Are Mobile Apps Worth the Investment?

By Guy LeCharles Gonzalez, Chief Executive Optimist, Digital Book World

Dr. Horrible iPhone App

Dark Horse has always attempted to work with great creators in order to create great stories. Over the years, we have been successful in taking those stories into other media. We have always been on the cutting edge of technology, and our new iPhone relationship allows us to reach a whole new generation of readers.

Mike Richardson, President, Dark Horse

Mobile apps are all the rage right now, and with over 27,000 book-related apps currently in the iTunes App Store, Books have recently leapfrogged Games as the largest category.

Today, the top paid app in Books is Dr. Horrible, a digital adaption of the one-shot comic book based on Joss Whedon’s “smash-hit musical” Dr. Horrible’s Sing-Along Blog. The original 40-page comic book published by Dark Horse last November had a cover price of $3.50, and saw an estimated 25,326 non-returnable copies ordered by comics retailers, representing approximately $44,000 in revenue based on a 50% wholesale discount. The iPhone app, featuring 124 full-color screens and developed in-house by Dark Horse, sells for $0.99.

With Apple’s 70:30 split, they’d have to sell more than 63,000 downloads to match the $44,000 in revenue for the print version, though the expenses are presumably lower for the app so the profit margin is likely higher.

When you factor in Dark Horse’s long history of direct engagement with their readers, the prominent visibility they give their apps online, their ability to promote them on a regular basis to a highly targeted audience via their monthly comic books, plus in-house development of apps — which means they’re not splitting revenue with a third-party developer — their program would appear to be a very worthwhile investment.

But what about traditional publishers, the majority of whom lack most (or any) of Dark Horse’s advantages, but are nevertheless tripping over themselves to jump on the latest shiny bandwagon?

[Sourcebooks publisher Dominique Raccah] focused on basing iPhone apps on Sourcebook’s baby-name titles (the house has about 20); the apps became a profitable niche. Sourcebooks now has about 58 iPhone apps in development and spends $3,000 to $7,000 to develop each one.

Calvin Reid, Publishers Weekly

iTunes App Store: Books

Click for Larger Image

The number of book apps will grow exponentially over the next several months as Grand Central Publishing, Osprey Publishing and Walker Books have all recently announced new apps in development, and developers like Enhanced Editions, Scrollmotion and Vook continue to roll out new offerings in partnership with a variety of publishers and authors.

The pricing for these book apps is all over the map, ranging from free samples and $0.99 digital comics to $16.99 (£9.99) for the oft-cited The Death of Bunny Munro.

While the $0.99 Dr. Horrible app is #1 in the Books section, it doesn’t appear in the Top 100 Paid Apps overall, the majority of which are games, with “Battle Bears: Zombies!” ($1.19) currently sitting at #100.

Interestingly, according to MobClix, 73% of the nearly 150,000 iPhone apps are paid apps, but 2/3rds of all downloaded apps are free, and the average paid app only costs $2.85.

In light of the exploding “traditional” eBook market (both in sales, retail channels and never-ending drama), are publishers taking their eye off of the ball, or are mobile apps the real future of eBooks?

Guy LeCharles Gonzalez is the Chief Executive Optimist for Digital Book World.

9 thoughts on “Are Mobile Apps Worth the Investment?

  1. trav

    It’s not an either/or situation. Mobile-friendly books should be a part of the future of books. Not the end. Looking long term, all of the experimenting and trials publishers are running will result in a very interesting “pie chart” of offerings. Sure a print book may be a bigger slice than an eBook for one title, but then the inverse could be present for another title.

    The banner above all of this experimenting could be “With, not instead of”. No publisher is anxiously waiting to throw out a proven hundreds-of-years-old business model out of the window, but we’re also willing to crank out any book/format that will help us stay connected to our customers and remain relevant in the future.

    I’ve read as many books on my phone as I have in paper, over the past six months. They’re not a distraction, they will be just one part of the future for publishers.

    And thank you for doing the math in the front of the post. It’s what hooked me and kept me reading. The entire industry needs to be thinking about the things you guys do here on this site.

    Reply
  2. jmnlman

    The problem is that some of these publishers seem to think that just by throwing out the material there going to profit. Like in Osprey’s case all they did was take some low resolution images of the pages. Unfortunately the resolution as well as font choice makes it next to impossible to read on the Iphone screen.

    Reply
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  4. Stephen Bateman

    Thank you Guy for this thought provoking piece – I have a couple of points I’d like to make:
    1. Barriers to entry here are very low – this is demonstrated by the break neck speed of “new: titles entering the distribution channel.
    2. Downward pressure on ebook pricing coupled with an over reliance on one-stop-shop distributors means that most publishers’ margin projections will be overoptimistic and meeting ROI within standard budgetary timeframes will fail – then, the famous spiral of crisis, fear, tears, blame, risk aversion and a “play it safe” next time will mean little real innovation in the medium.
    3. Perhaps the only viable way forward is to throw everything at the DTC customer base and invest properly in marketing a tight and loyal community of enthusiasts. By this I mean build a direct to consumer platform to ensure sales meet gross margin targets and there is not a reliance on third party distributors. This is a big change and long process and companies need to be in it for the long run. Clearly not for the fragile minded.

    Reply
  5. Rebecca Smart

    Thanks jmlman for your comment about the Osprey apps and I’m sorry you find them difficult to read. These apps are very much a test for us to see what the demand for our books as apps might be, and the Exact Editions technology provides a great showcase for the artwork and maps in the Campaign titles – personally I find the reading experience fine if the screen is turned horizontal.

    As you may know, we’re also experimenting with providing memberships to our content online (our database of artwork is growing all the time and members also get a discount off purchases). We’re also developing a number of apps which consist of content pulled out of books in a range of ways.

    If you have any ideas for how you’d like to see Osprey content presented in digital products I’d love to hear from you – you can find me on Twitter @rebecsmart.

    Rebecca Smart
    Managing Director
    Osprey Publishing

    Reply
  6. jmnlman

    Actually I was using the device in landscape. I also don’t think I’m going to spend my time trying to explain why this is a bad thing to you through 144 character tweets…

    Reply
  7. Rebecca Smart

    Clearly, but if you DM me we could take the discussion offline. I really would value your opinion on how Osprey content can best be presented digitally. We’re a small company and imvestments in digital experiments need as much input from customers as possible.

    Reply

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