While Apple (s aapl) has yet to sell a single iPad, the device has already challenged the domination of Amazon (s amzn) 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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