Like almost everyone else who works in the journalism industry, I desperately hope the iPad and similar devices will save newspapers from economic irrelevance. I really hope stories like the one blazed across The Australian
's media section today -- "Hype is justified as a new media model emerges
" -- are right.
But how could they be right? Where is there even a hint of a viable business model for funding large-scale journalism in such a device, or indeed in moving to a paywall model on the internet?
Here are the simple facts:
- Publishers will save the cost of printing and trucking printed newspapers -- maybe 30 or 40 cents per copy printed. Virtually all other costs remain the same.
- There will be no saving at the retail end -- Apple and other tech companies will replace the newsagent on a similar commission basis.
- There will be a dramatic decline in revenue from readers. Currently they pay around $12 a week for printed newspapers -- that will probably halve or more when they buy apps or pay-per-view. And how many buyers of the newspaper will convert to a paid digital option when there is so much free content available elsewhere? Maybe half, or a quarter, or less?
- There will be a dramatic decline in revenue from advertisers. First, they will be reaching a much smaller number of eyeballs. Second, there will be almost no pass-on readership -- the readership figure, which is currently two to four times higher than the circulation figure and is used as a metric by advertisers to caculate ad rates, will collapse
- So the net result is a small saving in printing and trucking, no saving in retail commission and -- if the digital platform ever becomes the major or only platform -- huge declines in both circulation and advertising revenues.
None of which is to refute the idea that the iPad isn't a wonderful device that will bring joy and utility to millions of people. It just won't -- and can't -- save the economic fate of journalism.