The New Buzz Word For Media Entities: Consumption

Philip M. Stone May 6, 2010 Follow on Twitter

Nobody can doubt Rupert Murdoch’s enthusiasm for the iPad. He said a week ago he thought it would save newspapers and he marveled this week at how his Wall Street Journal already has 64,000 active users. And as far as he is concerned there had never been such a demand for news and information as there is now, so he sees being a news provider a good business these days.

“There’s never been such demand for journalism as there is today, nor as much consumption. I mean, just look at Fox News or its competitors. People are consuming and needing news all the time. We don’t care in the least whether it goes out on a piece of paper or whether it goes out on a digital platform,” he told his own Fox News Channel this week.

He was happy because advertising is up by 25% at his Wall Street Journal and with that newspaper in particular there seems to be a very good uptake on iPad usage. But although he says there are 64,000 active users that doesn’t necessarily translate into that many paying customers. Anyone can see all WSJ headlines each day for free and there are a number of stories that can be accessed without charge, too. If you are a print or Internet WSJ subscriber then you get the iPad edition for free, too.

The financials, therefore, are cloudy since Murdoch didn’t break down his figures. We don’t know actually how many of those 64,000 are paying the near $18 monthly charge or how many fit into free for one reason or another. Murdoch claims he gets to keep all the subscription revenue which seems at odds with other users of that platform where it is said Apple usually takes 30%.

But what is obvious is that 64,000 people thus far have found the iPad a legitimate and user-friendly colorful way of reading the newspaper, and if it is working for the WSJ then there is no reason why it shouldn’t work for others. And if Apple leaves enough meat on the subscription bone then why not?

Murdoch reiterated the consumption theme to financial analysts, “I believe iPad will lead a revolution in media consumption and create added value to news and entertainment content."

Apple announced 1 million iPad sales within the first 28 days of launch and now there is an embedded 3G version demand is increasing even more – so much so that international launches are being delayed to satisfy domestic demand.  And as the device sales increase so, too, does the app distribution. Apple says more than 13 million iPad apps have been downloaded with about 5,000 apps available in its store. So on the surface this seems far more than a fad and it could well be a huge boon to the newspaper industry.

And Murdoch indicates it is only going to get better and he sees size as the major breakthrough to come. What he wants are “big ones, where you can really see the display.”

He met recently with Steve Jobs, and the Apple boss is anxious to get Fox TV shows and movies onto the iPad; Murdoch is being cautious on the business model to do that but no doubt it means he has some leverage with pricing print products, too.

Murdoch also told financial analysts that News Corp. was about a month away from announcing the subscription business model for newspaper online content. “Today, we're in final discussions with a number of publishers, device makers, and technology companies and soon we'll deliver an innovative subscription model that will deliver content to consumers whenever, wherever they want it," Murdoch said.

Of course to make all of this profitable news organizations are going to have to design apps that people find user friendly and are willing to pay for. Reviewers are scathing of the New York Times app because of the very limited amount of news available (which might have something to do with its Kindle contract) but also the Associated Press came out recently with an app which really didn’t hit the spot. Things seem to be a bit better on the magazine front with the Time Magazine app getting good reviews.

But these are still early days. The mainstream thought seems to be that iPad, Kindle and other digital platform users are willing to pay for their news and information whereas for the Internet that horse has already bolted. But the big key to iPad subscription success is for that subscription to cost less than the print option. Users understand digital offers major production savings such as ink, newsprint, having to buy new presses, distribution and the like and whereas there may be expenses solely to produce digital versions those users still believe a digital subscription should cost less than a print subscription. But at least there is general agreement that some sort of fee is acceptable.

Apple will want its share, publishers will want their share and the secret of this platform’s success will be to ensure that they are satisfied at a price that the user believes gives value for money. If someone gets too greedy that will be a large dumping thud you’ll be hearing.