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February 03 2011

15:30

The Newsonomics of apps and HTML5

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

Apps are all the rage, with The Daily’s taking center-stage this week. With tabletmania sweeping the country, you can almost hear the howls of publishers across the country, as they implore their IT chiefs: “Get me an app, pronto!” Consequently, there are many busy hands at companies like Mercury Intermedia, Verve, Mediaspectrum, Bottlerocket, Mercury Intermedia, DoApp, WonderFactory and the New York Times’ Press Engine operation, all of which are meeting the demand.

Apps are a wonder, a come-out-of-nowhere phenomenon that Apple invented for the iPhone and has been perfecting ever since. Apple just passed the threshold of 10 billion app downloads, and has spawned an entire new industry of entrepreneurs and rival (Android, Blackberry and Amazon) stores.

And yet, if you talk to tech people at the tops of news companies, they don’t focus mainly on apps. They talk about HTML5. If apps are the popular phenomenon of 2011, publishers’ on-ramp to digital reader payment, HTML5 is the future, they’ll say. And they are rapidly building the foundation for that future now.

I’m far from a tech expert, but I have talked with enough people to know that the unfolding behind-the-scenes drama of app and HTML5 development is an important one, vital to the future prospects of the news industry as it forages for new sustainable business models and forges new digital products for the mobile age. So let’s take a peek at the interplay between native apps (those we know from iPhone and iPad  innovation) and HTML5 apps (those quietly being developed in great number). Most importantly, let’s begin to explore the newsonomics of these technological changes.

Beyond Apple vs. Adobe

Most of us non-tech people first heard of HTML5 when Steve Jobs told the world last April why he wouldn’t allow Adobe’s Flash in his apps. The announcement was played by much of the press as an Apple vs. Adobe power struggle, but technologists tell me that Flash had had its issues for awhile. It made Google search engine optimization, key to everyone, difficult — and then Apple’s very public non-support gave a strong push to the alternative of HTML5. Yet the handwriting was on the wall. “We are abandoning Flash as a way to solve problems — with its coding and weight issues — for HTML, Javascript and CSS [cascading style sheets],” says Rob Covey, senior vice president of content and design of National Geographic Digital Media.

Now companies, from The New York Times to NPR to National Geographic, are rapidly building out both staffs and products based on HTML5, “rethinking interactivity,” Covey puts it. They’re also determining how that new, expected, pervasive interactivity — witness The Daily’s debut — will be accomplished most efficiently. The technology, they say, is the essential foundation for next-generation products, web and mobile, more elegant and faster than previous HTML in its presentation and more flexible in its implementation.

One big benefit: the browser-delivered HTML5 app experience is remarkably like our gee-whiz experience of Apple’s native apps. “The big deal here is is that there is no latency,” says Guy Tasaka, a New York Times Company and NewsStand alum, who now heads Tasaka Digital, a tech consultancy to news companies. That means that the fluidity we’ve all come to love about apps is built into emerging browser-based applications. It also means, as Tasaka emphasizes, “the sense of a beginning and an end…. HTML5 apps give the user a sense of a package.”

For a good tour of these apps, check out Paul Miller’s recent Engadget piece, which both describes the phenomenon and provides screenshots of HTML 5-based sites from Flixster and Amazon to the Huffington Post, USA Today (even with one for Google iTV) and the New York Times’ Times Skimmer, updated from an earlier version produced two years ago. Use these pages and you get a similar sensation to that of Flipboard’s on the iPad. (Flipboard CEO Mike McCue talks with Om Malik about HTML5+ here.)

So, in effect, the coolness of apps can be replicated, more or less, through the browser-based apps.

The app conundrum

The impact of an app-like browser experience is a big, and multi-edged, one.

On the tech level, it means a major re-training of staff in HTML5, a process that began more than a year ago at The New York Times, says Times CTO for digital operations, Marc Frons. (The Lab talked with Frons earlier this week about the paper’s new article recommendation engine.) “I knew HTML5 would have a major impact, but it has happened faster than I thought,” he tells me. Frons says much of that training, a reskilling really, is done — and that the company is well on the way to using HTML5 as the basis for most of its digital development. Rob Covey says that the retraining issue is a nuanced one, a smaller challenge with savvy developers ramping up their skills, and larger one for website producers used to using more basic coding to create pages.

