Is the iPad Paving the Way for a Strong Recovery in the Publication Industry?
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The availability of free content has negatively impacted many media categories, including music, home video, books and television. Above all, digital distribution of free content has crippled the newspaper and magazine industry, causing once-powerful publication companies to scramble for revenue to keep the presses running.
Advertising revenue has been scarce, especially during the recent economic downturn, and circulation has been suffering.
Akin to the impacts that the iPod and iTunes have had on the music industry, Apple's (Nasdaq: AAPL) Steve Jobs has now stepped in to secure the future of newspapers and magazines with the iPad tablet computer... maybe.
According to a study conducted by Oliver Wyman, magazine subscriptions through the iPad will account for an estimated $1.3 billion in additional revenue by 2014. While this sounds like a strong boost for an industry that could be viewed as circling the drain, in reality interactive tablet versions may end up being little more than a band-aid.
The study’s author Martin Kon gave several reasons for the tablet computer being a game changer for the publication industry, starting with the unique visual and touch sensitive capabilities that are projected to rapidly advance in the coming years. For example, think of the limits that were evident with the first iPods, and look at what they are capable of now.
A device like the iPad and the subsequent clones and upgraded versions offer something that traditional magazines cannot: they bring the ability for interactive video and photo galleries, comment sections and chat options -- all components that can attract readers in new ways.
Kon added that consumers, especially the younger generations, are now comfortable with digital content and the many access-points through a variety of devices. Consumers are comfortable enough to link their credit card numbers to accounts with Apple’s iTunes, Amazon.com Inc. (NASDAQ: AMZN), or eBay's (Nasdaq: EBAY) PayPal.
Another push for the advancement of tablet computers like the iPad over traditional physical publication is the green movement. While the amount of paper saved if popular publications made the transition to the digital media is a plus for the ecosystem, the amount of money saved on materials in labor would be the real boost for the industry.
To put the potential iPad boost into context, Time Warner Inc.’s (NYSE: TWX) Time Inc. saw $900 million in revenue in the last quarter alone.
The $1.3 billion estimate takes into account the amount of print dollars that the digital versions ill cannibalize.
The study from Oliver Wyman, which surveyed 1,800 people, presented a best-case scenario, as consumers say they are willing to pay print prices for digital magazines.
Peter Kafka of All Things Digital noted that based on the consumer willingness to continue to pay similar prices according to the study, some of the major publications will keep prices of iPad versions at the same level, while Hearst has talked of increasing prices for some digital titles.
Kafka added that the print price levels or possible increases for digital versions will not be received well, due to the consumer needing something more than the physical counterpart can offer.
The iPad and its ilk are surely becoming a staple of the tech community, and if momentum sustains to the point where consumers must have a tablet of some kind, the boost for the publication industry may be impressive. It is safe to say, however, that it will not be a savior and only those media outlets that take full advantage of all forums to reach consumers will survive going forward.
Advertising revenue has been scarce, especially during the recent economic downturn, and circulation has been suffering.
Akin to the impacts that the iPod and iTunes have had on the music industry, Apple's (Nasdaq: AAPL) Steve Jobs has now stepped in to secure the future of newspapers and magazines with the iPad tablet computer... maybe.
According to a study conducted by Oliver Wyman, magazine subscriptions through the iPad will account for an estimated $1.3 billion in additional revenue by 2014. While this sounds like a strong boost for an industry that could be viewed as circling the drain, in reality interactive tablet versions may end up being little more than a band-aid.
The study’s author Martin Kon gave several reasons for the tablet computer being a game changer for the publication industry, starting with the unique visual and touch sensitive capabilities that are projected to rapidly advance in the coming years. For example, think of the limits that were evident with the first iPods, and look at what they are capable of now.
A device like the iPad and the subsequent clones and upgraded versions offer something that traditional magazines cannot: they bring the ability for interactive video and photo galleries, comment sections and chat options -- all components that can attract readers in new ways.
Kon added that consumers, especially the younger generations, are now comfortable with digital content and the many access-points through a variety of devices. Consumers are comfortable enough to link their credit card numbers to accounts with Apple’s iTunes, Amazon.com Inc. (NASDAQ: AMZN), or eBay's (Nasdaq: EBAY) PayPal.
Another push for the advancement of tablet computers like the iPad over traditional physical publication is the green movement. While the amount of paper saved if popular publications made the transition to the digital media is a plus for the ecosystem, the amount of money saved on materials in labor would be the real boost for the industry.
To put the potential iPad boost into context, Time Warner Inc.’s (NYSE: TWX) Time Inc. saw $900 million in revenue in the last quarter alone.
The $1.3 billion estimate takes into account the amount of print dollars that the digital versions ill cannibalize.
The study from Oliver Wyman, which surveyed 1,800 people, presented a best-case scenario, as consumers say they are willing to pay print prices for digital magazines.
Peter Kafka of All Things Digital noted that based on the consumer willingness to continue to pay similar prices according to the study, some of the major publications will keep prices of iPad versions at the same level, while Hearst has talked of increasing prices for some digital titles.
Kafka added that the print price levels or possible increases for digital versions will not be received well, due to the consumer needing something more than the physical counterpart can offer.
The iPad and its ilk are surely becoming a staple of the tech community, and if momentum sustains to the point where consumers must have a tablet of some kind, the boost for the publication industry may be impressive. It is safe to say, however, that it will not be a savior and only those media outlets that take full advantage of all forums to reach consumers will survive going forward.
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