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Publishers bet future on iPad they haven't yet seen
Media members try out the new ''iPad'' during the launch of Apple's new tablet computing device in San Francisco, California, January 27, 2010.
Credit: Reuters/Kimberly White
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NEW YORK/LONDON (Reuters) - Publishers are placing big bets that Apple Inc's iPad will kick-start a commercially viable transition to digital magazines and newspapers -- even though few executives have laid hands on the tablet ahead of launch.
In fact, many publishers likely will not announce their iPad applications until after the tablet hits U.S. stores on Saturday, due to the many constraints that Apple has placed on allowing its partners access to the device.
While media content is critical to the success of the iPad -- a 9.7-inch tablet that looks like a large iPhone and aims to bridge the gap between a smartphone and a laptop -- Apple has been typically secretive about its plans.
Media executives say they have had to test out the iPad in situ at Apple's Cupertino, California office, or agree to extremely restrictive security measures to get one off-site.
"We were offered the opportunity to have an iPad in the building but the security implications were so high, it wasn't worth it," said one publisher who did not want to be identified ahead of the iPad launch.
Only a lucky few received a personal visit from Apple Chief Executive Steve Jobs, who was in New York earlier this year to show off the iPad to a few publishers including the Wall Street Journal and the New York Times.
Despite the restrictions, the iPad's full color touchscreen is seen as a game changer for media companies that have long struggled to make money off digital content, which most consumers expect to get for free or at a very low cost.
Book publishers see a new chance to get their electronic offering right -- and win more bargaining power if the iPad emerges as a viable rival to Amazon.com Inc's Kindle.
"We have all struggled in this industry to find an online model that works successfully in terms of content and the consumer's propensity to pay," Penguin Books Chief Executive John Makinson told a recent media conference in London.
"I think myself that the iPad represents the first real opportunity to create a paid model that will be attractive to consumers. and I think the psychology around payment on tablet is different from the psychology around payment on PCs."
Penguin will share 30 percent of its revenue from e-book sales for iPads with Apple, which Makinson said is better than the 50 percent that publishers typically pay to book retailers including Amazon.
"On balance, that's not bad. Plus we get some consumer data, we get some growth, we don't have marketing investment," he said.
MEDIA APPS
Time Warner Inc plans to unveil a full edition of Time magazine for the iPad launch. It will cost the same as the print copy at $4.95 and feature advertisers including Unilever, Toyota Motor Corp and Fidelity Investments among others.
Time Inc Senior Vice President Monica Ray said the magazine will eventually sell digital subscriptions, and is working on iPad versions of People, Sports Illustrated and other titles.
The Financial Times is working on an iPad application that it expects to be ready around the end of April, when the tablet will be sold overseas, including some European markets, and when a version with 3G wireless connectivity will be launched.
The FT's iPad app will be free to download and for the first two months, readers will be able to get a free trial of ft.com, thanks to sponsor Hublot, the maker of Big Bang watches owned by luxury group LVMH.
After the first two months, the regular ft.com access model will kick in: users must register to read up to 10 articles a month for free, or pay between 170 and 260 pounds ($256 to $391) per year for a subscription.
That compares with $17.99 per month or $126 a year for the iPad version of News Corp's Wall Street Journal, according to a source quoted in the Journal.
Like many publishers, the FT prefers iPad's direct-app sales model to that offered by Amazon: Kindle readers have to buy publications through the Kindle store and share revenue with Amazon.
"Importantly, the app model gives us the ability to retain a direct relationship with our customer and the ability to determine pricing," FT CEO John Ridding said in an email.
The FT, which is part of British media group Pearson, has already had 250,000 downloads of its iPhone app.
Thomson Reuters Corp will also have an advertising-funded iPad app at the launch, sponsored by FedEx. The company plans other subscription-based apps aimed at customers in the financial, legal and medical spheres.
Brian Murray, chief executive of News Corp's book publisher Harper Collins, said even though he has only seen the iPad twice, and for a short while, he felt that book publishing would benefit immensely from Apple's expertise.
"Apple has demonstrated over the years that they can really expand the market," said Murray. "The iPad represents a dramatic step forward in terms of handheld devices."
(Reporting by Yinka Adegoke in New York and Georgina Prodhan in London; Editing by Richard Chang)
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I suspect the reason publishers are liking the Ipad model is because it may become possible to create a semi-controlled or completely controlled marketplace for consumers like Apple has already made with the phenomenally successful Ipod and Itunes or Microsoft and Sony’s smaller-scale implementations for their gaming consoles.
Consumers are surprisingly willing to purchase various forms of media when the choice is simplified for them. Established publishing companies have, in general, been somewhat slow to fully commit to the jump to primarily electronic media, so a lot of smaller and new companies were able to jump up in the vacuum. To catch up and reestablish their dominance in the market, these publishers are definitely willing to ride the momentum that the Ipad hype has created. They’re probably even more reassured because Apple can guarantee protection of their copyrighted material better than anyone else out there. Again, it’s a controlled environment with far fewer competing formats or content providers rather than the crazy free-for-alls that MS, Linux, or web-based platforms represent. Add that to the fact that Apple grants the publishers so much more control than other platforms, and this doesn’t seem like much of a gamble.
As long as content providers flock to the Ipad to take advantage of the incredible frenzy it’s initiated, it won’t really matter if the device lives up to all the promises and hype. The hype will get it started, and the content providers will carry it from there.
We may be living in the golden age of easily acquired cheap media and poorly enforced copyright laws right now. The ever-narrowing field of media distribution platforms (narrow in terms of the organizations that run them, not the physical method of distribution) will keep making it more and more possible for publishers to get the money that they are legally entitled to for their copyrighted content. A form of natural selection will eliminate those that fail to protect their content, and the currently gray market for illegally downloaded material will go more underground and become a bit darker.
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