Will the iPad save newspapers?


Accompanied by endless media coverage and cues in the streets, Apple’s tablet computer, the iPad, was released in the US last weekend. Heading for Australian shores later in April, it’s the most visible example of the new generation of handheld devices some predict will eventually see the end of the laptop.

The iPad is set to make wireless email, web browsing and the consumption of music and movies on its 7.5×10′ touch screen display easy, but it comes with very heavy expectations. After a decade of decline we’ve seen a slew of stories about the death of newspapers, but many in the news business are pinning their hopes on Apple’s latest gadget. Newsweek editor Jon Meacham said the iPad ‘could finally be the device that does for visual content what the iPod did for music’. Many of America’s biggest media organisations agreed to non-disclosure clauses in return for early models, allowing them the time to program and release native iPad news delivery tools.

But the biggest sticking point about online content is who’ll pay for it. Rupert Murdoch’s News Corp has addressed the question with some controversy lately, intending to restrict online content unless users pay for it. As Murdoch said in a recent interview; ‘[customers are] very happy to pay for it when they buy a newspaper, if they read it elsewhere they’re going to have to pay.’

Once upon a time content was simply taken from the newspaper and put straight online at little extra cost. But with so many more people opting for online over buying newspapers and advertising income falling as a consequence, nobody knows where the revenue newspapers need to keep traditional newsrooms afloat will come from.

More importantly, because of the bells and whistles of technology at their disposal, iPad users are going to expect more than just text. Embedded video files or links to sources are only the beginning, but they’ll need a new level of production infrastructure, and with their business model threatened few newspaper owners are going to pay for the staff or systems to enable it.

Chris Mitchell, editor in chief of The Australian, is optimistic because content creation isn’t the expensive part of producing a newspaper. “When you remove the fixed costs in newspapers they become much more viable,” he told ABC’s Media Watch last week. “Without paper, ink, petrol and trucks you’re taking out between 60 and 70 percent of the cost base.”

As the business evolves the third party distribution of newspapers will also change. At the moment the newspaper distribution industry (including newsagents) receives around 20-25 percent of the cover price. If you download all your news on your iPad, might Apple one day impose a distribution fee on news publishers?

Of course the current distribution model isn’t the only one out there. Maybe media corporations like News Corp will give you an iPad for a fixed price per month contract, much like a phone carrier does with your mobile. It certainly makes sense for the media companies of the world who could deliver vertically integrated media from music and books to news and movies on one device.

Such ‘company-wide’ content delivery might be the value-add that will save news publishers. Getting news over the web alone is unlikely to convince consumers to pay US$499 for the iPad (no Australian pricing has been set), particularly if they have to pay for news subscriptions on top. Perhaps News Corporation, Sony or Viacom would do better offering tiers of all the news, movies, music, ebooks and TV under their respective corporate umbrellas for $19, $49 or $99 a month.

Few disagree things need to change as news consumers move online in droves. The current system of putting stories from a newspaper on a website and hoping to attract enough ads to fund reporting is a failed experiment. The New York Times spends ten times more a year keeping reporters in Iraq and Afghanistan than the Huffington Post alone (one of the biggest new media players) makes in ad sales. Old-style news is expensive, and the revenues from new media simply can’t cover it.

But will the iPad be the magic bullet the industry hopes? While it had the lion’s share of media attention and sold 300,000 units during its US weekend release, US Apple analyst Gene Munster admits he vastly overestimated his iPad sales estimates, downgrading his 2010 prediction from 5.6 to 4.3 million.

Without a Holy Grail of digital news content delivery the newspaper business looks set to keep struggling, but it won’t stop hoping. Rupert Murdoch told the US National Press Club he considered the iPad ‘a glimpse of the future,’. “If you have less newspapers and more of these [iPads]…,” he said, “it may well be the saving of the newspaper industry.


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