CNN charge users for iPhone news application

Another major news industry question is about to be answered. CNN announced last week that it is now charging Apple iPhones users for its news through an iPhone application that costs $1.99 to download.

The new CNN application follows an announcement in September by News Corp. chairman Rupert Murdoch that his company will start charging a subscription — possibly as much as $1 or $2 per week —for access to “The Wall Street Journal’s” mobile applications.

Others will watch CNN’s experience closely in the news business. Many are skeptical that readers will pay for much online beyond business and financial reporting, however, CNN reported online that on the day it was released it was the most popular app being purchased.

CNN thinks readers will pay for its iPhone application over free competitors because the company believes it offers better, more up-to-date coverage. It provides live feeds of breaking news events from the Web site and video on demand. Users can also submit their own photos and video clips to iReport, a feature CNN already uses on its Web site for gathering material from the public.

The application is also customizable, providing alerts when news on a particular subject breaks. Users can select a local news option that augments CNN’s reporting with newspaper stories collected by Topix, an Internet company majority owned by newspaper companies.

Push notifications will display an on-screen message, alerting users when live newscasts are available. Live breaking reports can be watched over Wi-Fi, 3G, or EDGE. There will be no preroll video ads in the live news feeds but still ads will display while the video loads.

Holding the iPhone in landscape mode will reveal a CoverFlow-style story slideshow, similar to how the iPod app displays album art in landscape mode. Social media sharing is integrated into the application, so users can share stories on Twitter, Facebook, e-mail, or SMS. Other features include offline reading of selected stories, customized weather forecasts and keyword searches.

There’s evidence that users will not buy the CNN application. The Associated Press, for instance, tried charging $2.99 for a BlackBerry application this year. The download rate was very low. Since dropping the fee, the AP has seen its downloads soar. Now the AP is trying to generate revenue from the app by selling advertising on it.

In related news, Apple said that more than 2 billion applications have been downloaded from its App Store since its launch a year ago.

More than 85,000 applications are available to 50 million iPhone and iPod Touch customers worldwide. More than 125,000 software designers are registered in Apple's iPhone Developer Program.

The App Store generates $60 million to $110 million in revenue per quarter for Apple, according to a report by Sanford C. Bernstein & Co. analyst Toni Sacconaghi. The outside developers, who split revenue with Apple, bring in $140 million to $250 million each quarter, according to the report. The average cost of a paid Apple program is about $3.