Can the Publishing Industry Save Itself From Apple Saving the Publishing Industry?

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Apple infuriates me, frequently and often. Seriously. The company is even more arrogant than I am (albeit with far more justification), and it does stupid things. All the time.

Just today, for instance, Apple pulled a copycat app from the App Store on a (most likely justified) copyright infringement claim by a competitor. That's stupid! Let the courts decide if there's a copyright infringement issue here.

But Apple didn't ask for my input, which is frankly something else to annoy me.

Seriously, folks, there are so many other things that Apple has gotten right that it (usually) more than makes up for the gaffes and missteps. In my never-humble opinion, of course.

For instance, Apple more or less saved the established music industry from itself by introducing the iTunes Store and getting people to pay for music online. It did so despite the best efforts by that industry to sabotage iTunes.

In return, the (established) music industry resents Apple, and it even feels entitled to unearned profits from Apple's hardware sales in exchange for being saved.

My favorite thing in this ongoing melodrama was how the labels blackmailed Apple by leveraging regulatory complaints being lodged against the company by European governments concerned about FairPlay, a copy control Apple implemented only because the labels demanded it.

What the labels wanted and received for letting go of copy controls was higher prices for music downloads, despite the fact that they were already making substantially higher profits from iTunes than they did from CD sales. The gall is astounding.

The labels are all pissy about how much power Apple has as the #1 music seller in the U.S., to which I say the labels are run by idiots and they should be thankful that there is at least one company out there capable of doing a better job of selling music than them.

Something crossed my desk today that reminded me of the iTunes/record label issue, a column warning The New York Times and other newspapers about hopping into bed with Apple.

Writing for New York magazine, Gabriel Sherman laid out the case that Apple (iTunes/unannounced tablet), Amazon (Kindle), and other platform providers want to control the customer with their various content delivery vehicles, and that newspapers should not let this happen.

At issue here is Apple's unannounced tablet, about which it has been leaked that Apple has reached out to publishers of newspapers, magazines, and books to get content deals for iTunes distribution to the tablet (and I'd bet for Mac and PC, too, but we'll see).

Rumor has it that Apple CEO Steve Jobs wants to save the newspaper and magazine the same way Apple saved the labels (and in the process make several new fortunes selling the devices that will be part of the saving formula).

I buy into that particular rumor for two reasons. The first is that I think Mr. Jobs has the kind of hubris (and track record) to think he can be that savior, and the second is that newspapers need saving.

Unlike the record labels, newspapers don't appear to be run by idiots, but they do need help adjusting to the changes the Internet has wrought on their business models. From Craigslist to access-everywhere-to-everything, to the lower barrier to entry for new media to enter the market, newspapers have faced dramatically decreasing revenues.

And unlike the record labels, newspapers are worth saving. An informed democracy needs to be informed to stay a democracy, and newspapers provide a critical role in doing the informing. From local reporting to dedicated editors and fact checkers that provide vital oversight over what gets published, we need local and national papers.

And they need to figure out how to make money online. The realities of online advertising and sundry other factors have resulted in free online content not paying for itself. Subscription models have also mostly failed, and Amazon was brazenly performing highway robbery before our very eyes by charging 65% for delivering newspaper subscriptions to Kindle devices.

Mr. Sherman, however, warns us that Apple controlling the customer through iTunes means that newspapers get shut out of a key piece of the relationship to that customer, and that therefore newspapers should resist in any way possible.

The New York Times, for instance, is moving to a metering system similar to one implemented by The Financial Times of London that will charge frequent readers for content once they surpass X amount of articles in a month.

"With iTunes or an Apple-controlled online store, publishers will be cut off from their readers," Mr. Sherman wrote. "Apple will handle payments and Apple will control all the lucrative demographic information that publishers collect to sell to their advertisers. The tablet may vastly improve the mobile reading experience, but in terms of providing a business model that publishers will leap to adopt, there's a strong case to be made that the Times and others shouldn't fall prey to the iTunes trap."

