The Guardian iPhone app sees 70k downloads but how will it pay its way in the future?

[UK] We knew it was sitting pretty at the top of the paid news chart in the UK but now The Guardian newspaper has revealed that its iPhone app has seen 70,000 downloads in its first month.

Initially launched on the 14th of December 2009 and available in the UK, Ireland and US, the app has since extended its distribution to also include most European countries, as well as Australia and Canada. With much wider circulation, expect sales (and revenue) to remain strong.

That said, the app represents a one-off payment and it’s not yet known how the newspaper plans to make revenue sustainable.

A quick back of the envelope calculation suggests that revenue generated by The Guardian’s iPhone app could be in the region of £117,110 in month one, based on the app selling for £2.39 – although pricing varies across currencies – and Apple taking its standard 30% cut.

We hear that the going rate for iPhone app development in the UK can be as little as £10,000, which if true would – superficially at least – present a very healthy margin. The app was designed in-house with development outsourced to 2ergo, although £100,000 probably doesn’t even cover more than 2-3 journalist salaries. How then will The Guardian generate sustainable revenue from its iPhone app in the future?

Advertising is one obvious option, which the newspaper hasn’t ruled out, although with the app already feeling ‘premium’, ads will need to be introduced gently. Major new functionality could be made available as a paid-for upgrade. Or perhaps sections of the paper will become subscription-based using Apple’s in-app purchasing. Or maybe a combination of all three.

If The Guardian can figure this out, perhaps news can pay its own way after all.