The hype around the iPad as the saviour of the newspaper industry is fun but wrong. And iPad newspaper apps are a fascinating diversion from the real, continuing dilemma for publishers — which is if, and how, they can successfully charge a substantial number of consumers for their digitally delivered content.
The iPad changes nothing except the form factor of the device and — if anything — brings this problem into sharper focus.
The iPhone is an apps environment — where the consumer wants a precise slice of specific functionality tailored to the device’s capabilities. They use it because they are mobile (i.e. not in front of a laptop at the time), and for short, sharp sessions. And because they have some history of paying for content on their mobile it’s possible for publishers to charge small amounts, typically in the form of one-off fees.
The laptop — or desktop — on the other hand, is a browse device with a big screen where the consumer interacts via the web, and is used to receiving their content for free. Newspaper publishers have built large audiences here, which they have monetised through advertising.
Until the iPad came along, the big question was how the publishers would start to charge for this previously free content. There’s been a lot of talk but no concrete indications that this is likely to work.
Then the iPad appeared and publishers got very excited, because they thought they might somehow be able to circumvent the tricky paying-for-what-used-to-be-free issue. iPad apps would be the solution — the device would be a bigger iPhone, so iPhone logic would apply on a grander scale: the apps would be big and beautiful, and the consumer would be only happy to use iPhone logic, and start paying immediately.
Only the iPad is as much laptop as it is iPhone. It functions pretty well as a small laptop, and browses the web nicely. So actually the device does not help to dodge the pay-for-what-used-to-be-free problem at all — instead it just reinforces it. Am I going to pay $4.99 for The Australian’s iPad app, or use my iPad to browse for free?
The answer to this is the same as the answer for my laptop: it depends on what I get for my money. And they key to this, it seems to me, lies in very clear product differentiation. We know, of course, that consumers will pay for content online — they pay for the Wall St Journal, Eureka Report and Crikey. I think we also know that they won’t pay for the same thing that they can get free elsewhere. So the challenge for the publishers is essentially unchanged by the emergence of the iPad.