Wednesday, May 19, 2010

Apple's Bite and Weisberg's Confusion

Jacob Weisberg, a distinguished journalist and Chairman of the Slate Group, has an article in this week's Newsweek which crystalises and epitomises some of the confused reactions of the magazine industry to Apple's iPad. Apple's Bite: publishers should beware the iPad is a clever but crass and logically inconsistent article and I recommend it in full for its cleverness and its instructive inconsistency. In a nutshell, Weisberg's position seems to be that the iPad is potentially a game-changing device but it is a poisoned chalice for publishers so they should avoid it:

The iPad is a gorgeous appliance and I wouldn't bet against it, or be without one, in the short term. But content creators ought not to delude themselves about Jobs's efforts to replace the chaos of the Web with his own velvet prison.

Weisberg's argument really boils down to three propositions:
  1. The iPad is so good for web browsing that many of the first generation of iPad apps are feeble in comparison. Many magazine and newspaper apps are 'exorbitantly priced' steps backwards and away from the web.
  2. Apple is trying to retain all (or almost all) the customer data and may share very little of it with publishers: "Such domination of the relationship with readers would be no less a disaster for publishers than it was for the music industry."
  3. Apple is acting as a censor in deciding what content should be available within the app store. "And Cupertino is more puritanical about nudity than the Vatican itself."
But these points don't hang together, if the first is really true and the iPad is going to be much better for web browsing than for enjoying apps which represent and contain magazines and newspapers we can forget about magazine apps. If the iPad really is a step backwards -- "Don't go there!" -- the other points are simply irrelevant. The iPad will not be a good environment in which to deploy magazines and newspapers as apps and so can be safely ignored. Concentrate on making the web services work. The fact is many of the initial apps are crude and have been put together in a hurry without the opportunity for effective prototyping and testing, but these multifarious apps are getting better very fast and most of the features that Weisberg wants from newspaper and magazine apps will be coming.

Weisberg probably knows this, and he is at least in part seduced by the iPad (as have been most magazine publishers who see it) so he goes on to develop his critique of the Apple political economy. Apple gets to decide what development tools will be used on the iPhone O/S, Apple will invent and will develop a new advertising system which will be deployed within apps (iAds), and Apple will make decisions about what magazines to include or exclude and some publishers may prepare special sanitized content for the Apple system (eg the Playboy app which has no nudity!). But these complaints are pointless and otiose. Publishers may complain about the Apple system, but they should get on and use it, as many publishers are. Weisberg's complaints about the advertising system are particularly bizarre. The proposed iAds system will be especially attractive to magazines - the ads promise to be engaging, to be incremental to the performance of the apps which contain them, through their richness they will attract major brands and will be of especial relevance to the advertising budgets that like print magazines (the launch ads will cost in the region of $1 million per campaign, $10 million at launch). The Apple system has much more promise of effective 'trickle down' to magazine budgets than we have seen from Google search ads. Weisberg complains that the advertising system will siphon %40 off the top. But let us note that this still means that %60 of the advertising spend remains accessible to publishers. They should be there to catch it when it falls.

Weisberg is right that too many publishers are under the illusion that the Apple iPad may permit them to simply replicate their existing business model (irreparably holed under the water-line by the internet) on the iPad platform. It will not do that. But publishers who care about their magazine brands should ignore Weisberg's jeremiads. They will rush to develop their magazines and newspapers as apps and they will not be disappointed to have done so. The key point that Weisberg is missing is that the iPad really is a new market, and it will not be the last. It will help publishers to sell magazines and subscriptions to newspapers and it will introduce new types of sponsorship and advertising revenues for content owners. But no publisher will put all their eggs in the Apple basket. What Weisberg should have said, the warning that he should have posted is this: the Apple system will probably succeed and if it does so it will not be the last such technology driven new market, so publishers need a strategy for progressive digitization of their core assets. There will no longer be one circulation figure and the BPA and ABC solutions will not be helpful in these new domains. Publishers need to get used to the idea of modular distribution. They may well need to develop content solutions which are specific to the iPad/iPhone, different solutions for the web, for Android, for games platforms or for social networks (Facebook or Twitter). The challenge that publishers will have difficulty in meeting is this: how can they design and produce 'digital magazine' solutions which meet the needs of these very different audiences and technological environments. Publishers who respond to the iPad opportunity by building an iPad app (or better a 'universal' iPhone/iPad app) also need to think about how this new development impacts on the way they are using their existing web presence. They need to keep an eye on Android and Blackberry app environments. They certainly cannot ignore these choices. If Weisberg means by his 'beware' that publishers should ignore the iPad, his advice is lousy.

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