Major newspaper publisher plans apps to tap lucrative market on tech gadgets
March 15, 2010 by donal brown
Filed under 1st Amendment News, Freedom of Speech / Press, News & Opinion
Wall Street Journal
March 12, 2010
By Shira Ovide
At Hearst Corp., a handful of employees are cranking out what the media company hopes will add up to the next big thing.
Hearst, best known as a publisher of magazines and newspapers, is jumping into the business of developing software applications, or “apps,” for use on Apple Inc.’s iPhone. Hearst is focusing its apps on what it knows best: information, mainly in the realms of sports teams, players and celebrities, but also hobbies and topics, like coffee, Barbie and cupcakes.
Hearst eventually expects to offer thousands of apps that pull together news and photos about narrow slices of information. Dozens of applications already are available from Apple, with more expected to roll out over the next year. The apps sell for 99 cents and up for fans of the New York Yankees, Red Sox and other ball clubs, as well as for Rihanna, Taylor Swift, Coldplay and other musicians.
George Kliavkoff, the Hearst executive overseeing the application unit, known as LMK—shorthand for “let me know”—said consumers are more willing to open their wallets for news and entertainment for their on-the-go gadgets. “Unlike the Web, we’ve always trained people that everything on the mobile device costs money,” he said.
The move is the latest sign of the media industry seeking fresh business ideas for devices such as mobile phones—as well as an effort to prepare for Apple’s iPad tablet computer, which media companies hope will allow them to reawaken their digital ambitions and profits.
Hearst aims to tap into an exploding market for apps by offering thousands of choices.
Apple in 2008 opened a digital storefront for apps that range from the silly to the serious. Users of the iPhone and iPod Touch have bought more than $2.7 billion of apps, according to Flurry, a firm that tracks consumer use of applications for the iPhone and other mobile devices. Hearst believes it can sell more apps if it offers ones that appeal to a broad range of interests.
Hearst said it can create its informational apps for just a few hundred dollars of employee time. Most follow a similar template and link to information, making them less complicated than, say, a game application. LMK’s five full-time employees simply dig up the best sources of information on each topic area and feed the sources into a common template.
Hearst pays for rights to photos but not for the other content, which comes from traditional news outlets and blogs, keeping its costs down. Later, Hearst expects to add statistical information for sports teams and alerts to notify people about the latest goings-on of their favorite celebrity or team.
‘In a needle-in-a-haystack situation, better to be the haystack,,’ says one software developer.
The Angelina Jolie application recently pulled in a story from E! explaining why the actress didn’t attend the Academy Awards, a riff from pop-culture Web site Bossip about one of Ms. Jolie’s daughters, and photos of Ms. Jolie in Paris on the set of her latest movie.
Apple has been trying to clear its storefront of apps that are deemed of limited function, but Mr. Kliavkoff said Hearst had conversations with the technology company to make sure Hearst’s strategy of multiple apps would pass muster with the notoriously tough restrictions.
Apple approves all of the apps sold for the iPhone. About 70 LMK apps have started popping into the Apple app store, and Mr. Kliavkoff said LMK has sold hundreds without any marketing or promotion.
Users of the iPhone and iPod Touch have bought more than $2.7 billion of apps, by one estimate.
“The App Store is a hit around the world with over three billion applications downloaded by customers and more than 150,000 apps currently available on the App Store,” Apple said. With so many apps for sale, it’s tough for many applications—particularly those like LMK’s, without a known brand name—to stand out. Still, some software developers say Hearst’s effort to develop mass numbers of apps is a sensible strategy.
“In a needle-in-a-haystack situation, better to be the haystack,” said Josh Koppel, a founder of software developer ScrollMotion, which has created about 10,000 iPhone apps. (ScrollMotion developed Hearst’s Esquire magazine iPhone app.)
On the other hand, “Unless you’re doing something substantially innovative with the content, or bringing more content to the table than one could just get using their [iPhone Web] browser or the Google app,” Mr. Koppel said, “it’s a little bit limiting.”
LMK is weighing other pricing models. Instead of a one-time charge, LMK could charge 20 cents a month and let consumers keep paying for an app until they don’t want it anymore, Mr. Kliavkoff said.
LMK also plans to add advertising later. Marketers interested in reaching college football fans, for example, could make all thefootball-team apps free for consumers in return for ad spots.
