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The iPad: Cable TV For Publishers?

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It comes as no surprise that newspaper and magazine publishers would be leaping at the chance to develop apps for the iPad. With its bright, full-color touchscreen and dedicated app-store distribution model, the iPad promises to deliver the closest thing yet to the print experience in digital form–with the added benefits of interactivity, video display ads and sound.

Unlike digital publishing efforts on the open Internet, iPad apps are also resistant to scraping, aggregating, re-publishing and search-engine indexing–activities most publishers regard as stealing value from their content. With the iPad, they have a chance to re-invent their digital businesses along more familiar lines.

Yet there are risks to pushing the print analogy too far, particularly with respect to pricing. Even assuming consumers are really prepared to pay for content on the iPad (a fair enough assumption) their calculus is likely to focus on the total cost of using the iPad to access content rather than on the value of the content per se. And based on publishers’ announced or rumored plans, the total price could start to add up very quickly.

The Wall Street Journal, for instance, has announced it plans to charge iPad users $17.99 per month to subscribe. Fair enough, perhaps, on its own. But unlike the print world, where people tend to subscribe to one, or at most two, newspapers, in the digital world regular news consumers tend to use four or five sites regularly. If you want to be able to access the New York Times on your iPad in addition to the Journal, that’s going to run you an additional $15-30 a month, according to reports.

Most magazine publishers thus far seem to be eschewing monthly subscriptions. But most plan to charge a single-copy price for the digital edition similar to the cover price at the newsstand.

For the avid news consumer, the monthly cost of using the iPad could quickly mount to $100 or more — cable TV territory. Those using the 3G version will need to tack on $15-30 a month more for 3G service. That’s going to force consumers to make some tough, and probably pretty narrow, choices as to what content they get on their iPad.

In effect, the economics of using an iPad to access magazine and newspaper content could end up favoring bundling, just as with the economics of Pay TV. (For more on this topic, see Daniel Taylor’s report, “The Ongoing Battle for the Digital Home.”) People may complain that cable operators’ bundling of content into tiers forces them to pay for channels they don’t watch, but it’s not at all clear that prices would go down for most consumers under an a la carte model. Cable operators buy content in bulk and amortize its cost across all of their subscribers. Without those economies of scale, consumer price for the same programming would likely go up. Most consumers would likely end up paying the same or more for fewer channels than they watch now.

What the iPad may end up exposing is the down side of a la carte pricing for content.

That, of course, raises the question whether anyone could emerge as a media app bundler for tablet devices. Wireless providers would no doubt be happy to put in for the job were it ever to open, as would digital newsstand services like Zinio. Ditto Google.

The wild card would be Apple itself. We know from published reports that Apple has toyed with bundling a package of TV networks for an over-the-top video service that would compete with cable and satellite TV. But for the most part, it has stuck with an a la carte model for content, starting with the original 99-cent iTunes downloads.

That’s worked up to now in part because Apple has been able to keep a tight lid on a la carte prices on iTunes, the better to add value to Apple’s devices. With iPad apps, however, that tight lid  already seems to be coming loose. Whether that points to a bigger change in Apple’s approach to content distribution depends on how people actually end up using their iPads.

Question of the week

Are publishers planning to charge too much for content on the iPad?