The definitive answer of web or apps as the future of mobile content? It depends.

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Session Name: Are Apps Or The Web The Future Of Mobile Content?

Speakers: Announcer Jeff Roberts Jason Pontin Nick Alt Ryan Spoon Audience Member (Roy Weisman)

Announcer 00:03

70 deals? Who is going to run home and start up a Tumblr? All right, well, we are going to keep moving. This is a really big question – especially as mobile audiences increase dramatically – that we’re going to talk next and that is Are Apps Or The Web The Future Of Mobile Content? That’s going to be a discussion led by Jeff Roberts, he’s the Staff Writer for GigaOM and paidContent. He’s going to be talking with Jason Pontin, the Editor in Chief and Publisher at MIT Technology Review, Nick Alt, the VP of Mobile for Vimeo, and Ryan Spoon, the SVP of Product Development at ESPN. So, please welcome our next panel on apps or web, the future of mobile content.

Jeff Roberts 00:52

Welcome everyone. Thanks for joining us, guys. Let’s get right into it. Jason, I’m going to start with you because last year, you published a controversial essay, in which you lost your app religion in a very public way. Perhaps you can probably explain it better than I can. Why don’t you give us the capsule version of that essay?

Jason Pontin 01:12

So, the capsule version is, I lost of money, people quit and were fired, we got nothing in return and I hated every single moment of Native Apps – is the capsule version [chuckles].

Jeff Roberts 01:31

How do you really feel [chuckles]?

Jason Pontin 01:32

We committed to it very early. I never felt the full religion about apps. The full religion went something like this: the Internet sucks and Native Apps can un-roll the unhappy legacy of traditional publishers on the Internet. So, traditional publishers told themselves something like this: the Internet taught readers they could pay nothing and advertisers they could pay less, although no one in the history of publishing had ever really liked digital replicas. Native Apps would be like digital replicas, but even better. They would teach readers to pay again and they would create measured rate bases, analogists to print rate bases, and we could somehow move back into the past, and it would be like it used to be. Now, I never believed that, but I did think that our content was sufficiently attractive and Native Apps could do sufficiently cool things that it might be worthwhile investing a lot of money in it. Over a yearlong experiment, we ended up with around 200 new subscribers. We spent around $400, 000 in un-budgeted expenses and my head of Digital Development and most of his staff left and the editors were furious. At the end of it, I decided that it was worthless and that all the things I wanted to do as a publisher could much more easily be done by committing to HTML, and one day to many of the cool things that we hoped to see in HTML5. So, in October of last year, essentially we closed down Android and iOS apps, committed to a fairly conventional river of news for our mobile platforms and have been moving towards the bright upper pastures of HTML5 later in this year.

Jeff Roberts 03:40

You’re not the only one who feels that way. The FT2 has turned their back on the App Store and it seems as the responsive web gets better and better, there’s less and less of a need for apps and all those headaches. However, I don’t think this applies to every publisher, because Nick, you seem pretty big on apps, as do you, Ryan. So, Nick, why don’t you tell us why you’re still a believer?

Nick Alt 04:03

Well for me personally, I ran a small company that our whole focus was establishing new business models around video content in particular, and innovating that with a new customer set that the App Store brought us. Whereas, traditional media have a tremendous amount of customers that the attempt was to convert them to paid subscriptions or paid models in native software. We were starting at basically zero. So, for us to leverage what Apple and Google could bring us from a user standpoint is tremendous. We also were able to start thinking about ways in which we could harness the actual software on the device, beyond limitations of what HTML or even HTML5 would allow us to do.

Jeff Roberts 04:55

Right. So, you can tap into the hardware and do things that for a traditional print/publisher, you don’t really need that fancy kit. Ryan, what about ESPN? You can afford Monday Night Football, so you can probably afford an app. Do you have the app simply so you can be everywhere your viewer is, or do apps deliver something that the web cannot?

