Media & Fruits Part II: Attack of the Paper-Killing Apple

Another recent buzz is due to the pre-announced decision from Apple to not allow iPad subscriptions outside of the App Store. It is indeed a hard time for media companies who were already selling iPad apps as an add-on (sometimes for free) to their existing dead tree value proposition.

I understand press groups’ feeling of being imposed an unfair decision, but let’s take some perspective on this. Apple experienced through the iPod ecosystem one of the most important economy moment of the information era: they succeeded making the transition from an “old/physical media” (Compact Disc) to digital music at a late stage: while many consumers were using peer to peer networks to download “illegally” music for free. And they sold billions of songs to date!
This has not been done hand in hand with the record companies and now everybody agrees on the fact that this strategy was the only possible to save music industry, that needs anyhow to update its business model, it’s mode for doing business.

I have the same feeling here with newspapers and magazines on iPad. I believe Apple is aware that the current situation will lead to chaos, which is not a good state for establishing a lean new business. Apple has built a whole ecosystem it controls. There are just connectivity (but commoditization process of it helps, and agreements with Carriers is also an enabler; cost of owning this step being way too high!) and content that Apple, just like Orange, as said yesterday, won’t bother to cover.

Just like I also said regarding Orange, the most important step in Digital Information Consumption and Distribution Ecosystems is the aggregation (linked to credentials). And Apple proved it right for music (iTunes Store), radios/podcasts, apps (App Store on iPhone, iPod Touch and now on Mac) including games, movies and series (also through iTunes Store).

The only problem is that Apple doesn’t have (yet?) a typical aggregation platform for newspapers and magazines. Unlike this article claims, I’m sure Zinio is in Steve Jobs’ radar since the beginning. This is the logic of monitoring your complementors activity & innovations and partnering/buying them when they step on your strategical path. Remember iBooks/Delicious Library story or Siri?

Of course, this whole logic starts from the assumption that newspapers and magazines on iPad will be big enough to take a significant market share to paper versions of it. If this is the case (just like it has been for all the media and entertainment markets listed in the previous paragraph), Apple doesn’t want (and press groups neither, except that they don’t know about it yet) iPad versions to be treated as a nice add-on, as a product plus, as a freebie to be given in exchange of loyalty to a title on paper. And if people (beyond early adopters, which could very well be a market on its own for a few years, waiting for other market segments) are not used paying for it as from the beginning, it will be impossible to revert the process.

And that is, according to me, the reason of this move. Apple is a very bad communicator, and there are probably points in the strategy that could, if publicized, cost trials to them. Consider also that Apple already had difficulties talking to dozen of carriers when iPhone stepped out of the US. Imagine how they would feel talking to thousands of press groups…

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4 Responses to Media & Fruits Part II: Attack of the Paper-Killing Apple

  1. yves says:

    Good point. And i tottaly agree. but from a publishers of view : Apple is a big fat pimp who screws his own bitches šŸ™‚

  2. Thanks for your comment, Yves. The aim of the book is to help publishers (but also all other media and telecom players) to understand what’s going on and to find creative opportunities in terms of products, features, business models…

  3. Marc says:

    Good article Fabian.
    The main question is if traditional magazine formats are the future to go.
    It will be the first step, as we convert paper to digital as this is what we have to start with. New devices nevertheless require new content packages. Music and video has learned us that only converting a former medium to digital will lead to price drop and if no added value is part of a new digital pack, just as a more automated way of creating/ processing the content, the business case is difficult and old castels will collaps. When the new princes enter the market, that do not come from the traditional paper industry, the game can become difficult. Epaper is a new medium with paper feel, but it is a complete new package with new business models, new ways of consumption and new creation/ distribution methods. The content companies at understand this have the digital future. And the market is not starting, but princes already entered the playground…

  4. Thanks Marc. I agree with you. What’s interesting is that Apple and Google don’t seem interested by holding a dedicated aggregation role in this ecosystem. Which leaves opportunities for companies such as Zinio which will need, as you say, to package their content into services or experiences in order to reach sustainable business models.

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