Exclusive: Economist Unveils Enhanced Tablet Edition

The Economist has launched an enhanced version for the iPad and iPhone with a subscription option, addressing major sticking points magazine publishers have with Apple.
But it’s unlikely others will be able to follow suit because most lack the Economist’s preexisting online pay model.
Many magazine publishers saw the Apple tablet as a cure for their declining print fortunes, but its benefit has been limited because they haven’t come to terms with Apple over a subscription option. As a result, most publishers are selling single issues only, at relatively small volumes.
But Apple let The Economist sell subscriptions directly because the title already charges for its content online, said Oscar Grut, managing director of digital editions for the Economist.
“What they want to make sure of is, you’re not selling something new through the app,” he said of Apple. “It’s something that’s already on the Web, and charged for.”
The app combines a few models already out there, but seems unique in how it does so. Consumers can sample a free selection of articles or buy a single issue of the full print edition through iTunes, the model most common to magazines. They can subscribe to the Economist app directly, a la The Wall Street Journal. A subscription to the app is free to current print or online subscribers, which is similar to People’s model.
With single-copy sales of the Economist app, Apple keeps the customary 30 percent of the revenue for itself. But with the subscription sales, which includes the app and online access, the Economist keeps the subscriber information and revenue.
The Economist app shows that mainstream, well-established publications with significant market share can set some of their own terms when it comes to both information and revenue, said Seth Kahan, a consultant who has worked with publishing companies on their digital strategies. “Customer information and CRM systems themselves are sources of innovation and leverage in the marketplace,” he said.
The Economist charges a premium for its content and accordingly, has been protective of it.
While raising the prices of the print edition, the Economist has restricted its online content to subscribers. As of few weeks ago, it raised the paywall again so that non-subscribers can only view up to five articles per week.
And like the print version, the app edition doesn’t come cheap. A single issue is $5.99, $1 less than the print. A yearly subscription costs $110, which is below the suggested retail price of $138 for a print subscription (but slightly above the average net price of $107).
The Economist continues to sell editions on the Kindle ($126 per year) and through digital newsstand Zinio ($127).
“Our view is that if you want to read our premium weekly content, it’s paid for, and it doesn’t matter what channel you choose,” Grut said.
The Economist took a while to get its app ready for the iPad, which hit stores seven months ago. Grut said one challenge was building a system that recognizes subscribers regardless of which channel they come through.
Another was recreating the text- and graphics-heavy Economist for the small screen. (Part of the solution was to let users pinch and zoom charts and graphics without losing the layout.) The Economist also wanted to incorporate an audio feature so that users could have the entire issue read to them.  
“You’re trying to recreate your print magazine but redesign it to make the most of the medium,” Grut said.

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