Ryan Spoon 05:14

The back of every ESPN employee’s business card says, “To serve fans, anytime, anywhere”, and that means different things to everyone, but in our organization, it means we have to be on both. We have to be on Web and depending on experience, we have to do it on application. The ‘it depends’ part is I think the theme here, which is: it depends on what your content is, what you want to build, what your monetization strategy is, what life cycle you are. If you’re a start-up, Apple affords distribution and fundability in a way that Google does as well, that the Web doesn’t. We have a diverse portfolio of products. Watch ESPN streams millions of hours of live footage. That just cannot be done in HTML5 with the quality and the movability that we want it to. Then there are other components; scores, which is kind of the fundamental need of a lot of what we do, and content. We build products to serve both avenues. The important mentality of where we are today is that, the Web experience is being built truly mobile first, which is a shift. That means whether it’s responsive or however it behaves, but think mobile and apply global after that. Then for rich experiences, I do believe it has to be native, based on what you want to achieve.

Jeff Roberts 06:50

Are over-simplifying then based on what we heard? To say that most print-based publishers can do without it unless they have a lot of money and they like to play, but if your video or your niche or your sports, then by all means jump onboard? What other advice would you have for other publishers out there?

Ryan Spoon 07:06

Take readability out, because you can read and surface fantastic content on a dot com in e-mail. You can do that anywhere. There are things that are afforded if you can build it cheaply and with the quality you want that you just can’t get elsewhere. So, examples: after you find, we all face the question, whether small or big company, how do you re-engage? There are things you can do in application that are more powerful than Web. We send billions of score alerts every month and that is a hook back into the application world. If I sent e-mails at the velocity, you’d be really upset. If you’re a subscription magazine, or if your business, like ours, has a very significant video advertising component, again, native in some cases trumps.

Jeff Roberts 08:03

Right. Nick, would you agree? What advice do you have?

Nick Alt 08:07

I would agree that regardless of the element of us doing paid video content in native mobile software, which is taking advantage of more of the actual hardware of the device, there is the art of push notification and built-in messaging inside the device that we were taking advantage of. We were seeing a much higher engagement. We were doing e-mail marketing in tandem, especially with appetites and echo graph. We had the same model for both of them and our push notification engine would always bring us more monthly active, unique users, more paid users than our e-mail marketing efforts.

Jeff Roberts 08:48

Okay. Let’s shift this a bit. Let’s talk about Facebook for a second. They made a dramatic announcement last week, where essentially Facebook home will replace the standard screen you see on your mobile device and you have to dig a couple layers deep. I think the appeal of apps to many publishers is they see those little dots on the phones and they want to be there too, because their competitors are there. Is the arrival of Facebook a game changer? Are they the new Apple or the new Gatekeeper you have to deal with? Are we over-stating this?

Ryan Spoon 09:20

I think we’re going too far in that; we’re only 96 hours into it.

Jason Pontin 09:27

How many people have used Facebook at home in the audience? Okay, it’s insane. It’s the strangest thing in the world. Ryan Tatum called it an operation, I think. It’s essentially just an abstraction lab between you and your Android device, but it keeps you in Facebook world in this strange and odd fashion. For most users the experience of it is, essentially, it’s just a home screen where everything is routed through your friends. It’s very frustrating. I urge you to download it as soon as you can. I found it completely baffling [laughter].

Ryan Spoon 10:06

I actually own the device, the HTC First.

Jason Pontin 10:08

Yeah, they lent us one.

Ryan Spoon 10:09

I think it’s brilliant. I don’t think it’s for everyone, but if you are a Facebook fan, they have turned an app into an OS. Whether this thing is massively successful or not, that’s a pretty profound move.

Jeff Roberts 10:24

As ESPN, are you worried at all? It’s yet another intermediary between you and the user.

Ryan Spoon 10:29

I think there are avenues for us to play in all of those. Whether it’s in the home environment or whether it’s a sports environment. I don’t see it as different than us having to figure out how to play around Android, play around HTML5, and play within Apple. I think what they’ve done is take a more creative approach that works for them than a standard application.

Jason Pontin 10:51

I see why it’s brilliant for Facebook, I see why it’s great for them, but as a user, it closes me off from many of the things I’d like to do. I just want to say something. I’ve been set up here as the religiously anti-app guy, but that’s not of course how I feel. It depends, it really does. The important thing for non-technical people in the audience is that HTML5 is not finished. HTML5 is a aspirational set of standards at the moment. Most of the specs are not agreed upon by any of the standards bodies and by none of the companies who will have to build around them; the big ones, like Microsoft. The only bit that is thoroughly agreed upon is local storage, which people are already building around. If you need to be in the Market Place now and you’re making a lot of processing calls down into the operating system, and crucially if you’re serving a lot of video and you’re monetizing that video through advertising, you need to be on Native Apps now. You can have an end goal of moving away towards HTML5 and there’s some interesting hybrid experiments being done right now. It depends what kind of content flare you are, and you need to know before you commit to HTML5 that it essentially doesn’t exist in any real way at the moment.

