Apple is Hurting the Tablet Market, Allegedly

March 16, 2011

Uh oh – it looks like Apple is earning some (more) enemies out there in the publishing world. While sales of the iPad may be strong, there are growing calls amongst the publishing powerhouses that its demands are too great. For this, many of the biggest, most widely read magazines in the world are avoiding a business relationship with Apple. Rick Levine, executive at Conde Nast, allegedly spoke to a crowd on Friday night, “the growing tablet marketplace will make good business for the magazine industry but one thing remains in the way: Apple’s dominance,” according to WWD.  He told WWD that while subscriptions are needed, Apple’s demands are simply too great.

WWD goes on to say that “unfortunately, it’s going to be tough to overcome the Dark Lord Apple.” While people certainly love the iPad, Android tablets are just starting to take off. Thankfully, this is set to change. Honeycomb tablets have garnered some positive early reviews, and are likely to sell well once the market gets a bit more competitive on pricing.

“It puts publishing houses in a very difficult place, one that might see them eventually bowing to Apple’s standards. Steve Jobs might look like a nerd, but he’s actually one big ass bully.”

“We frankly don’t want Apple to have a stranglehold on this business,” he said.

Levine, the director of editorial operations who was recently named the Conde Nast corporate executive of the year, said that publishers need the marketplace as “open and competitive as possible. That’s how we will get scale,” according to WWD.

Enter Android

This is where Google and Android come in. According to leading technology analysts, the amount of Android Tablets sold in 2011 will easily trump sales of the iPad, and its looking more likely every day that publishers are looking for any possible strategy to augment their businesses and stay relevant in an increasingly digital world. Of course, the sales numbers behind the iPad are too great to ignore. With this in mind, it’s likely that publishers are going to be looking for a multi-tiered approach, in order to reach the greatest amount of consumers possible, regardless of the platform they choose to use.

The interview goes on to say, “Levine condeded that “for the foreseeable future, Apple will rule the roost in terms of the marketplace.”

According to All Things Digital, Google has been much more flexible on the business issues that are significant to the publishers, while Apple hasn’t been. Simply put, publishers want to have the ability to sell their tablet magazines directly to consumers, and be able to access the data collected in the process. Currently, Apple demands a 30% margin, and will not reveal any data to the publishers. Next Issue Media, a consortium of major content publishers has been working for nearly two years to create a platform for publishers, consumers, and advertisers alike. However, like other industry backed ventures, it too looks like it will fail. Despite this, the founder and CEO Morgan Guenther said that “Android is a very important tablet platform, and a very important platform for smartphones.”

Because of Apple’s ridiculous demands, Conde Nast and almost all other major publishers have been unable to make a deal to sell subscriptions of digital magazines on the iPad. Another important piece of information is that single-copy sales for digital editions of magazines have stagnated in recent months. For example: Wired sold 100,000 copies for its debut iPad edition in June, and since then sales have dropped over 77% to just 23,000 monthly subscriptions, according to the Audit Bureau of Circulations. Levine, Executive at Conde Nast, said subscriptions are absolutely necessary.

“That’s why we’re actively working with all distributors to get a more competitive environment,” said Levine.

According to the interview with WWD, Levine was bullish on the business and said that he expects there to be 60 to 70 million tablets on the market within nine months.

“We like this technology so much that by the end of the year every [Conde Nast] magazine will have a digital edition,” he said.

Our Thoughts:

Competition benefits virtually all players involved. We the consumers will always want access to great content. While Apple remains satisfied in strong arming developers and publishers alike, public statements from major executives at one of the biggest content publishers in the world indicate some serious dissatisfaction with the way Apple does business. Undeniably, Google has the leverage, resources, and platforms at its disposal to most directly compete with Apple on this stage. Remember – a wise man once said, it is better to own the highway than the car that drives on it. Time will tell how things pan out, but with tens of millions of Android tablets to be in the hands of consumers everywhere within a few short months, it looks like Apple’s position of dominance is likely to change.

More on this to come. What do you think – would you pay a reasonable fee to have a subscription to access premium content on your tablet? Perhaps the real question remains – will you pay you even pay for content?

Via: WWD, All Things Digital, Media Week

http://www.mediaweek.com/mw/content_display/news/magazines-newspapers/e3iec5afb4149d70ad5855ef844e4e6ae2dM

Comments

  • acupunc

    All the publishers that are now complaining should have thought about this before jumping on the iOS band wagon. What did they think would happen? If you want a more “open” environment to publish your junk then you need to support a more “open” platform. . . duh!

