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Summary:

While Apple has yet to sell a single iPad, the device has already challenged the domination of Amazon and the Kindle for e-books, and now periodical and newspapers are experiencing this “iPad Effect” for their business models. At the TED conference, Wired Magazine Editor-in-Chief Chris Anderson […]

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While Apple has yet to sell a single iPad, the device has already challenged the domination of Amazon and the Kindle for e-books, and now periodical and newspapers are experiencing this “iPad Effect” for their business models.

At the TED conference, Wired Magazine Editor-in-Chief Chris Anderson used the tired “game changer” moniker in referring to the iPad, while doing a Wired demo on a large multi-touch display. Readers of Wired on the iPad will be able to view content vertically like a web page, or on two pages like the print magazine, easily rotating between the two. There will also be plenty of flicking, zooming, and interactive media in the new format, too. That’s the good news for publishers.

According to Anderson, the iPad is “part of the answer” for the future of print media, but the Financial Times is reporting that talks with other publishers are raising new questions about the iPad, too.

Like the advent of the iTunes Store and negotiations with the music industry, the main point of contention between Apple and publishers appears to be that of control, specifically pricing and subscriber information. Publishers rely on subscriber information to not just to reach customers, but to plan the direction of publications. However, Apple’s policy of releasing little beyond sales data has, according to one executive of a major U.S. newspaper, the potential to be a “dealbreaker.”

Beyond that, there is the issue of price and single sales versus subscription sales, with Apple demanding 30 percent of revenue for both types of transactions. “You can imagine we feel less good about it,” said another media executive, asserting that “30 percent forever changes the economics.” Arguably, that’s a fair point, and certainly television executives have thus far refused offering subscriptions for iTunes, reportedly $30 a month and similar to what one gets from cable TV.

The problem is $30 a month may be what the New York Times wants all by itself. According to Gawker, advocates for the print edition within the New York Times argue that unless the iPad edition is priced between $20 and $30, people will cancel the print edition (I had no idea Captain Obvious worked at the New York Times). More sanely, those responsible for the digital edition of the paper are suggesting $10 per month is about right. In comparison, the Kindle edition of the New York Times costs $13.99 per month, and that’s without color, let alone interactive media.

If the rumors about what’s going on at the New York Times is indicative of publishers in general, there could be trouble for the iPad launch. The decline of print media is accelerating, and thus far magazines and newspapers have been unable to monetize web sites. The Kindle has failed to achieve the kind of success as a portable device that the iPhone and iPad touch have, leaving the iPad as the only current hope for a transition from a physical to digital world for print media. If not Apple and the iPad, then who?

The danger is that cold rationality might not prevail, even if it means the worst for print media. If that happens, Apple won’t suffer nearly as much as the New York Times, but iPad owners will lose out. A dearth of content can hurt the iPad as the Apple TV has been hurt, especially when trying to convince consumers to embrace a new platform. Apple doesn’t need another hobby, and print media needs a business model that works.

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  1. As an old-timer that read paper pubs and now only consumes online, I still find it hard to justify 2 subscriptions at a $20-30 price. If I can share my paper with my iPad/Tablet toting wife, no problem. Otherwise, $10 may be the breaking point…same argument as applies to eBook sharing. And, OTW, we’re both boomer eBookers…

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  2. I have over 12 magazines subscription but most of them go unread as when I have some free time I will read something on my iPhone.

    I get the digital copies of 2 magazines and those are read entirely. I will be canceling all but the ones that offer digital versions.

    And if they become available for the iPad I will sing up. But no more physical magazines for me.

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  3. If people wanted to read other than print content cable companies would have long ago had that as an option, making the forever dream of convergence a reality. Holding up the I-Pad as the holy grail ignores that digital content could have also been made available on laptops and netbooks. Is it reasonable to believe that the large clipboard shaped I-Pad will really force a major change in reading? People are not reading newspapers or magazines not because they are too expensive, difficult to receive or to carry, but because either they do not want to make time or have the inclination to do so. If the thought is that spending over $500 plus a carrier fee plus subscription fee will help the media business, I highly doubt it.

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  4. What’s with the honked up pie chart? It is commonly known that apple is taking the 30% portion of the 70/30 split. Does that chart just serve to make apple look greedy in spite of the facts?

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    1. I’m closing on a house in three days, which is an excuse and not a reason, but there it is. I apologize.

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  5. Newspaper and magazine executives probably should just shut up and get on the iPad/iPhone/iPod touch bandwagon or retire and get out of the way. At the very least, print is dead for throw-away news publications. Get over it.

    Publishing companies have been working on eInk tablets for 20 years and the best technology they could come up with were lame, grayscale devices that don’t do color, photos, graphics, audio, video or music. This sort of decision-making and leadership is par for the course in this industry, which alway has tried to emphasize the written word over more powerful images, and has a long track record of being painfully slow to adopt new technological innovations.