Seriously? "The iTunes trap?" Is that the trap of being saved? Of seeing new and increased revenues? Is that the trap of finally monetizing all those online eyeballs? For goodness sake, save us from the horror!!!!!

I think that any industry in the kind of straights the publishing industry finds itself in should count its lucky stars if iTunes distribution could become big enough and important enough to matter one way or another. If newspapers on a tablet through iTunes don't become a raging success, little has changed. If it takes off, however, newspapers will have a significant new revenue stream that could allow them to survive, or even thrive.

And if they could do it on their own -- if they could reverse their fortunes through their own efforts -- Apple wouldn't have anything to save them from.

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10 Comments Leave Your Own

FlipFriddle

Something needs to kill news aggregators, to help news outlets survive, and hopefully the “iTunes trap” can do that.

gplawhorn

With iTunes the math was very simple. A musician makes more by selling three songs on iTunes than he does by selling zero CDs. It took some quite a while to do that math; Metallica comes to mind.

I’ve been a busy Kindle user for six months; I’ve spent right around $300 on books during that time - money that I wouldn’t have spent otherwise, because I live in a small midwestern town without a decent bookstore. What’s more, that’s $300 that cost next to nothing in distribution costs (printing, warehousing, shipping, shelving, etc).

I also tested some subscriptions to the newspapers I read online, but - unfortunately - they pick and choose articles, and generally chose the ones that didn’t interest me. I read them online because I have access to the full monty.

I think it’s a perfect time for newspapers and magazines to go digital. The “StevePad” will increase their cash flow. What’s more, copycats will create devices of their own, giving consumers a choice of hardware and provide more opportunities for downloads (a la digital music downloads at Walmart.com, or the plethora of eBook readers on the market).

Over the next few years the mechanism of news delivery will change, but the income from news will increase, for those savvy enough to change with the times.

sweyhrich

What’s going to surprise EVERYBODY is that I’VE discovered what the Apple Tablet is. It is actually a new pharmaceutical, literally a tablet that you take every day to reduce your resistance to buying new Apple hardware. They are getting the buy-in from all of those publishing and news sites, because the tablet will induce you to purchase from them also. Just depends on how the tablet is programmed. And the delay in announcement is because it has to go through the FDA.

Bosco (Brad Hutchings)

The iTunes trap is about the difficulty to play on non-Apple branded devices. And it’s a Faustian gamble for the content providers. Do they insist on DRM and let Apple lock them in more? Do they eschew intermediation and lose their reach to potential customers? Do they coalesce around e-Ink devices like Kindle that are phenomenally better platforms for reading? Or do they go with jazz and snazz of 24 bit color multi-media that loses all readability outdoors? Do they leverage a subsidized wireless connection to keep a price floor on their content? Or do they race to $0.99 on consumer-paid network devices?

I’m pretty sure that they’ll come to Apple with completely wrong assumptions to be on the bandwagon. Something won’t turn out as anyone planned or expected. Think unbundling of albums or $0.99 apps. Some players will end up thriving while some long established players will be up the BOHICA river, unable to adjust to the Apple reality. So I’m really not convinced that Apple will save the newspaper and magazine industries. It will rearrange them though. Back to iTunes… Any thoughtful player in this dynamic would be a lot happier with an Apple that focussed on reintermediation because that’s what Apple’s focus was, not because it eventually sells Apple hardware. That’s where the worry comes in.

Noibs

“Apple infuriates me, frequently and often. Seriously. The company is even more arrogant than I am (albeit with far more justification), and it does stupid things. All the time.”


Yep…you nailed it.

boogiedj

As a former longtime advertising employee for a major market newspaper, I can tell you the answer is YES. The newspaper industry does need to be saved from itself. Don’t believe me? Go to your local newspaper to find out if they are hiring. They are letting staff go on a massive scale.

It has been the perfect storm of sorts, dying on the vine for years. Whether by recession, or 9/11 (which actually boosted readership shortly), soaring gas prices and general attitude of the public, the newspaper has been slowly choking on its own ink.

