While a lot of people in the media industry spent the past couple of years figuring out how to make old media business models work online, and media critics droned on about the death of newspapers and magazines, technology innovators focused on fixing the problem.
What problem? Getting consumers to want to pay for digital content. I took a pretty hard line on the issue of free versus paid content, pushing for free as the answer. I now pay for a dozen or so subscriptions across the various electronic devices I use to consume content.
The New Newspaper, Magazine
Newspapers (in print form) may be “dying” in terms of subscription declines and upside-down business models, but devices like Amazon’s Kindle and Apple’s iPad are breathing fresh life into publishing for newspapers, magazines, and anything else in print.
Nobody knows for sure how many Kindles have been sold to date, but there are plenty of guesses out there that suggest there are at least 5 million out there. Of course, that’s nothing compared to the iPad. Apple moved 7.33 million iPads in Q4 – more than 3 million MORE than the previous quarter.
That’s enough devices to think about, but there are also tons of new tablets running Google’s Android platform – and I think the new Blackberry Playbook tablet will be a hit.
All this adds up to a lot of mobile devices in the marketplace – new devices built for a world of digital media. Instead of throwing your slippers on and marching down the driveway to get your paper, you can just turn on your reader.
Same Old, Same Old
Some skeptics might argue new devices don’t change the problem. Publishers have been delivering online content for years and few have been able to drive significant profits from it. True, but I think these new devices dramatically change consumption habits. I’m much more likely to subscribe to content on a Kindle or an iPad because it’s cool. It’s a new format and it’s convenient.
One major factor that has limited the growth of online subscriptions for publishers is the media industry’s payment infrastructure. Most media conglomerates would like to control distribution and payments, limiting users’ ability to buy subscriptions from competitors. Some businesses have tried to organize publishers through partnership, but the models have failed to gain traction. Amazon, Apple, and Google each now have a payment platform that simplifies digital content subscriptions for publishers and consumers alike… at a price of course.
New Payments Platforms
Earlier last week, both Apple and Google launched services that allow publishers to control billing for digital content subscriptions distributed in apps – turning up the heat on competitor Amazon.
Apple’s subscription billing service, announced last Tuesday, lets publishers of magazines, newspapers, music, and video set terms This essentially lets consumers buy content for any Apple device they have (not just limited to the iPad).
By comparison, Google unveiled its One Pass subscription publishing service last Wednesday, making digital content available across tablets, smartphones, and websites – great news for the growing audience of Android users (the second most popular smartphone platform).
All this adds up to more options and flexibility for getting your favorite content. No longer do consumers have to subscribe from each publication’s website. Now they can get all their subscriptions on one platform (or three if you will).
Apple takes its standard 30% cut of revenues from App Store purchases. Google OnePass will also probably be about 30%. This may sound like a lot until you realize that Amazon.com has charged publishers upwards of 70% in the past (Amazon recently matched Apple’s 30% cut). It’s a good thing to have all three in the game since it should drive the split down. I am concerned about the cable/satellite TV problem, where you might only be able to get one type of content on a particular platform. If publishers can keep pushing their content to all three, consumers will be much happier.
Of course, I suspect any of these revenue splits will make it difficult to generate significant profits – then again when you consider the volume of devices in the market place already, and the limited selection of titles that have converted to the new format, there could be some meaningful short-term revenue gains for publishers convert their content to the new devices today (for example, I can’t get my Men’s Health on my Kindle – I might be more likely to switch to a magazine I can get in digital form).
This is a much better deal for smaller publishers looking to build an audience. Google, Amazon, and Apple deliver the audience for those that publish great content. I can picture a new wave of start-up magazines who opt to go all-digital. Who will be the Angry Birds of digital magazines or newspapers? That’s what I want to know.
For now, I think consumers are more likely to pay for content they can get on their Kindle, iPad, or other tablet or reader – and that’s good news for publishers, Apple, Amazon, and Google alike.