Jeff Roberts 12:16

Is your heart softened at all to the rise of what they’re calling sub-compact publishing? These are outfits like 29th Street Publishing that are making cheap, very elegant little apps. The website, The All, which is a very well regarded art and culture, literary site has its own little app. It was able to build it for cheap and the advantages of subscription, regular revenue coming in every month. The content just flows right in there and you can build it cheap, it’s light. Is that something Technology Review would contemplate?

Jason Pontin 12:49

We’re owned by MIT. MIT is an open-source committed university. Although my owners keep a very light hand upon me, amongst the things they prefer me to do, given the W three C is actually headquartered on MIT’s campus, is to be committed to open standards. So, I like some of these small experiments, and particularly if you’re trying to drive your revenues through subscription and you have no legacy, I think they’re very interesting. We’ve been around for 114 years. We’re committed to open standards, and we monetize our business, though like the guardian, we are owned by a trust. We monetize our business through a combination of subscriptions, advertising, licensing and events. For all those reasons, for us, it makes most sense to be on the Web, to have a print publication, and to be moving toward HTML5 as the standards begin to be more solidified.

Jeff Roberts 13:52

Sticking with money for a sec, Nick, do you regard apps as a means to an in to get money? Or do you see them as a way to wring out money directly?

Nick Alt 14:05

That’s a good question. I see them as a way to build a better user experience to obtain a more engaged customer and if that customer wants to transact on something we’re offering, that’s great, but I think in my previous life and in my new life at Vimeo, it’s always been about the growth of mobile and the enhancement of building something better that a user can take advantage of on their mobile device. We’re well into the mix now with how aggressive– Smartphone has taken a while for us to cross 50% adoption rate here in the States. Tablet is moving at a much more aggressive clip. So, that’s enhancing those user experiences where the focus needs to be for the time being, and then we’ll start thinking about layering on monetization after that.

Jeff Roberts 15:00

How about ESPN? Are those apps – they’re pretty, they’re expensive, they’re there – but are they essentially a loss leader for other parts of the brand, or is the cash register still ringing within them?

Ryan Spoon 15:12

Our goal across everything we do is lift engagement. That means drive more usage, drive more users, and the rest will follow. The best usage – depending on the product – might be Web, it might be native. There are things we can do that are better for the advertisers and our partners and the native environment as well.

Jeff Roberts 15:36

We’re talking about transactions within the app. Is that something ESPN is pursuing?

Ryan Spoon 15:40

A pure transaction for us, we do have an Insider business, that’s a subscription business that is both Web-based and mobile based. Monetization to us at the highest and largest scale, is advertising. Advertising is heavily video and heavily Web.

Jeff Roberts 16:03

Right. Perhaps if we do want to get to transactions within there, Apple of course is always the elephant in the room and people are sick of giving them 30% and so on. Why can’t we break the micro-transactions problem? I’ve spoke to some of the FT recently who said it’s finally happening. The phone carriers couldn’t do it, but who might do it is entities like Amazon. I’m just thinking of some competition in there. Who can process the payments within apps? Jason, what do you see going forward?

Jason Pontin 16:30

So, those of you who actually are publishers, talk to Amazon. A couple of months ago, we took an interesting meeting with Amazon. They want for a much more reasonable cut than Apple’s 30% to enable micro-transactions and subscriptions. We already have a fairly healthy business for the Kindle and the Fire. Again, it depends on the kind of content you’re delivering. Amazon is not a good platform for video. If you’re ESPN, Amazon may not be the best partner. I think one of the reasons why iTunes was so successful is that it was so frictionless from the point of view of the user. I believe strongly that it’s not that users are habituated to not paying for content. It’s that they have very little patience for any friction, in terms of experiencing content. If someone – whether it’s Amazon or a common set of standards built on HTML5 – could go and make those transactions easier. If your content is valuable – truly valuable and unique – I think readers might be willing to pay for it.

