As expected, Virgin founder Richard Branson launched his iPad-only magazine this week and declared: “The future of publishing lies in apps not on shelves.”

Dubbed Project, the first issue has about 100 ‘pages’ of content that can be updated hourly. It costs US$2.99 per issue.

“It’s the first truly digital magazine about creative people for creative people,” Branson said. A Reuters report notes that editorial and advertising content will be interactive: “You can actually make advertising really good fun to delve into,” said Branson. “I think from an advertisers point of view, it’s going to make advertising a thousand times more effective than it was in the past.” For example, a story about Jaguar lets users hear the engine and watch video of the car in action.

Reuters notes that, unlike Rupert Murdoch’s tablet newspaper The Daily (due to cost US$0.99 a week), which has amassed a staff of 100 and is spending US$30 million on its launch (due early next year), Project’s staff will stay lean with about 20 employees working out of the magazine’s UK offices. Reuters said Branson declined to give financial details, but he hoped “word of mouth” would help supplement the limited marketing budget.