In app purchasing for newspapers: The answer to the 60 million dollar question ?

Newspapers are searching for a way to monetize their digital content, Rupert Murdoch plans to charge for all his news websites by next summer, something that didn’t seem to work well for The Irish Times, who removed their “pay wall” in June 2008.

On-line advertising revenues just aren’t paying the bills, this Observer article covers an analysis suggesting that the average print newspaper reader is worth £155 a year (£90 from price, £65 from advertising), whilst the same on-line newspaper reader is worth just £5. So in simple terms you need 31 online readers in order to recoup 1 offline loss.

Is that in any way possible, should we all pack up and go home?

So how can newspapers make money from their digital assets? One answer may be through mobile applications, Apple’s recent decision to enable “in app purchases”, supplementary content purchased from within iPhone applications, has been adopted by the Spectator magazine, their application costs 0.79 cents and “expires” after a week, and thereafter you must pay 0.79 cent for the current weekly edition. It’s an old school model updated for today’s world. You can’t ignore the cost savings here and dare I say it the positive environmental impact of reading your spectator online.

This strategy could be a lucrative play for other news titles with large amounts of multimedia content. For example, the forthcoming Guardian iPhone app could easily incorporate in app purchasing for their highly successful audio podcasts covering the premiership.

Apple also recently decided to allow in app purchasing from within free applications, previously in app purchases were only available within paid apps.

In Ireland (where I am based) the new iPhone application released by the Irish Independent newspaper seems to be doing very well in the new world. The app launched recently, sells for €2.39 and is top of the paid application chart in Ireland, which means it has certainly paid for itself already, and will be making profit from here on. It is a relatively simple RSS feed style application which doesn’t use in app purchasing, it displays 4 categorises of news: National, Sport, Entertainment and Top Stories. Is it canabilising an existing audience? Hard to tell, but I doubt it as it’s a younger more tech savvy audience that have the iPhone here and its possibly increasing the audience. Regardless its one further revenue stream to stem the hemorrhage of revenue loss from traditional papers.