For the news industry, 2010 may have been a watershed year as for the first time in history, more people got their news from web rather than the ‘physical’ newspaper per se. The news industry is plunging for 20 consecutive quarters as per David Kaplan ; it does not require much analysis to understand that the sources of revenue have to follow the consumer. Associated Press (AP), a not for profit cooperative, which is a network of press people based out of New York has seen its own revenues go down from $748 million in 2008 to $630 million last year.
AP joined hands with 40 newspapers to launch “iCircular” a smart phone based feature (currently limited to iphone and ipad users) that would offer ‘deals’ within the news app space of the phones. A synopsis of how it pans out for the users, the retailers and the news agencies may be available by the end of the year. AP is currently beginning the pilot for which neither the news agencies nor retailers would be paying for now. Macy’s, Toys “R” us, Staples, Target, Walmart and some others would be a part of the trial run on retailers side and newspapers that have joined in include New York Times, New York Daily News, Los Angeles Times, Chicago Tribune amongst others.
From the perspective of an iphone user, it may be a smart way to look for “deals” in the geographic location that they opt for, create a shopping list and find directions to the store, all through the comfort and ease of their mobile device. That’s convenient and it may be a winner for the iphone users as only people who are looking for deals can look at the inserts which reduces the annoyance quotient of those who do not want to see any.
Now from the perspective of retailers, what more could they ask for if it really works. All that the retailers look for are eyes that go rolling over the deals, anyway. So, it may be another set of audience, not necessarily new that retailers could hope bring them more sales.
While this may be cool for both retailer and the user, what can it possibly mean for news industry remains fuzzy? A recent report by Nielson estimates smartphone penetration at around 40% in US market which is on the rise. It also says that Apple iOS has 28% market share in that. It implies that the new app “iCircular” will not reach 60% of the market at all. On the other hand, AP seems clear that the target audience for this pilot run is around 5 million users who read news apps for these 40 newspapers combined. To think that in near future, this could turn around the fortunes of an industry that for the last five years hasn’t seen a positive quarter may be overkill. Although it may be a smart way of reclaiming some of the audience lost to Daily Deals, Groupons and Craiglist, but again it may only be from those 5 million target audience. In the long run, as the smart phones replace the feature phones, who knows this may become the most preferred way of shopping in America.
The ‘iCircular’ currently runs on HTML5. David Kaplan in Paid Content mentions that although the feature is not yet available on Android, that would happen over the course of time. The success of the pilot run would determine the price of the inserts. It is only the next year that will determine if the apps could reverse the fortune of a plummeting industry.