Thursday, January 28, 2010

Why old media loves Apple's newest thing

The cream of the New York publishing industry rose to the occasion of the Apple iPad launch, then sat in the shadows for almost an hour as chief executive officer Steve Jobs extolled the gadget's utility for just about everything – gaming, networking, browsing, watching videos – except reading. The legendary Kindle-killer of the book trade's imagination made no appearance among the iPad's multiple personalities. But then Mr. Jobs introduced the print brigade. As the executive previewed a nimble, full-colour application of the influential newspaper, it became obvious how important the iPad was to him and his competitors. Although it may not be designed primarily as an e-reader, the device Apple introduced in San Francisco yesterday was greeted as the potential lifesaver of a drowning industry. Five of North America's largest trade book publishers – Penguin, Harper Collins, Simon & Schuster, Macmillan and Hachette – joined yesterday's party as pioneer suppliers of Apple's new iBook store, clearly hoping the new service would do for their business what Apple's iTunes store did for a music business brought to its knees by piracy. But those with the most hope invested in the new iPad are newspaper and magazine publishers who are struggling to open new revenue streams as print advertising shrinks and readers seek free content on the Internet. “It's the best chance especially newspaper and magazine content publishers have, said Kaan Yigit, a Toronto-based new media analyst. “A predictable, good-looking platform that's more intimate to the consumer and is more ready to replicate some of the features of the printed paper,” he added. In addition to unveiling its new iPad app this week, The New York Times announced the creation of a new “reader applications” division focused on developing “a digital reading experience similar to a print platform.” In December, five of the biggest magazine publishers in the U.S. combined forces to create a digital storefront, called Next Issue Media, to retail electronic versions of such heavyweight titles as Time, Esquire, Vanity Fair, and Better Homes and Gardens. The announcement included a video previewing an electronic version of Sports Illustrated on a tablet that resembled an unbranded iPad. At the same time, consortium member Hearst Corp. acted on its own this month to introduce Skiff, which it called “the first e-reader optimized for newspaper and magazine content.” Among others, startup Plastic Logic also released a long-anticipated next-generation e-reader at the Consumer Electronics Show in Las Vegas. And Bonnier Group, which publishes magazines such as Parenting and Popular Science, also launched a demo of its vision for research and development of digital issues. “I think the entry of these tablets into wide use will revolutionize the magazine business in a way that will be happy for us,” Condé Nast editorial director Tom Wallace said in an interview at the time. “It is going to change dramatically the way magazines are made, the way magazines are marketed and the way magazines are consumed.” Given the dramatic success of the Amazon Kindle over the past three years, book publishers are already familiar with the drama. Their enthusiasm for the iPad is based largely on the hope the new gadget will give them more clout in negotiating prices and release dates with Amazon. This week, industry newsletter Publishers Lunch reported that New York's “Big Six” trade publishers had persuaded Apple to adopt a new pricing model that will restrain and potentially eliminate Amazon-style discounting of electronic titles. Rather than selling e-books wholesale, according to the newsletter, publishers are attempting to negotiate a deal in which they retain ownership of the titles and license Apple to distribute them on a commission basis. Distributors would pay only for the books they “sold” at a fixed rate independent of the retail price. “While some consumers might resist publishers' pricing under this model, it is a way of offering e-book owners access to new high-profile releases simultaneous with hardcover release,” it said. Ownership of e-books is already a hot issue within the industry, with almost all players hoping to enforce some form of “digital rights management” in the distribution of their products. This often means that “buyers” of e-books are unable to lend, trade or resell the titles, as they are with print books. The new digital cornucopia is wonderful, according to Darren Wershler, professor of communications at Ontario's Wilfrid Laurier University. “But I'm profoundly distrustful of anybody who comes along and offers to consolidate all that for me,” he added. “I don't want them making choices about what I'm reading, where I can get it, what format it's in, which machines I can look at it on. All of those things are a real problem, and nobody ever talks about them.” Apple did win plaudits yesterday by embracing an open software standard for formatting e-books, called “epub,” that makes it possible to read them on any devices that use the same standard. By contrast, Amazon uses a proprietary format for Kindle, which forces customers to shop at its store exclusively. The iPad also has the sex appeal notably lacking in the Amazon reader. “The Kindle looks like it was designed in a Russian tractor factory,” Mr. Wershler said. “The aesthetics of the thing are horrifying.” But Apple clearly has bigger game in mind than the traditional reader who values a good page-turner in crisp black and white. Whatever ultimately emerges from the tablet revolution would likely be unrecognizable today, according to Mr. Wershler. “To call what we're reading on our phones and our computers today e-books is like calling a car a horseless carriage,” he said. Amazon has done “a great job” priming the market with the Kindle, Mr. Jobs said after an hour's chat about the iPad's talent in music and drama. “But we're going to stand on their shoulders and go a bit further.”

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