On a business level, it creates a conundrum.

Steve Jobs not only created an unexpected revolution with apps. He also proved that people would pay for them. Indeed. Analysts say this new (native) app industry generated $5.2 billion in 2010 and could hit $15 billion this year. The great majority of that revenue is non-News, of course, but news publishers have begun to build their “paid content” hopes on apps nonetheless. The Guardian, The Washington Post  and CNN are among those charging small subscription prices for smartphone apps, but the big expected payoff is coming this year, as many news publishers see tablet apps as the route to cementing paying digital relationships.

Why? There seems to be some mental toggle that consumers do, swapping their demand for “free online” for a willingness to pay for mobile apps. Maybe it’s the perceived freedom of mobile. Maybe it’s the sense that we are buying something tangible — an app, a product — and making it our own on the smartphone or the tablet. Maybe it will last; maybe it won’t.

A balancing act

Yet if news technologists are right that browser-based HTML5-powered apps can deliver great experiences, then why do we need native apps? Some will tell you that apps are just a front, a way of productizing something that their new browsing experiences can deliver just as well. The power is in the code, not the app. But will readers pay for something they don’t own? Maybe apps will just become shells for delivering HTML5.

Which brings us back to the tablet. On the iPad, we can both consume news through an app and through a browser. Publishers report, among early adopters, a range of experience as to how much access comes via one or the other. As various paid tablet models go forth, this question may become a big one.

Publishers have to wonder: Is it the romance with discrete, ownable apps that consumers are willing to pay for, or is it the wider experience? We can see, in the makings of Apple’s evolving publisher subscription policies, an understanding of this dilemma. That may be why Apple is forcing news publishers to restrict browser access to news if they want to retain their direct customer relationships with readers — and continue to offer enabling apps through iTunes. There’s a balancing act here, in the uncertain interplay between native apps and HTML5 apps, as both publishers and Apple try to hedge their bets.

“Give it a year”

For now, it’s a twin development path. Apps are still a big news rage in 2011 — most would pay the price of admission to both the tablet and the paid reader content games — so the app creation companies are doing land-office business, and big news companies are creating apps even as they focus increasing peoplepower on HTML5.

Yet the promise of next-generation (later 2011-2013+) user experience seems solidly rooted in HTML5. That twin development is costly, a headache for smaller publishers, and still another factor separating out the big news boys — the Digital Dozen I identified in the Newsonomics book — from the rest of more local, smaller, more struggling news companies. Further, it’s just one more example of how the future of the business of news is rooted in technologies, from HTML5 to vastly improved analytics, which, among industry leaders, are now starting to drive strategy and execution.

In the end, we’ll see technological possibility and business heft mix and match in unpredictable ways. One technologist suggests that “application of the web using HTML5 is just a phase. Websites will eventually surpass apps in readability and usability as designers and technologists combine the best features of an app with the immediacy and depth of the Web.”

It’s hard to know at this point what that quite looks like, but, as he says, “Give it a year.” Then, though, business realities will determine how stuff gets built and sold. Remember those 10 billion downloads? The new app store ecosystem — not just Apple’s, but Google’s, Amazon’s, Palm’s and Blackberry’s — will drive some of that decision-making, as well.

[Image by Justinsomnia used under a Creative Commons license.]

May 07 2010

17:42

DoApp Wants to Dominate Mobile Apps for Local Media

The buzz surrounding mobile and tablet apps is deafening. Media companies of all sizes are considering how mobile apps might help a hurting bottom line, leading them to consider mobile ads or paid apps. The We Media folks even threw a one-day Tablet Throwdown so media companies could show off their iPad apps and talk about possible business models.

But what's a local media outlet to do? Apps are costly to create, and you need to make them for iPhones, iPads, Android, Blackberry and more.

