James Murdoch says apps cannibalize newspapers

Visitors check out the new Apple iPads at an Apple retail store in Madrid in this May 28, 2010 file photo.

MONACO (Reuters) - Sales of newspaper apps for devices like the Apple iPad are cannibalizing sales of physical newspapers, James Murdoch, head of News Corp's operations in Europe and Asia, said on Friday.

News Corp in June closed its free Times of London website. The Times, the Sunday Times and Britain's best-selling Sunday tabloid the News of the World -- also owned by News Corp -- are now available online only to paying subscribers.

News Corp's British newspaper arm News International said this month the titles had lost up to 90 percent of their online readership and now had 105,000 paying customers, including those who had bought the iPad and Amazon Kindle apps.

The exercise is being closely watched by the newspaper industry, which has lost readers and advertising revenues to free alternative news sources online and is seeking new business models for the digital age.

Rupert Murdoch, News Corp's chief executive and James's father, has called the iPad a game-changer for news media, and many in the industry agree, thanks to the iPad's large screen, high resolution and capacity for interactive features.

James Murdoch welcomed the opportunity to sell through Apple's iTunes online store, despite the fact that Apple takes 30 percent of the publisher's revenue.

"We go to the iTunes store because it's frictionless. They charge a percentage but the guy on the newstand and the newsagent charge a percentage, and they don't even merchandise it properly," he told the Monaco Media Forum.

But he said apps for mobile devices, with which readers typically engage far more than they do with computer websites, were more dangerous to print sales.

"The problem with the apps is that they are much more directly cannibalistic of the print products than the website," he said. "People interact with it much more like they do with the traditional product.

Apple began selling the tablet computer in April and had sold 7.5 million by the end of September. Other manufacturers have responded with their own tablets.

(Reporting by Georgina Prodhan; Editing by Jon Loades-Carter)