The Guardian iPhone app sees 70k downloads but how will it pay its way in the future?

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[UK] We knew it was sitting pretty at the top of the paid news chart in the UK but now The Guardian newspaper has revealed that its iPhone app has seen 70,000 downloads in its first month.

Initially launched on the 14th of December 2009 and available in the UK, Ireland and US, the app has since extended its distribution to also include most European countries, as well as Australia and Canada. With much wider circulation, expect sales (and revenue) to remain strong.

That said, the app represents a one-off payment and it’s not yet known how the newspaper plans to make revenue sustainable.

A quick back of the envelope calculation suggests that revenue generated by The Guardian’s iPhone app could be in the region of £117,110 in month one, based on the app selling for £2.39 – although pricing varies across currencies – and Apple taking its standard 30% cut.

We hear that the going rate for iPhone app development in the UK can be as little as £10,000, which if true would – superficially at least – present a very healthy margin. The app was designed in-house with development outsourced to 2ergo, although £100,000 probably doesn’t even cover more than 2-3 journalist salaries. How then will The Guardian generate sustainable revenue from its iPhone app in the future?

Advertising is one obvious option, which the newspaper hasn’t ruled out, although with the app already feeling ‘premium’, ads will need to be introduced gently. Major new functionality could be made available as a paid-for upgrade. Or perhaps sections of the paper will become subscription-based using Apple’s in-app purchasing. Or maybe a combination of all three.

If The Guardian can figure this out, perhaps news can pay its own way after all.

  • Jon Moore

    Hi Steve – good article – as the product manager who’s working on it – I can say that we intend to remain true to the principle that people will pay for a great consumer experience. Delighting your audience remains the best marketing tool possible, so you can be sure that we won’t risk that…:)

    • Steve O'Hear

      Thanks for stopping by Jon. Keep us updated in the future, would be interested to know what features users are requesting.

  • David Catley

    Presumably revenue from the application itself is supplementary since the content is not unique – its more a case of promoting engagement with the brand, people are unlikely to engage with the guardian’s content solely through the application, provided it pays for itself, and drives people toward the website and the paper (with the more profitable advertising) then it has done its job.

  • Fabio

    First of all The Guardian’s app is very well done and totally worth the money (sometimes people complain for paid apps also when the price is negligible, let’s be honest). Anyway, in term of a sustainable revenue stream I wouldn’t worry too much because there’s no extra cost to produce the content circulated with the app. So I were their product manager (oh, hi Jon Moore!) I’d probably focus on making sharing not just easy, but to incentive people to do it. Well, I’d start by adding twitter (and possibly digg or other popular outlets if they have APIs) to the current sharing options (facebook and email). Sharing a link generates more visits to the website rather than to the app (I’m just using common sense here) and the website has ads and possibly other monetisation bits.
    Also, one path for the future could be social shopping, both in terms of location based shopping and virtual storefront. And I agree that premium content via in-app payment would be a good solution, given that the piece of content is really perceived as premium. Let’s say that it should be premium in respect with the current offering, not something that is free now and becomes premium along the way (no Rupert Murdoch-esque moves please!).
    IMO the bottom line at the moment is much more than the £120k in revenues so far… it’s about a very nice app with potential to become even better. They will win new readers, especially among the younger audience who doesn’t really pick up a tangible newspaper anymore if not the free press in the tube…

  • WayAnonForThis

    I bought the app and love it. Last i heard the Guardian is losing £100k/week anyway (is this true?) so it isn’t going to solve much in the short-term anyway. I think things on the horizon are the dating site and other similar communities that they will charge for eg Kids, Gardening, Cookery, Motoring – maybe some £ can come from that.

    • smiggs

      The Guardian News & Media division the Guardian Media Group lost £36.8m in the year up to the 29th March 2009. That’s over £100k per day (source their very own reporting on the subject

      I have to say as a long term Guardian reader I’m hugely surprised that they are charging for anything other than the cost of dead trees to print their traditional copy. I always assumed the Guardian was run out of Comintern’s Swiss bank account as a way to keep the socialist elite employed while they readied the revolution.

      It’s quite unlikely that they will actually seek to monetorise the content unless they indeed to put a paywall up on the website, which the iPhone should make a reasonable stab at ready anyway. I suspect they will soon be making great strives to introduce their dating site, job pages, plus their prominent web ties with auto trader and sporting bet.

      I still won’t make a profit for the year, the dead tree edition’s recent price increases would seem to demonstrate that they are struggling to generate revenue from even their traditional sources.

      • Fabio

        smiggs dude, the “I always assumed the Guardian was run out of Comintern’s Swiss bank account as a way to keep the socialist elite employed while they readied the revolution” thing is genuinely hilarious. Kudos for you :)

  • jeejeebutt
  • azeem

    It is an awesome app. Genuinely beautiful and a very competent brand extension to the Guardian Newspaper.

    As a horizon one play, it is fantastic. But does it redefine their business? Not yet, it doesn’t.

    70k sales is pretty good–as an individual product–and no doubt on a software-only basis the product will be highly profitable.

    Could the Guardian charge more for me to use it monthly? I don’t know. Will they get enough downloads to sell targeted advertising at much higher yields? Don’t know.

    My verdict: Excellent incremental app. Beautifully presented and produced. Blue ocean product to salavage the business? No.

    • Richard John

      ‘brand extension’, ‘horizon one play’, ‘blue ocean product’… how many characters long is your job titler?

  • alex grant

    Can someone tell me when it’s going to be available in Italy as I am really looking forward to getting it.

    • Fabio

      it is available indeed! I got it from the Italian store last week :)

  • Tom Hume

    It is a mandatory at this point for me to mention the (unofficial) Android app which we produced for the Guardian ;)

    My own view (and I’m in not connected with any Guardian mobile efforts myself) is that one-off sales to the degree they’ve had them demonstrate that their product is extremely strong… but they’re bound to tail off over time. Some sort of ongoing revenue, be it subscriptions, sponsorship or advertising, would be needed to keep this sustainable in the long term.

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