Alphonso Labs Eyes a Freemium Strategy for Its Social News App Pulse

One of the first categories to really be rethought for touchscreen interfaces, news reading, saw a spate of innovative iPad apps in the last part of 2010 including Pulse, Flipboard, Zinio, Flud and Instapaper. Yet, like the troubled media industry, these apps are all diverging in interesting ways as they try to monetize and build businesses. Alphonso Labs, the maker of Pulse reader app, is eyeing a freemium, consumer-focused route, unlike rival Flipboard, which will need to rely more on business development and deep partnerships for its goal to reinvent brand advertising. Co-founder Akshay Kothari says Evernote's model is one ideal. That company, which has the grand vision of enhancing memory and is a place to store thoughts and other media, went down route of offering its product for free. Only a half-percent of users convert after the first month, but more than 5 percent do after two years. The free-to-play model with extra paid features is fast-becoming a popular choice for developers, both gaming and otherwise. Urban Airship, for example, surveyed more than 300 developers last month and found that 31 percent of them planned to derive their primary revenue from in-app purchases this year, up from 8 percent in 2010. That means acquiring users quickly, getting them hooked and nudging them to pay for extra features. "Getting to a million users is not that big a deal anymore," Kothari said. "It's getting the new users to become engaged. So we're tracking daily active users, weekly active users, sessions per day, sessions per week and so on." The company can also help users keep track of what they read and how far into each story they go, which could lay the groundwork for recommendations and game mechanics. He also alluded to some social and game-like features that may be coming in the next few weeks. "We'd like to make news reading more active and more social," he said. Pulse will keep its grid interface, which is less hierarchical than traditional news design. Among the other big trends the company is noticing include the rise of Android, where Pulse's download rates have surpassed those on iOS. Pulse is helped by the fact that the Android marketplace now has its own specific news category, instead of lumping news and weather together. The surge on Android devices is also fueling growth outside the U.S. for the company. About half of Pulse's Android users are in the U.S., with good figures coming in from Asia and Europe. E-mail remains the most popular way of sharing. It's three times more powerful than the Twitter or Facebook. With capital in the bank from the days when Pulse was a paid app, Kothari's company was able to be extra selective about investors. The company pulled together an angel-sized round from a coterie of venture capital firms with investors like Alan Patricof, who founded Greycroft Partners and brings relationships with big media brands, to Emily Melton from Mayfield Fund, who has experience in consumer Internet strategy.

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Alphonso Labs Eyes a Freemium Strategy for Its Social News App Pulse

Kim-Mai Cutler

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Kim-Mai Cutler