Into that void step the folks at DoApp, a self-funded startup in Minneapolis that has transformed itself from a utility and game app maker into a partner with local TV and newspaper outlets who want news apps. In fact, DoApp says it has 120-plus local media apps built and a total of 185 signed on.

What makes the startup so successful in getting local media outlets to use their services? DoApp CEO Wade Beavers told me it's the low cost charged for apps that run on multiple platforms. He said DoApp typically charges media companies $750 to $1,000 per month, with a split of ad revenues, and says some outlets are already turning a profit based on that arrangement.

wade beavers.jpg

"We build them an Android, iPhone, and even a Blackberry WAP [site]," Beavers said. "It's very affordable. We've heard a lot about media companies in financial trouble so we said, 'Let's make this a no-brainer.' They pay hundreds of thousands of dollars for content management systems. We're a mobile content management system and they're paying a fifth or even a tenth of the price."

While DoApp made a name for itself with utility apps like MyLighter (turning your iPhone into a lighter), the startup has made local media a focus with its Mobile Local News platform ("The Best Mobile App You Never Had to Build"), and a budding local mobile ad network, AdaGoGo. But DoApp faces serious competition from Apple's own iAds network, as well as various app developers such as Verve Wireless, which has worked with Hearst, Cox, Belo and the AP.

I recently talked with DoApp CEO Wade Beavers, who previously worked at IBM in user experience, and founder Joe Sriver, who worked as the first user interface designer at Google, to hear more about how their service works, what they are offering publishers, and their view on geo-targeted local mobile advertising. The following is an edited transcript of our phone conversation.

Q&A

Tell me about how your company got into creating mobile apps for news organizations?

Joe Sriver: The company's roots are back in '07 [when] I started a company called PagePal. It was a website widget development company ... We shifted our focus from widget development to mobile development. And that's just when the iPhone SDK came out, and at first we were trying to get our feet wet so developed some games and utility apps.

We created MyLite and MyLighter, which creates a virtual lighter, and they were two of the top downloaded apps in the App Store for '08. We did some work with Sony BMG for their artist David Cook who had won "American Idol," so we did an app for them. At first we were seen as an iPhone gaming company, but we knew it was just to [build experience] on the platform, and we would do something bigger. We had contacts at WCCO, the local CBS affiliate here in Minneapolis, and they wanted to get their content delivered on mobile. So that got us into mobile local news, and we teamed up with another group to deliver journalism content from TV stations or newspapers on mobile devices. Our Mobile Local News product has had about a year of development on it, and we've been able to achieve most popular status for the number of apps we have for local TV stations and newspapers around the U.S. We have the most apps out there among our competitors.

So how many local outlets are using your services?

Wade Beavers: We have about 120-something in the store and about 185 signed, so another 50 or so coming out to market. I can tell you that on a daily basis I'm getting three to four calls from companies who want this service. About a year ago, when we talked about local mobile, a lot of them were intrigued by it, but now they're scurrying; they're feeling like mobile is definitely an important point for distribution. A year ago, we had to do a whole lot more convincing. Now we're getting calls from smaller local properties. I have one down in Mississippi, where the town's entire population is 10,000. I was surprised.

When we started the Mobile Local News product, we saw the handwriting on the wall. I'm 40 and Joe is in his mid-30s, and we have employees in their mid-20s, and I see the lack of them using print regularly, and the way they consume information is asynchronous -- 'when I want it.' It's hard to get people to sit down and watch the 6 o'clock or 10 o'clock news, and it's hard to get people to take the paper. You capture everything in nuggets of information, and that's when we said mobile makes sense because the phone is such an appendage to people, it's not even funny. You take it away for a day and people go through withdrawal.

Sriver: There's a lot of news aggregation sites like Google News, but for me, I still want to know local news, and the local TV and newspapers have a trusted brand that they've been developing for 50 years or more. There's still a need for truly local news.