    Why? Because it primarily is writers who get promoted into positions of authority at newspapers and magazines, and many simply do not understand the importance of graphics, photography, art and design in modern media.

    As a result, industry executives still make the very same kinds of decisions made 20 years ago when it comes to new technology. “Let’s study it and experiment with it and after a few years, perhaps we can adapt it to meet our business needs. Oh, while we’re working on this, let’s spend as little as possible.”

    Apparently, it’s going to take massive failures of a large portion of daily print newspaper and weekly magazine companies to shake this industry out of the past. These executives all are trying to hold onto the old business model at all costs. Their companies have an inherent conflict of interest against moving to an entirely new, online business model, because that new model WILL destroy the existing cash cow — print.

    The iPad, iPhone and iPod touch are gifts. If existing print newspaper and magazine companies don’t take advantage of this new technology, let them fail so that a new generation of more open-minded publishers can step in and recreate the entire industry from scratch. I hate the thought that it may come to this, but I honestly think it will…

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  6. It’ll break the printer and driver unions at newspaper and magazine publishers. It’ll get rid of all that paper waste and those damn inks. I almost hated reading magazines, because after I’d read articles on warm days, my hands would be all stained with that crummy ink. It’ll be tough for those corner newsstands that block the sidewalks when people start carrying tablets. There is going to be whole lot of changes being made. I’m mainly in favor of digital media because when I watch those shows on how many trees get cut down just to feed the print industry I really get upset. Those paper mills really use up a lot of power, too. I think the sooner tablets and slates get into use the better. It’s the information that’s important, not the paper medium.

    I personally think the holdup of moving to digital media is job loss. None of those old-timers want to give up their sweet paychecks. Some printer that’s been working 20 years on some printing press doesn’t want to see his job go away. Those damn printing presses use up a hell of a lot of energy. All those paper rolls that need to be transported daily using tractor trailers that burn huge amounts of fuel and clog the roads.

    With daily and weekly digital media, you just need the reporters, the guys that do the formatting, the editors and boom, just upload the article to the cloud and boom, a subscriber downloads it to his iPad or Kindle and the distribution of media is done, eliminating all that other unnecessary crap.

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  7. It’s a problem of perception.

    Those media outfits don’t have the knowledge, capability and, dare I say it, cash reserves to roll out a digital distribution method in addition to the R+D required on a device (plus support etc) to get themselves set up.

    In the physical object world, those selling the end products have only a fraction of the overheads for distribution – with most included as part of their purchase price. With digital, much of that distribution has been stripped from the media organisations and placed elsewhere – they need only provide one digital copy and the rest is handled by those with the infrastructure. As a result a meaty portion of the cashflow is now no longer going to the media organisations (pumped up as it was).

    Should they wish to complain too much, then the option is clear:
    spend your own cash and develop an end to end model that is palatable to end consumers, ensure that you will have longevity in a market where you are the unknown new player (devices that is, not the content you’re delivering) and sell it to us.

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  8. Seriously??? Just browse the web, I’m sure you’ll find similar information…and the best part is…it’s FREE!!! =)

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  9. I think that the publishers need to take a cold shower and realize the world is a changing place. If they want to charge $30 for a digital subscription, they have to know that isn’t going to fly.

    The iPad is really the perfect device for these publications (easier to carry around and read on than a laptop, but with the color and the browseability that an e-reader lacks). It just depends if the publishers wise up and take an initial hit to their bottom line or the try to charge these ridiculous prices.

    If the former, they may actually make more money in the long run, as subscriptions may actually shoot up, even as demand for the paper edition drops. I know I would read a lot more newspapers and magazines if I could have them on a device on the iPad. Apple is offering the publishers an out here, it may hurt their bottom line a bit but it beats closing up shop for good.

    Unfortunately, these companies seem DETERMINED to kill themselves, so they’ll probably try charging outrageous prices for digital content while still selling very little paper subscriptions. Not only will this spell doom for the publishers, but the consumers will suffer too. Let’s hope they are a bit more forward thinking than that.

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  10. I love it, print media is declining because they have sod-all content. It’s the same stories being published regardless of whether you’re reading the NYT, WSJ or Bob’s Conspiracy Newsletter. AP syndicated content, published under a NYT heading is still AP syndicated content.

    The NYT already has an app prepared for their special iPad version of the paper. Once that hits the streets, expect a software version for other platforms, after which the printed version will be retired. Far lower production costs mean the company can continue to run profitably on the lower income from fewer readers (ie: people from NY, or those who care for the columnists who write only for the NYT).

    Once newspapers start moving to subscription-only electronic versions, there won’t be much left of the “free” content on the Internet.

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    1. I don’t think the future is a binary decision when it comes to free/paid content, at least that’s not the way it’s been for music and video. It comes down to how much people will pay for a “content experience.” like the iTunes Store. Although the iTunes Store is immensely popular, there’s still plenty of free and legal ways to get music and video like Pandora and Hulu.

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