The long-anticipated official debut of Apple Inc.'s iPad last month met expectations but did not rock the business publishing world.
While business media executives think Apple's latest device holds potential for selling paid subscriptions, publications and applications, they do not expect it to dramatically change their revenue model for digital content.
“As usual, Apple has got it mostly right in terms of packaging, marketing message and, maybe, business model,” said Steve Weitzner, CEO of Ziff Davis Enterprise, adding “[it] definitely holds some promise for content sales.”
On the other hand, publishers need to question “whether the iTunes store model will lead to incremental revenue from a larger, nontraditional audience,” Weitzner said.
Another question for publishers will be revenue share, Weitzner said. In Apple's iTunes and Apps stores, Apple generally takes 30% of revenue, leaving the larger share of 70% to the music label, musician or software application developer. In the digital book market, online retail leader Amazon has traditionally been less generous, taking 65% as its standard royalty for the Kindle Digital Text Platform. Last month, Amazon unveiled a new program that gives authors and publishers 70% of the digital book's list price, net of delivery costs, as long as the book meets several criteria, including a list price between $2.99 and $9.99. Amazon made it clear that the new program is “in addition to and will not replace” its standard program.
Jeff DeBalko, president of Business Media and chief Internet officer for Reed Business Information, had a similar reaction to the potential of the iPad. “Every publisher needs to get to work to see what kind of products they can build for the iPad and what the economic model might be.”
But DeBalko went further: “It only makes sense if it leads to incremental revenue,” he said. “That will only be achieved by providing new functionality and content for users who are willing to pay for it and higher value for advertisers who are willing to pay for it.”
Paul Miller, CEO of United Business Media's EE Times Group, agreed. “We will continue to develop content that will be delivered digitally, and we may indeed create some version for the iPad,” he said, adding: “The key is that the content is valuable to the audience.”
William Pollak, CEO of ALM, called the iPad “exciting.” “For ALM as a seller of information, I feel very good about the iPad,” Pollak said. (ALM is a publisher of legal and real estate newspapers, magazines and books, as well as subscription legal and business information.)
Pollak also noted the mobility of the iPad, which weighs 1.5 lbs (Wi-Fi) or 1.6 lbs (Wi-Fi+3G model).
“One of the things we've heard from our market is that they want portability,” he said. “A lot of legal information isn't very portable, but, with the iPad, it conceivably is.”
Consumers presumably will be able to access Web sites with an iPad without the special applications needed on Internet-enabled phones, said Steven Brill, co-founder of Journalism Online, the just-launched platform providing technology and market intelligence to newspaper, magazine and online publishers wishing to generate revenue from users of their digital content. Publishers working with Journalism Online will be using the new brand Press+ with consumers.
Journalism Online has already started talking to e-reader manufacturers and marketers about selling content formatted for those devices through the newspaper and magazine Web sites affiliated with Journalism Online. “And we intend to have conversations with Apple,” Brill said. “Once we've launched our platform and can demonstrate the critical mass we say we have, those discussions will bear some fruit, I think.” Journalism Online has affiliate relationships with 1,381 newspaper and magazine Web sites and blogs around the world, Brill said.
While the iPad will “absolutely” outsell dedicated e-readers such as the Amazon Kindle, “it's still a niche item,” said Tom Cintorino, exec VP-digital media for Northstar Travel Media. In the short run, he does not think his audience will be using the iPad in huge numbers, and it is not currently on his priority list to develop special content or applications for the device. M