Jeff Roberts 17:38

In practice though, I think many of us have an Amazon account and have an iTunes account, so if I’m within the app or you’re offering to sell me something, I can click a button and it’ll bill my Amazon account?

Jason Pontin 17:50

We get six figures a year from Amazon. It’s a nice little business for us. You can get a mixture of the print magazine and a selection of our daily news content. It’s essentially, from our point of view, a fairly conventional licensing business with Amazon taking a vigorous of the transaction. If they can make it even more frictionless, then I’d be interested into committing more to it. There’s some smart guys at Amazon working on the problem. I urge you to go and talk to them.

Ryan Spoon 18:22

To me the 30% or whatever take anyone is asking for, is a calculation. It’s a calculation of two things: new users coming in the top of the funnel and your ability to get people through the funnel. Today, if you don’t want 30% and you just make a webpage and ask it on a mobile device, you will have greater than that 30% of friction because I’ve got to whip out my credit card and start to enter in. Right there, that’s a saving. The next saving depends on your size, your business model, etc., there’s a good chuck of the companies that are in the top 100 apps that wouldn’t get the traffic if they weren’t there. Apple and Google and others would say, “Don’t think of that 30% as a transaction fee. Think of it as a transaction fee plus a finding fee”. That calculation is something that we each have to do on our own side, but the traffic distribution is the really significant part of that calculation.

Jeff Roberts 19:15

I have a few more questions, but I just thought I’d throw it out into the audience. Does anyone want to ask the panel anything? There are microphones there and there.



Jeff Roberts 19:40

I guess my next question was [laughter], I guess it’s asked at every one of these panels, but let’s talk about the weak and the sick for a second. You can build apps for Apple, obviously, and Android, but are people still going to be making them for Blackberry and Microsoft in a year?

Nick Alt 20:02

Microsoft, yes. Blackberry, I would kind of question.

Ryan Spoon 20:08

We’re developing everywhere. We have new Windows devices, Blackberry, we have apps out there. I do think where the HTML question becomes very important is, as you think of outside the US – new devices – I think you’re also seeing that hardware wants to un-burden themselves from some of these OSs and are going to ask more of HTML as well. Depending on where you are in the spectrum, HTML is going to play– you can get onto Blackberry with a focus there in a different way than Apple, for instance.

Jason Pontin 20:43

You’ve touched upon a real problem, which is that most publishers aren’t like ESPN. Most publishers are like the New York Times with 120 developers sitting on the 40th floor. Most of us have fairly constrained development resources. MIT Technology Review is unusual in that we have four or five, six developers.

Ryan Spoon 21:08

How much does a developer cost?

Jason Pontin 21:11

That’s the point. We can’t afford the best developers either. In Silicon Valley, a good developer who has CSS, JavaScript, and a bit of Python, you’re looking a pretty good six figures. In my world, we’re going to be paying high five figures for a publisher, and we’re not going to have a lot of them as well. You can’t be on every platform. That’s one of the reasons why HTML is so attractive. What we discovered when we tried to commit to Native, it wasn’t just we had to have one group working Objective C, one group working in HTML and CSS and JavaScript, but we had to go and do quality control because we care about design on every platform. That quality control never went away. That was a tremendous burden for an organization whose main value is in providing extraordinary content and beautiful designs with a great user experience. We didn’t want to get into the world where half our resources were being funneled into development.

Jeff Roberts 22:14

I think we have a question here. Please introduce yourself.

Audience Member (Roy Weisman) 22:16

Sure. My name is Roy Weisman from I have a question. I think it’s great that Amazon and Apple have all these opportunities to sell subscriptions and things, but Amazon and Apple haven’t been very willing to provide the names of the subscribers, and the customer information. I’d like to get everybody’s thoughts on whether they’ve gotten feedback from Amazon that they will provide it or Apple. Then the second half of it is now they’re getting your customers to market to, to sell comparable or competitive publications to also. So, feedback on both those comments, please.

