at 6:21 am

   Hi Ken,

   Some Spanish media launched last year a kiosque (called “Orbyt”) that included big magazines and newspapers and claim to have reached 27,000 subscriptions. They are trying to bypass Apple through that plataform with some (but slight for now) success.

   Do you think the kiosques (Orbyt seems the more advanced but the French will become probably even more this year)will bring them the same independence from Apple than the Web apps?

   Regards,

   Miguel
3. 

   Ken Doctor says:

   June 7, 2011 at 9:07 am

   Miguel: The primary route to digital circulation should be through a title’s own brand, own site, own products. It is current customers, extending their relationship, who form the core here. Then, it seems to me, the big question for everybody is where do the new people — especially younger readers — come from. They’ll certainly come from iTunes, Android stores+, but will also get sent by Facebook and by industry portals. Portals, like Orbyt, can succeed in being a #2 or #4 driver of new business, depending on how much share of public mind they generate. Then, there’s the question of how much the Orbyts — or US magazines’ Next Issue Media — cost compared to how much they yield in new subs. It’s all in those metrics, and we’ll watch them over the next 12-24 months. Ken
4. 

   Keegan says:

   June 7, 2011 at 9:21 am

   Hi Ken,

   I thought that Apple wouldn’t allow publishers to sell subscriptions directly to consumers. Does FT get around this by not offering its Web app in iTunes?
5. 

   Ken Doctor says:

   June 9, 2011 at 9:33 am

   So my delay in answering has now been trumped by the news. Publishers could always sell subscriptions directly, as the FT and WSJ have done. The questions have been — changed today — how much they had to align the offers they made on their own websites with what they offered through Apple. Now, that’s in a world of change.
6. 

   Miguel says:

   June 9, 2011 at 10:32 pm

   Thank you very much for your crystal clear explanation Ken. I have subscribed to your Web and I expect to learn a lot.

   Regards from Spain,