How does the business model work? If a news property wants you to develop an app for them, how do you charge them?

doapp ad.jpg

Beavers: We have two models we work with: One is a subscription model with an ad revenue share; or a straight revenue share with limited monthly costs to help them get going. But the reason for that is we built an ad network called Adagogo, with geo-targeted ads we can serve. When people see it working, their jaws just drop open, because we draw a circle on a map and say that when your app is open in that area, your ad will be served. When you have that kind of detailed functionality it's pretty impressive, and we have digital coupons that can be shared on Facebook and Twitter with one click. So they get it.

Adagogo is something we want to grow; that's our business model. What we got tired of was people built ad networks like AdMob, and then they let developers build apps, but there's a true disconnect, because ad networks don't understand how to make apps. And app developers don't understand how to integrate an ad. We know how to do that. So when [Apple CEO] Steve Jobs says that mobile ads suck, we say that we've been doing this for a year creating a great experience.

So is it a plug-and-play platform so publishers can decide what to put into the app? Where to put sports, weather, etc.?

Beavers: Exactly. They can create it and move things around and decide what is a priority and not. We also let them change the navigation color. It's scalable so they can add categories on the fly without having to re-submit to the App Store. We realized that news and information changes so much that we had to build this scalable. Before we built ours, we weren't the first in market, but we did our homework and said, 'How do these news outlets work?' We found out that they're not technical people, they're writers, they have different jobs, so we knew this had to be easy. If it wasn't, then you're going to run into all kinds of problems. We even created a 'feed cleaner' where we could take a feed with a photo image that would be too large and compress it on the fly so it could go through the data network faster.

joe sriver.jpg

There were things we learned along the way to improve that experience. We definitely didn't want to do -- what many competitors have done -- which is throw a WAP [Wireless Access Protocol mobile website] inside of an app. We didn't want that. I commend Apple for putting the kibosh on that because you're not even using the phone the way you're supposed to. Why don't you just make a WAP, why are you making an app? We have geo-targeted weather and traffic for cars. We built things that were useful for having on your phone.

Sriver: The main point for newspapers is that it would integrate into what they already have. So they have RSS feeds on their website, and they can simply add those RSS feeds into our back end and they don't have to do any extra footwork. We use what they already have, and it's easy to get up and running. We can usually get their app into the store in 30 days or less -- and usually it's less than 15 days.

Beavers: We also added user-generated content so people can take a photo or a video right within the app and submit it within the app. And no one was doing that besides CNN. We do it on a scale of 100-plus properties. And we do it on Android too. When we did that, we should have promoted it more. The stations love it. Most of what they get is weather and local sporting events. They'll get their traditional inappropriate things [laughs].

Does it cost different amounts for each platform, or does one subscription fee pay for all of them?

Beavers: It's one cost for all the platforms. We decided that as we add more functionality, we're not going to itemize that. User-generated content or geo-targeted traffic -- we added those in one of our updates and everyone can use it. They can just turn it on, and we don't charge extra. We think of it as an ongoing thing and we'll keep improving the product. We did nine updates in the app in the last 12 months, and they were all major updates, not just bug fixes.

espn chicago.jpg

Everyone talks about Pandora. That's single-handedly created a competitor to local radio. News properties need to figure that out, too, because the New York Times announced it would go into local markets, and CNN is trying to do that as well as ESPN going into cities and having ESPN Dallas and ESPN Chicago. So local news outlets need to start thinking about ways of using new technology or they're going to be challenged. Their one advantage is local and they better start providing that or others like CNN will.

Do the outlets set a price for the apps if they want to charge?

Sriver: In all the ones we've done, we say that we recommend you make them free, and ad revenues is where they'll make their money. Paid walls are a big issue, and a lot of them want to charge. I think charging for the app is fine, but what I've seen is that when people put up paid walls your number drops immensely. Could you make that up by giving it away for free and getting ad revenues? Yeah, you would tend to make more that way. Unless you have really unique content.

Beavers talks about who DoApp considers to be competitors in developing apps for media companies:

When these local news outlets first went online, they used providers like WorldNow and IBS to help them develop their websites. A lot of the sites looked similar. Is that the same problem with these apps, that they look cookie-cutter in design?