Jason Pontin 22:54

I feel really strongly about this. Read my article. This is one of the major reasons why we dumped iOS. Apple did not provide the kinds of data – at least initially – that the traditional auditing organization – it was called ABC, it’s now called AMA – recognized. So, we couldn’t count the damn readers that we were selling to them against our rate base in the first place. It did us zero good. Apple has tried to comply, but it’s not their business. Worse than that, they’re taking that 30% vigorous and they’re marketing to my audience. It’s really outrageous at some level. If there’s an alternative, people like me chose a different one.

Jeff Roberts 23:37

Do you guys have the same problem?

Nick Alt 23:40

It’s back to your point about the funnel. Customers that are coming into an app that have a previous relationship with us, they have an account, they’re signing in, Apple and Google are not stealing that customer to market to. There is some grey area around the customer being acquired by virtue of discovery of the app property on an App Store, downloading it and never transacting with us before. New York Times is a really good example of this, where you have an account on New York Times, but if you subscribe for the New York Times on your device, you can just transact with that without setting up an account necessarily. I do understand the qualms about having Apple put the constraints around customer data, but it is about where you achieved that customer in relation to that funnel.

Ryan Spoon 24:30

Agreed. Two separate notes: first, I also think, as the publisher and the app creator on our side, it’s also our burden to figure out more information about the customer outside of that transaction. Where we are spending the bulk of our time organizationally, on the product side is around personalization. What do we know about people? How do we deliver a better experience to people? How do we progressively surround that with whatever Apple is doing with us or without us. It’s not a total handoff to Apple. I think the burden has to be both sides. Second, ultimately I think you also have to go to where the users are. I’m not saying you need to agree with every decision on these locations, but the bulk of users are in locations and it’s our jobs to figure out how to satisfy our needs, but also reach – in my life – fans, and in other people’s lives, readers or video creators etc.

Jeff Roberts 25:38

We only have a couple minutes left. Nick, I wanted to ask you – because you know apps so well, you don’t just work with them, you make them, you know them – take us a couple years into the future. Are we going to be having this debate? Are we going to be talking about Web versus app? What’s the great platform debate going to be two or five years from now?

Nick Alt 25:58

The HTML5 conversation is very interesting. I think what will drive that two to five year mark is this agreement around some standards. The longer we take to agree on standards and build more compelling experiences on Web, the more Apple and Google and Microsoft are taking over the customers, especially on mobile, because they’re controlling the OS. In essence, they’re controlling that user’s experience as they interact with the devices and they’re building more compelling things on a native OS and allowing me to create better products on native OS apps than I could by way of the Web, especially with multi-media content and attempts to monetize that content. So, if somebody cracks that better or is able to establish those standards sooner, I think the argument will shift back in favor of the Web, but until then I think we’re going to continue to see a tremendous amount of fragmentation around the different devices and the different players in the space. It’s like you said, where are the users? That’s where we have to spend our time and resources, even if it’s costly.

Jeff Roberts 27:21

Who can carry that banner then? Who’s powerful enough to take on Microsoft, Amazon, and Apple at the same time?

Nick Alt 27:28

I don’t know [laughter].

Jason Pontin 27:30

At the moment the standards are so uncertain that HTML5 doesn’t even do swiping without jittering. If we’ve thoroughly mystified you, a good compromise is to do an HTML5 app and then wrap it in native code and stick it in the store, which is something that we ourselves might do. It buys you some time as the standards begin to develop. You can use the hybrid elements in native code that you do want to do, like video or swiping, and you can still keep a common code base for the future, which I at least believe is going to be here eventually of a common set of HTML5 standards that we can all commit to.

Jeff Roberts 28:12

Do you think you’ll get there or are you just hoping out loud?

Jason Pontin 28:16

I have a preference, which you’ve heard. My owner has a preference as well. I do think that in the end, open standards usually win. In the end, open standards are good. Open standards benefit us all and there are strong reasons why those of us in the content world will want to go and commit to them. What I can’t tell you is how long it’s going to take. No one agrees on anything at the moment.

Nick Alt 28:43

Two quick–

Jeff Roberts 28:44

We’ve got about five seconds.

Nick Alt 28:45

One, it’s going to get more complicated than it is today. We’re talking about two OSs, there’s going to be more. Two, we’re not even including television. I think television is the next frontier for development, which complicates this again.

Jeff Roberts 28:58

So, that’s what the debate might be in two years then? Okay, well thanks very much. This was a great discussion. Thank you everyone.