Peter Kafka

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Is There an iPad Premium? Hearst Says Its Popular Mechanics App May Cost More Than the Print Version

Internet axiom: Digital stuff–movies, music, whatever–should cost less than its physical counterparts. Because it costs less to make it.

But don’t tell Hearst. The publisher says it will charge at least as much for the iPad versions of its magazines as it does for its paper and ink version. And in the case of at least one title, it may ask for more.

Hearst says that when the full version of its Popular Mechanics app launches in the fall, it is considering charging a dollar more for the digital magazine than the $3.99 the title fetches at the newsstand. Meanwhile a demo version of the app, which doesn’t contain everything in the magazine, is now going for $1.99.

What gives? John Loughlin, Hearst Magazine’s executive vice president, makes two arguments:

  • True, Hearst doesn’t have to pay to print and distribute copies of the app. But it’s still spending money on it, both for app-specific features like new interactive graphics and videos, and for digital overhead costs.
  • At least as important: Hearst thinks everyone else who sells their digital stuff at a discount–or worse yet, gives it away online–is dead wrong. “I think publishers have learned a huge lesson from our cousins in the newspaper world,” Loughlin says. “I think we’ve got an opportunity to reset the right expectations out of the gate.”

Philosophically, Hearst isn’t alone. Nearly every publisher I’ve talked to imagines that the iPad will give them the ability to reverse the price-eroding effects of the Web. But the digerati squawked when Time Warner’s (TWX) Time Inc. and Condé Nast charged the same price for their first magazine apps. And even though Condé’s Wired app debut sold 100,000 copies at offline prices, the publisher has since shaved a dollar off the price.

Loughlin doesn’t expect to charge a premium for every magazine app Hearst puts out. IPad editions of Esquire and Oprah Winfrey’s O magazine, due out in August and November, respectively, will have fewer bells and whistles than Popular Mechanics. So there, he’ll be willing to charge the same price as the print edition.

And Loughlin says he’ll follow the same pricing philosophy when Hearst begins selling subscriptions to its iPad magazines, which it plans to start with Esquire at the end of this summer–digital subscriptions will be priced at or above the price that print subs pay.

Meanwhile, a word on iPad subscriptions, which Hearst’s competitors are also planning on rolling out but haven’t done yet: Hearst doesn’t like the current plan, which involves selling bundles of issues for one-time payments via Apple’s iTunes store.

That’s because that method gives Apple (AAPL) 30 percent of the transaction, and more importantly, it doesn’t give the publisher access to crucial subscriber data. But since that’s the only option Apple is offering for now, Hearst will take it.

Ideally, Loughlin says, Apple will relent and allow it sell iPad subscriptions directly. If not, he’s hopeful that iPad/iTunes competitors–most likely Google and its Chrome and Android platforms–will give Hearst the terms it wants.

We chatted about all of this yesterday, after a show-and-tell session where Hearst laid out its digital road map for the rest of the year (short version–lots of apps!):


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