Sunday, January 02, 2011

Cry Wolf, Cry Pad

The iPad and all its cousins will save the bottom line of digital media houses. Or so were we told. Sales figures (sales of e-mags have gone down by 20% despite a steadily increasing amount of iPads in the market) show that people are less willing to pay for iPad versions of content. Not after the initial honeymoon or curiosity phase at least. 

Why do I not think that pads or tablets will save the bottom line of struggling media houses? Some major, some minor reasons below.  

iPad is one of many tablets available. Photo courtesy of Apple.

  1. What you get isn’t exactly groundbreaking compared to what you have seen or experienced before.
  2. The tablet editions can in most cases only be viewed on one specific device or type of device. 
  3. The devices need to be charged.
  4. They are are pretty big to be carried around.
  5. They can’t be folded and will hardly or not at all fit in your pocket.
  6. They need to be carried around as opposed to magazines or papers that can be thrown away (of course so can tablets, but that will be expensive in the long run).
  7. You cannot give the tablet editions of newspapers or magazines to someone else after you finish.
  8. They don’t feel or smell like paper. And can’t be touched, felt and 'owned' in the same way.  
  9. The interesting articles or photos can’t be ripped out.
  10. You get pretty much all of it for free via the Internet anyway.
  11. These editions costs more than most people consider to be be fair. After all the free rides on the Internet have lowered their willingness to pay.
  12. The user experience is not much better, if at all, than what is the case with the Internet editions.
  13. They are attractive for thieves.
  14. They brake easily when falling to the ground. 
  15. They can’t be recycled. Or at least they won’t. 2,4 million mobile phones are sold in Norway every year. Only 35,000 are returned to a recycling plant.
  16. They take a lot of energy to produce and has a lifespan of less than two years (estimate compared to mobile phones which last 18 months on average). I do need some help on this one. How much energy does it take to produce a tablet pc? How much energy will it take to keep it charged for two years? And how much energy does it take to produce a newspaper or magazine and to transport it to the average reader? Just a couple of comparisons: Researchers claim that 2,000 times more energy is required to produce bottled water than to produce tap water ( And to produce the 'environmentally friendly' car Toyota Prius takes the equivalent of 4,500 litres of petrol. Before it even reaches the dealer (
  17. They need an Internet connection to be updated. Or the devices will alternatively have to be equipped with a broadcasting chip in order to be updated that way, although they will then need to be in the coverage area. Broadcasting Isn't Only for Radio and TV.
  18. They are not updated regularly. Neither are paper magazines of course, but consumers that are used to always updated news on connected gadgets might expect that. 
  19. Screens are too small to give you 'the full picture' as you can get in a newspaper or a magazine.
  20. The devices are capable of so many other useful, communicative and entertaining features that reading no longer gives you the peaceful time you often are looking for.  
  21. Printed material is easier to read than electronic magazines or newspapers on a tablet, and doesn't strain your eyes as much.
  22. You can't offer samples together with an electronic versions. Such as a fragrance in Vogue. 
  23. Not being able to own a physical product diminished a lot of the value of it. This may be due to emotions and nostalgia, but it is nevertheless relevant. A newspaper or a magazine is a physical carrier of media. An electronic version is not.
  24. The pleasure of collecting a certain issue is taken away. Now everyone can download any issue via the Internet. Rarity disappears. 
  25. The ads of an electronic version of a newspaper or magazine can be much more personal or intrusive than what is the case with a paper version. When you download something, the version of the electronic issue may be tailored according to what is known about you due to earlier behaviour and surfing on the tablet.    
  26. They don’t really give you much that your phone and laptop didn’t already give you. Did someone say another gadget that you don’t really need?

Is Greed Good?
So what is the solution? Much of what is wrong is that you actually need a certain device that needs to be carried around in order to consume the content. I still think that it will be a good start to stop being greedy. People don’t mind paying for apps. Apps usually cost a dollar. Start looking into micro payments. If everyone can get an edition for 25 cents or a month worth for a fiver you may be on to something. At least in order to reach out to those people that don’t actually mind being forced into carrying around a device to be able to get their latest news fix.

But will the tablets save falling revenues of media houses? They will contribute, but to a much lesser degree than what we are led to believe. I'd stop crying pad and start looking at other business models.

I'll furthermore argue that the gadget makers will need to become less greedy. Apple takes 30% of revenues for apps and content sold to their devices, Amazon takes an unheard of 65% for content to i.e. the Kindle. This is very similar to how telecom operators operated for years towards content providers, taking a percentage of revenues for content. Now we see the same walled garden story all over again. A story that never worked well in order to create a successful win-win mobil market.

Media houses also need to understand what works better on paper than in an electronic version of an issue. Each media has it's own strong sides. Realize what they are for paper and improve them. Use the characteristics of paper and the contexts of how it is used. It is all about understanding the user or reader. What do they want, how do they behave? 

Just Be a Great Pipe 
Gadget makers should already have made most of their revenues when selling the device. It is as if Porsche sells a car that can only run on a certain fuel exclusively found at Shell petrol stations, and where Porsche would demand a high percentage of the revenues from Shell for that certain fuel even though they didn't even produce the fuel in the first place. Let gadget makers be great at producing gadgets, application producers great at producing apps and content providers great at producing content. And then cooperate.

Two years ago I worked as Director of Development for Norwegian Broadcasting Corporation (NRK). Some colleagues of mine and I had a meeting with Eddy Cue at Apples HQ in California. Cue is now in charge of iTunes and the App Store and was recently the runner up in the 100 Most Creative People in Business 2010 Awards (after Lady Gaga). In 2008 he said the following about telecom operators;

Be a pipe, just be a very good pipe.

Very wise words indeed.