-DB Ross
The release of the i-Pad is not big news— it's really big news, especially for the newspaper industry. The debate is raging about the significance that this new platform could have on the long term prospects of the newspaper industry.
On one side of the fence are those who assert that the device will be the savior of the newspaper business, and on the other are those who contend that it will only serve to quicken the demise of the ailing industry. In ten years we will all know which camp is correct.
One of the issues in the debate is the question of subscription revenues. Currently, Apple takes a 30 percent cut of subscription revenues for i-Pad content. Needless to say, publishers are not happy about giving that money up. However, Apple's model is still far more appealing than that of the Amazon Kindle, which takes 70 percent of subscription revenue.
A major criticism of the newspaper publishing industry is that it has been slow to embrace the i-Pad. The strategy of the magazine publishing industry is a good example of what newspaper could be doing differently. Conde Nast is eagerly working with Apple to push its content onto the i-Pad, announcing titles it plans to publish on the device. Another key development is the creation of Next Media Initiative, a consortium of magazine publishers working to develop strategies of dealing with the new technology.
The newspaper publishers are not even close to doing something like this. Maybe they should be.
Regardless of all the hype surrounding the i-Pad, the following question need to be answered if its potential to deliver sustainable success for the newspaper publishing industry will be realized:
How does advertising fit in?
Currently, online advertising revenue lags far behind print advertising revenue. The newspaper publishing industry needs to figure out how the i-Pad will change this fact. The advertising potential for this device is huge. If publishers take advantage of the personal nature of the i-Pad, such as its large screen and portability, they might be able to create a new advertising model that really makes money.
In the traditional newspaper industry business model most revenue comes from advertising and this fundamental fact is unlikely to change in the future. The true value of the i-Pad is its potential to serve as a new way to channel advertising to media consumers. At $499 a pop, consumers will not embrace tablet technology overnight.
Just as the traditional newspaper publishing business model has declined gradually, its future business models, centered around new advertising strategies afforded by tablet technology, will rise gradually— a fact that the newspaper business can take advantage of.
Blogger Ken Doctor takes note of this, asserting that the newspaper publishing industry can take advantage of the situation and lead the way for consumers. This means not merely reacting to technological changes as they have in past decades, but defining the rules that consumers will have to play by in the future.
If they do it right, the newspaper publishing industry will see huge growth in the next decade. If they do it wrong, they will likely go belly up.
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