iPad Not So User Friendly – To Media Publishers

Philip Stone January 20, 2011 Follow on Twitter

iPad collects 30% of the revenue earned from the many media publishing apps out there but when a newspaper gives away iPad usage to a print customer then Apple loses out. So it has told some European publishers to quit the practice by April 1. Apple also has told them that all sales must be made via its iTunes store and the Europeans aren’t happy about that either, so Europe is near to declaring war on Cupertino with the first skirmish already underway.

Belgium has announced it is investigating whether Apple is abusing its dominant position in the tablet market by insisting that newspaper sales must be made through the iTunes store, Other European countries will likely follow and if there is some smoke then probably the European Competition Commission will get involved and that is really serious business.

New newspaper business models for digital and print are premised on basically the information being available on whatever platform a user prefers, and the user should not pay twice for the same information. But with Apple saying no giveaways to the iPad version and that all iPad sales must be made through iTunes then that pushes a stake right in the heart of what publishers are trying to achieve.

Apple’s relationship with publishers the world over is not what it should be – except for some of the big players like Murdoch or the Financial Times where compromises seem to have been made. Publishers are most angry that they cannot sell subscriptions themselves but rather all such sales must go through the iTunes store. That means Apple keeps all the marketing information about the subscriber, even the email address, and that is information publishers really want to entice advertisers let alone to work on subscription renewals.

There have been reports for months that Apple was going to resolve this but nothing came of it. Then there was a deal done with Murdoch’s new Daily which starts out publishing exclusively on the iPad but then the launch was delayed for a few weeks because subscription issues were not fully resolved (One criticism already of The Daily is that apparently there are no updates during the day. You get your issue in the morning and the next you hear from The Daily is the next morning with the next issue – sounds like print all over again!)

Subscriptions are important because recent trends show that people don’t stick with single copy sales and download numbers are dropping (which in itself might put more pressure on Apple to come out with a subscription model). Pricing is also important. iPad users are not stupid – they know what a print subscription costs and they expect that their iPad costs for that product to be less – no ink, delivery trucks, newsprint, etc. – and buying by single copy does not accomplish that.

But with iPad subscriptions, publishers will likely still have to pay Apple 30% -- the Belgian Economy Minister wants that 30% figure investigated by competition authorities because it "could have enormous consequences for the profitability of the sector," --  so it will not be that easy to set a subscription price that is much less than a print subscription, but that’s why the suits get the big bucks – to work out such details.

Publishers are already talking with Google that Android devices have no such subscription issues and if they get their way there and Android makes it mark then Apple will no doubt be more receptive to tweaking its policies.

For some media big shots iPad sales have been a resounding success. The Financial Times, for instance, says that 10% of new digital sales are coming via the iPad. Yet another example how an expense account can really come in handy!

One thing that Apple and publishers can agree upon – that iPad sales continue to soar. In Q4 alone Apple says it sold 7.3 million iPads which was about 22% higher than forecast. Total tablet sales are forecast to reach some 50 million this year with the iPad talking more than half of them. Overall, that’s a marketable user group for tablet-delivered news and information.

The Belgian Economy Minister Vincent Van Quickenborne best summed up the way Europeans see their current iPad relationship, “A new information medium such as the iPad can represent a serious boost to publishers, however, we must ensure that this success does not lead to abuses.”

Apple, meanwhile is laughing all the way to the bank. It earned $6-billion or $6.43 a share in its first quarter, compared to $3.38-billion or $3.67 a year earlier, paced by very strong iPhone, iPad and Mac computer sales. But Apple must still be wary of the EC. It successfully took on Microsoft a few years back, so why not Apple today?

See also in ftm Knowledge

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