When Apple Inc. unveiled the iPad last year, co-founder Steve Jobs, with his characteristic aggrandizing touch, called it nothing short of "magical." But he wasn't the only one who thought so. Publishers were also hoping that the iPad would have the mystical power to turn back time.
Newspapers and magazines are still feeling the impact of the economic downturn, but their woes stretch back years, to the popularization of the Internet as a way to consume news. The publishing industry still struggles to stand out from a churning sea of unpaid online content. Few publications have enjoyed much success in persuading their readers to pay for digital products. The reader-friendly tablet, publishers thought, could be the device to change all that.
Now it seems they should have been more careful what they wished for. Apple's long-awaited system to sell subscriptions on the iPad, unveiled this month, gave publishing companies a new way to charge for magazines and newspapers. But the response was not entirely friendly. Almost immediately, the industry, which had been looking to the iPad as its possible saviour, attacked the terms as onerous: if subscriptions are bought through iTunes - and many readers will surely prefer to do it that way, given its popularity - Apple will take 30 per cent of the price, and will keep most of the subscriber information for themselves.
"This trips us up pretty good," said Earl Wilkinson, the executive director and chief executive officer of the International Newsmedia Marketing Association (INMA), a not-for-profit industry group made up of news media companies from around the world. Within days of the Apple announcement, the group held a roundtable at which publishers from Europe, Britain and Canada expressed their fears over the new model.
While much has been made of the 30-per-cent levy, it's the least of the industry's problems. After all, traditional newsstands selling products on paper keep a much larger share, roughly half of the cover price for most magazines. Most publishers are actually much more concerned about other restrictions, Mr. Wilkinson said. Under Apple's rules, for example, publishers can't offer a discount to customers who bypass iTunes and buy digital subscriptions through their own websites.
That's important, because if readers buy subscriptions that way, publishers can keep access to their personal data. And in a digital age, the advertisers who keep most publications afloat are demanding more detail than ever about who the readers are and how they interact with the product.
"It's all about control of the data … they're worried about having Apple established as a gatekeeper to the customer," said Morgan Stanley analyst Ben Swinburne.
But why should readers care, as long as they can still easily buy the content they want?
How this battle develops will shape everything about the media industry in a digital age. Apple has already invented a device (the iPod) and a payment and distribution system (iTunes) that gave it unparalleled dominance over the music industry. Most industry players believe this will be different. There will be much more competition, with a bevy of other tablets coming to market from powerful players such as Hewlett-Packard Co. and Research In Motion Ltd., and software from Google Inc.
No one knows how well these alternatives will succeed, or how much Apple's pricing model will dominate, but these questions will determine how much of what you love to read will be available to you in new forms, which media companies survive the transition - even the quality of what they can offer readers.
Google has started the competition, with its Android operating system for new tablets such as the Motorola Xoom and the Samsung Galaxy. Last week, a Google announcement was heralded for challenging Apple's subscription model: the Web giant unveiled the One Pass service, which will allow publishers to offer subscriptions while only giving 10 per cent of the revenues to Google and gives them access to information such as the name and co-ordinates of their customers. (But these subscriptions are for access to websites that require payment, not for app purchases.)Report Typo/Error
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