The Apple iPad has not yet been released in Australia but you would be mistaken for thinking it had when you see how many column inches it has dominated in newspapers Down Under.
It may not be well known but two of the most popular downloads for the iPad, over the release weekend and via the Apple’s iTunes store, were Time and Popular Mechanics magazines. Yes, you heard right, they were magazines and not applications. Single copies sold for US$4.99 and other titles available from day one were GQ, Outside Magazine, USA Today, The Wall Street Journal, the New York Times and The Guardian application from the UK.
Despite these early successes, many newspaper and magazine publishers are resisting selling their products via iTunes, in part because seven out of every ten US periodicals sold in the USA are via subscription, and the fact that they have to give Apple 30 per cent of the revenues. Maybe those resisting should talk to their colleagues in the music industry and find out what happened there. With 125 million iTunes accounts worldwide this is not a market to be scoffed at.
Publishers appear to be annoyed at the lack of information that Apple is willing to share with them regarding who buys their product. Apart from information gleaned at time of subscription there is probably very little known about their existing customers anyway. As for those that buy the product from newsagents, supermarkets and news-stands, even less is known. Surely, this is an area that CSPs excel at. And I’m not sure how strong the argument for giving up 30 per cent of the revenues is when you consider the current costs of paper and printing and distribution via diesel burning trucks to countess outlets dotted across the countryside.
The big benefit for publishers appears to be the desirability for advertisers to take advantage of the iPad’s features to develop colorful, interactive ads. Chase Bank is reported to have paid US$1 million for an exclusive cross-platform deal including the iPad. Time has also signed up Unilever, Toyota, Fidelity Investments and at least three others for marketing agreements costing about US$200,000 each. This is like a return to the good old days when advertising was the real profit centre for most publications. It’s also the area most adversely affected by the online advertising efforts of Google and other search and advertising engines.
Is this the beginning of a fightback for publishers? If they can convert existing print readers to the new medium, and attract the under-30s that think the iPad is sexy, and as one writer put it, ‘toilet-friendly’ (for those that prefer reading in the quietest room in the house) then we could well see a resurgence in popular titles. The iPad is about to be joined by eleven other market segment entrants boasting tablet-like devices, so the future does look rosy, indeed. As ‘The Australian’ newspaper headline blared, “iPad ushers in the era of convergence”. The article’s author, Simon Canning, pointed out that, ”history shows telecommunications and internet companies buying media companies did not work – nor did media companies buying telecommunications companies fare any better.”
He goes on to state, rather boldly, “that phone companies will get their cut, not as media companies, but by clipping the ticket on the way through”. Really? “Data plans will become more important to consumers than text and voice plans that have, until now defined the development of the mobile market. there seems to be order developing in the market-place again.”
I’m not sure how many mobile operators would share that belief as most are struggling to keep up with increasing data demands and diminishing returns per megabyte of data across their networks. He does, at least, offer one solution. “ Some mobile companies have already offered free netbook computers with wireless broadband plans, and publishers could do deals with telcos to offer free iPads, Slates or other devices as part of long-term subscriptions to publications.”
I can’t see too many operators jumping at that opportunity, but there must be some way they can cash in. Does anybody have any idea how?