The iPad and the saviour of the publishing industry

Ralf Schlozer
Jan 29, 2010

Steve Jobs can be sure of at least one success and that is the instant domination of all blogs around the world with one product launch. There have been many things stipulated, but I would like to get back on the influence the iPad could have on the publishing industry. There are remarks abound, about the great opportunity the iPad poses to publishers. But it should be spelled out explicitly: Steve Jobs is not interested in saving the publishing industry. He wants to sell iGadgets including software and everything around it. What will publishers gain?

Let’s have a look at the numbers: Assuming a consumer buys an iPad for publishing products it means a one-off fee of $500 and then every month an additional $30 (the web access charge) less to spend on publishing products. This money goes into the pockets of Apple and the network provider. Of course a consumer will expect a huge discount in return for the publishing content he reads on the iPad. That is the money the publisher is not getting. Sure, the publisher is saving money by producing e-content. Printing is only a small fraction though, about a seventh of the retail price. The biggest cost factor though is the retail channel which typically receives up to 50% of retail price. However this is the portion Amazon or iBooks are vying for and what they are already charging. In the end there will not be a lot of margin left after giving consumers the discounts they expect.

Another issue will be the quick distribution of illegally copied content, aka file sharing. It is already common knowledge that everything that can be copied will be copied — and electronic versions of publishing products are no exception. And it is very unlikely that somebody will buy a product once he already has an electronic version. Still an on-line shop as iTunes is touted as the saviour of publishing and that all will move to a fully digital model soon.

Why is the comparison to music downloads misleading: Most music is consumed while we do something else. A better comparison might be movies. Like reading you cannot watch a movie (I am not talking about TV) while doing something else. And while some people are going to great lengths to download movies on the web for free (and practically all are there already), cinema attendance actually went up. In other words the experience of a main activity is more under scrutiny of a consumer. The demise of music companies is a big warning sign for the publishing industry, but all media and content types have their own merits and we should not jump to conclusions prematurely.

By the way, is the iPad even the right product for e-books? It has a colour screen but in an InfoTrends research only 3.4% of consumers stated they want a colour display for an e-reader. The iPad is a player for all content, but in the same survey only 6% of consumers stated they expect a player that can handle music and video as an e-book reader. The main reason for not planning to buy an e-reader was, after preferring print, that they are too expensive. Nevertheless the hype machine is already in full steam and the iPad will be successful, at least in the 5% of the population, who are the technophiles. The instant feedback on the excitement over the iPad launch one is getting is not surprising, because people being at an Apple product launch or following it on twitter, blogs and feeds are the technophiles. Equally less surprising is that many peers in the discussion sound like hot candidates for an iPad or e-book or whatever comes next. The rest of the population, not in the discussion at the moment, are most likely much less technically inclined. Still 5% of the population are a couple of million consumers and growth rates when starting from0 are infinite.

It is an old snippet of wisdom, that in the short term developments are overestimated, but in the long term they are underestimated. Publishers and service providers will need to adapt to the change, even if this means losing revenue to e-providers. Some will have great ideas on content and find new business models based on the new opportunities e-publishing offers. That is good. Many others in the publishing industry will struggle. However in all the hype publishers should not forget that many are making good money on printed products. Perhaps too little time is spent in making printed products more attractive and exploiting ideas and opportunities for example digital print offers in on demand production, customisation and personalisation. Also too little is being published about the consumers preference for print and the higher value a printed product conveys. The Printing and publishing industry does not have a Steve Jobs though!

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