With Apple Tablet, Print Media Hope for a Payday
By
Published: January 25, 2010
SAN FRANCISCO — With
the widely anticipated introduction of a tablet computer at an
event here on Wednesday morning,
Almost all media companies have run aground in the Internet Age as they gave away their print and video content on the Web and watched paying customers drift away as a result.
People who have seen the tablet say Apple will market it not just as a way to read news, books and other material, but also a way for companies to charge for all that content. By marrying its famously slick software and slender designs with the iTunes payment system, Apple could help create a way for media companies to alter the economics and consumer attitudes of the digital era.
This opportunity, however, comes with a sizable catch: .
Mr. Jobs, the chief executive, made Apple the most important distributor of music by imposing its own will on the music labels, bullying them into accepting Apple’s pricing and other terms. Apple sold lots of music, but the music labels claimed that iTunes had destroyed the concept of the album and damaged their already deteriorating bottom lines.
With the new tablet, media companies could be submitting themselves to similar pricing restrictions and sacrificing their direct relationship with customers to Apple.
For now, at least, the technology and media industries are looking at the brighter side. “Steve believes in old media companies and wants them to do well,” said a person who has seen the device and is familiar with Apple’s marketing plan for it, but who did not want to be named because talking about it might alienate him from the company. “He believes democracy is hinged on a free press and that depends on there being a professional press.”
Part of the media industry’s high hope for the tablet comes from descriptions of the device from analysts and others who have been briefed on it.
It will run all the
applications of the
Their optimism for the
tablet also stems from consumers’ willingness to spend money using
mobile devices. In the last decade, while people downloaded music
illegally to their desktop computers, they happily paid small
amounts of money on their cellphones to download ring tones and
send
The iPhone has provided further proof that the economics of mobile devices are unique: the Apple App Store is expected to generate an estimated $1.4 billion this year, according to an analysis by Piper Jaffray.
“The iPhone was a harbinger,” said Trip Hawkins, a founder of Electronic Arts and now chief executive of Digital Chocolate, which makes games for cellphones. “When you have a device that is this convenient and fun for consumers to use, you can get a lot more people interested in paying for and engaging with the content. Big media companies should be all over this like a cheap suit.”
Indeed, they already
are.
On Monday, The Times also announced that its media group division had created a new segment for “reader applications,” and named Yasmin Namini, the senior vice president for marketing and circulation, to head it. Executives said the timing was coincidental, prompted not by the Apple device specifically, but by the growing importance to The Times of electronic reading devices in general.
Two magazine
publishers,
To successfully sell
their material on the coming wave of tablets from Apple and other
hardware makers like
Such shifts are under way.
In October, The Wall
Street Journal, which is owned by the
The December issue of GQ was downloaded from the app store almost 7,000 times, and twice as many times for its January issue. Last week, The New York Times announced plans to begin charging, by next year, frequent Web site visitors who are not also newspaper subscribers to read the online version.
Media companies may have to swallow hard before tethering their futures to any high-tech company, let alone Apple. Many publishers believe their economic health depends on finding a direct line to their customers, and it is not clear whether Apple — and other aggregators of Internet content — will allow that.
Magazine publishers, for example, maintain sophisticated databases about their customers, which lets them cross-sell products, renew subscriptions and entice advertisers with statistics about their wealthy readers. A big part of the business is automatic renewals charged to credit cards.
But when magazine publishers sell applications through the iTunes store, they do not get credit card information or even the name of the buyer.
However, Apple, which
makes most of its money selling devices, not content, has shown
itself in some cases to be a more benevolent warden of online
content, than, say,
Nevertheless, concern
over preserving the customer relationship is one reason, late last
year, that major publishers including
“It’s fundamental to the business model of publishers,” John Squires, the interim managing director of the consortium, said last month. “We’ve always enjoyed an opportunity to know exactly where our consumers are, and be able to market other products to them. It’s a very key issue for the founding members of this business.”
One branch of big media whose fortunes may not be lifted by an Apple tablet, at least initially, is the TV business. Apple has also talked to television networks about offering access, for a monthly fee, to a selection of their hit shows, bypassing traditional distributors.
But perhaps smarting
from their experiences with Apple, many of the old-line media
companies —
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