Not long ago media conferences had a predictable, tedious theme. “O noes! The media is dying! The internets are stealing our stuff! Whatever shall we do?” Now they’ve got a new one: grab an iPad and bend over for Apple.
And why not? Three years ago telcos bent over to receive the iPhone 3G, paying well above the usual handset subsidy and even, here in Australia, an ongoing percentage of revenue. Despite the pain of having their tubes collapse under massively swollen data loads, they learned to enjoy it.
Apple’s deep alliances with both old media companies and the telcos are a powerful coalition, according to Tim Wu, author of The Master Switch: the rise and fall of information empires.
“Apple’s model is basically one that the old media was always trying to do and failing to, which is to bring their undoubtable ability to create content to a platform where they can make money and deliver their content to consumers in a way that consumers like,” Wu told the Digital Directions 2011 conference in Sydney last week. “Now old media isn’t so happy that Apple is putting them in this subservient position, they’re used to being in charge, but in truth Apple is the best thing to happen to old media in a very long time.”
From a news publisher’s point of view in particular, this tablet-based scenario looks appealing. Instead of content being out on the open internet for free, gathering low-grade advertising revenue, it’s delivered through a platform-specific app for iPad or Android where they can charge real money for it.
But Kevin Anderson, journalist and digital strategist, isn’t so sure: “Thinking that tablets are going to save our bacon, you’re not just fighting against other news apps, you’re fighting against every other app that’s on the iPad. When I’m sitting trying to kill time I don’t read news, I play Cut the Rope.”
The fundamental issue is that we’ve gone from an information scarcity market to one of information abundance, and one where the barriers to entry for new competitors are almost non-existent.
“That’s what [Rupert] Murdoch doesn’t quite understand yet, why he’s actually not been terribly successful in digital businesses,” Anderson said. MySpace is the classic example, bought by Murdoch along with its parent company in 2005 for US$580. Today? Hello Facebook.
Right now Apple has the old media companies exactly where it wants them. And that’s why, as John Naughton wrote in The Observer, Apple is turning into the evil empire.
Apple’s iTunes Store is both the marketplace and the tollgate. All those credit card numbers on file, and customers willing to pay with a single click. It seemed worth paying Apple’s 30% commission.
Then Apple changed the rules. Any publisher selling a digital subscription on their website must now also make that available for sale within the app. Amazon’s Kindle, for example. Amazon can’t just sell the books on their website for you to download and read on your iPad using the Kindle app. Now the app must have a “buy” button. If the punters buy through the app — and they’re bound to, because it’s easier than going out to the Amazon website and downloading separately — Apple takes its 30% cut.
“Publishers have been furious about this, but there’s nothing they can do about it,” Naughton wrote. “If they want to do business on the iTunes Store, then they have to do it Apple’s way. In itself, this was just an example of the Big Unfriendly Giant flexing its muscles, but it could be a harbinger of things to come.”
Media critic Charlie Brooker put it more bluntly in The Guardian: “Apple continually attempts to scrape even more money from anything that might conceivably pass through iTunes’ tight, leathery anus.”
Whether Apple’s strategy will work long-term for the media companies comes down to the question of which model is now the best: Apple’s closed system, or the naturally open system of the internet for which Google is the prime example.
“If you think that everything is changing forever and people aren’t interested in old media any more, then Google has the advantage because who cares,” Wu said. “But if there’s still a strong market for sitcoms, TVs and all this sort of stuff — the TV content — then Apple has in some ways done something quite ingenious by bringing old media to them.”
*Stilgherrian attended Digital Directions 2011 as a guest of the organisers