Beavers: I would say that's true, and with our design, the navigation is the same. But they can definitely brand it differently, they can change the color, but it does have the same feel when you open the app. But you know what's funny? If you look at all the other news apps, they're all the same because they're using Apple's SDK. They have five buttons on the bottom -- four are categories and then you have a 'More' button. We wanted to do something different, and everyone says they love our navigation design.

Sriver: The other point is that the percentage is very low of people who download the app from the Daily Herald as well as WCCO and someplace out in California. For an individual user, they probably don't know that a sister station in New York has the same interface and they wouldn't care.

Beavers: If someone wants uniqueness, we can do that for them if they pay for it. But I always tell them there's a cost for that. There's more we can do for a fee. But you know what's funny? The content is king. What they provide is the key. There are some apps that are good and some that are bad based on the fact that some don't provide good content and others do a great job.

People have complained that some apps don't allow comments on stories or don't have outside links to the web. Is that something you leave to the publisher to decide to include?

Beavers: There's about 40 or 50 different commenting technologies out on the web. Every time we talk to a group, they ask whether we can include those. But who's going to monitor and manage the acceptable terms and what people put in there like expletives? Otherwise we have to tie into all those technologies. We can for a fee, and most of them say they don't want it.

Sriver: The other thing is the form factor of a mobile device being so small and it's difficult to type on. So that might thwart someone from commenting because it takes people so long to type. With the iPad, that might be a feature we want to integrate because the keyboard is much bigger. So we might circle back on user comments or interactive elements. Outside links work, and publishers can put those in there. We launched a light version of the browser within the app, and technically they could do commenting the same way if they wanted to. A link could bring up a browser session to do that, but no publisher has asked for that yet -- but they could.

Beavers talks about how he thinks there isn't a problem distinguishing between advertising and editorial on mobile apps:

What kind of ads do you offer? Interstitials, roadblocks, rich media?

Beavers: We do, and we're adding more. One of the things we're working on is a splash interstitial. We have billboards, we've got banners and we integrated ads into RSS feeds on the fly, which is patented technology that we have. Video pre-roll ads are the next one we'll be rolling out. It's one of those things that a lot of people think they want, but so far with the video numbers on mobile across news it's not as high as viral video where people watch the kid in the back seat who came back from the dentist's office.

Sriver: The other thing about ads is that they can get annoying for the user if a lot of these ads from AdMob are national ads. If I'm reading a local article about a sewer system, and there's an ad to download [a game] that's not relevant for me. But if I see a local ad about cleaning your sewer or it's a time-based ad at lunchtime with a local restaurant ad that comes up with a two-for-one deal ... I would feel better showing relevant ads, which would ease people's hesitation to put ads in the app.

Do you have people buying ads through your network, or are outlets selling ads into their apps? How does that work?

Beavers: We end up doing both. We provide the path for outlets to sell locally, and we also have an opportunity as we are negotiating some national ads for people. But we also have a self-serve component, so any advertiser could choose what app they want to be in depending on geo-location.

Sriver: Right now, if you download our apps, you'll probably say that the ads aren't relevant. But it's a gradual process where we're building up the Adagogo network on our side. In the next six to nine months I think we'll gain more traction for local ads. The Denver station and the station up in Seattle are selling local ads, but once we release the self-serve ad service, local mom and pop shops can come in and advertise their stores and the local aspect will...

Beavers: The other part is that because they can sell geo-targeted, you may get the [Minneapolis CBS TV affiliate] WCCO app. You're in San Francisco and if you open the WCCO app, you'll get national ads or geo-targeted ads for that area because WCCO will have local businesses, but businesses will be able to choose where ads can run geo-targeted. Research has shown that 50 percent of your transactions are done within a five-mile radius of where you live and where you work. So why wouldn't an advertiser want to serve ads based on geo-location? It makes sense.

Sriver talks about the difficulty in finding out market penetration for apps in each locale:

*****

What do you think about DoApp's local media apps? Do you use them, or have you contracted with them to develop apps for you? Share your experiences in the comments below.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

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