Despite what most people think, the newspaper business is mostly advertisement driven. It has depended on the local car salesman, real estate broker, help wanted section and even the person getting rid of their old washer/dryer. Oh, it also told you who won the game last night and the goings on of local politics.

The nervousness stems from the idea of one company controlling it all. Imagining a day when Apple, Amazon or Microsoft controlling the newsprint industry may be a difficult pill to swallow.

Countless focus groups, executive meetings and re-designs of product have not been able to retain readers for this simple fact: The days of sitting in your bathrobe, with a cup of coffee, going through the Daily cover to cover are quickly going away. Ask the twenty- and thirty-something why they don’t buy newspapers anymore. Their answer: “Newspapers? I get my news online”

The only way I see this working is by selling subsidized e-readers, with advertising based content, including coupons. The Sunday paper still remains to be a huge moneymaker for newspapers. Which is why they still do it. Newspapers charge 50 cents or $1 for their dailies now only because it covers the cost to print them. THEY DO NOT MAKE A PROFIT FROM SELLING NEWSPAPERS.

If Apple wants to make real money for themselves and the newspapers, they shouldn’t sell subscriptions at all. They should give them away. Similar to the Podcast model. Work the price into the tablet/reader to cover costs for Apple. If it sells like they are anticipating, this should not be a problem. Same goes for iPhones, too. Make the content heavy advertising-based to make profits for the newspapers. Eventually, the revenue will come. When profit is the main motivator to change the way society works, it’s fruition is never realized.

fricfrac

2 things.
‘Unlike the record labels, newspapers don’t appear to be run by idiots’
ahem… they wouldn’t be in the trouble you go to great lengths to describe, if this were the case. In fact they are exhibiting all the short-sighted, entrenched thinking and reactionary responses of all the old hat, traditional, mature industries that have to do very little to earn their bags of money. Laziness and venality are not the best attributes to succeed in the digital age.

‘Mr. Sherman, however, warns us that Apple controlling the customer through iTunes means that newspapers get shut out of a key piece of the relationship to that customer, and that therefore newspapers should resist in any way possible.’
This is just the sort of response that typifies my first point. Newspapers have traditionally sold at the street corner, kiosks or corner stores where there is no link to the consumer. The vast majority of magazines are also sold the same way. Only a small percentage are sold through subscription where they have more access to the customer. So they are terrified of losing something -the relationship, they never had in the first place. Only when Apple showed how it could be done with iTunes did they wake up to the fact that all that information generated by Apple’s business was important. What did they do? Nothing.
Now they are running round in clueless circles, complaining because another company has figured it all out(maybe) and they can see their ‘old’ money and status being wiped out, or, depending how you see it, flowing into Apple’s coffers. The strength of their bitching would seem to indicate that Apple has just about tied the knot around their throats.
Status Quo…good riddance I say.

fricfrac

Status Quo - sorry guys, didn’t mean you, tho’ you got in first with this one:
http://en.wikipedia.org/wiki/Down_Down

Jeremy Avalon

I remember reading something about ‘losing control of the customer to iTunes’ a while back. The basic gist was that it’s still a great idea to sell your music through iTunes for the exposure, but if the customer happens to come to your site, you shouldn’t do like (for example) MGMT, where ALL the links on their site point to iTunes or Amazon, because then you’re WILLFULLY giving up a potential customer relationship.

gslusher

“Just today, for instance, Apple pulled a copycat app from the App Store on a (most likely justified) copyright infringement claim by a competitor. That’s stupid! Let the courts decide if there’s a copyright infringement issue here.”

Maybe you haven’t read other comments about this. If Apple had allowed the app to stay up, Apple could also have been liable for copyright infringement. Because Apple approves apps for the iPhone, it becomes liable for copyright infringement unless it immediately takes down the infringing app. Even if it did NOT approve the apps, it could still be liable under the DMCA, just like YouTube and eBay can be, once it was notified of infringement.

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