    Seriously, I’ve been reading about newspapers giving away iPads if you sign up for two year subscriptions, schools giving them out, car companies, etc. . . wouldn’t it be nice if they gave you a choice if they are going to give something like that away–iPad, Android tablet, WebOS tablet, Playbook, etc. . . or just support the open platform period lol.

    • God of Biscuits

      Apple supports HTML5 more than anyone out there.

      And besides, it’s not the 30% that publishers are pissed about, it’s that Apple is giving consumers the CHOICE of opting out of sharing their personal information to each publisher each time they buy a new subscription.

      Google doesnt plan on giving users a choice in the matter.

      • Tmdean

        > Apple supports HTML5 more than anyone out there.

        So then why do HTML5 applications run much slower when launched from the home screen on iOS?

    • Doug Petrosky

      Maybe they gave iPads because “They were available!”. There are no WebOS tablets, the playbook hasn’t shipped yet and the first interesting Android tablet shipped 3 weeks ago.

      Besides this article ignores the fact the companies who bring a huge subscription base PAY APPLE NOTHING!!!!! It is only the new subscribers that come on board because of the iPad that Apple takes a cut of. If you are a major paper distributor with existing subscribers, now is the time to convert them to digital which massively reduces your costs (far more than the 30% apple might some day get) and allows you to push into digital without paying a dime to apple. Now if your circulation doubles, due to new subscriptions on iOS devices, I’d think you could afford to take only 70% of that FREE money. (zero ad costs, zero distribution costs, zero payment costs, zero marketing costs).

      Now I think someday Apple will have to reduce its subscription cut but if you are a creator of content, the Apple model seems completely reasonable.

  • Shock Me

    I think it is a bit of a stretch. I’m perfectly happy not to subscribe to magazines that don’t appear on my tablet of choice. Fortunately, Bonnier is now getting the lion’s share of my subscription money and personal info because they chose to make it convenient for me to subscribe to their content using Apple’s new service.

  • God of Biscuits

    So Apple is the first one ever to give consumers the chance to opt out of sharing their information with magazine publishers and you just gloss over this?

    Google happily caves to the publishers on this point because for them it all comes down to ad revenue. Even Android itself is primarily a penultimate vehicle for ad revenue.

    We all get upset when Facebook messes with our privacy, but magazines get a bye here and Apple is the bad guy for doing proactively what Facebook had to be dragged kicking and screaming into doing?

    Really.

  • http://kpbonline.com Ken Berger

    Don’t know where people are getting the idea that Android tablets have any chance of capturing a significant share of the tablet market in the next 12 to 18 months? While no one know what will be out by the end of the year it does not look like a very likely scenario. Check out the news today: Report: Tablet Market Is Apple’s Until 2013 http://gigaom.com/apple/Report-tablet-market-is-apples-until-2013/

    This is good as Google does best when they feel pressure and Honeycomb has a lot to offer but is still buggy and incomplete, it probably needs 3 more updates before it is really ready to compete with iOS in terms of usability and it does and will continue to bring new and better features. This is good for the market place as a whole.

    With regard to App subscriptions the issue that no one is talking about is the quality of the apps, and why not simply use HTML5 to publish them on the web. People fell that they should not pay for web content so publishers are hopping that they will pay for apps, but they are not doing much in apps that could not be done on the web. They are using lame Adobe tools to repurpose printed content in an App and sprinkling some video (that could be just as easily done on the web).

    When someone does a real immersive Appzine the world will take notice.

  • pjs_boston

    Apple is indeed hurting the tablet market… the Android tablet market, that is.

    Point if information: Apple’s terms are the same across all of it’s content stores. The content supplier sets the price and Apple takes a 30% cut to defray the costs of running the store. Apple has been totally consistent from day one. As mentioned before, magazine publishers are mad mostly because Apple is letting subscribers opt out of sharing their private data, only to have it sold to junk mail marketers.

  • Ben Swanson

    MartinHill says: 
Fri Jan 21 13:56:00 PST 2011

Brennon, why lump iOS and Android together in terms of insecurity? 
Android is far more insecure than iOS by design, though not necessarily because of its open source nature and is already suffering the fallout despite having half the installed base worldwide.
The proof is in the pudding. It is Android and the Android Marketplace that has suffered multiple malware outbreaks such as:
- More than 50 Android mobile banking apps in the Android Marketplace each targeted at a specific financial institution whose true purpose was phishing and identity theft.
- the Geinimi botnet app that is infecting numerous Android apps on Chinese app stores and spreading around the world.
- Trojan-SMS.AndroidOS.FakePlayer.a, the Russian “Movie player” app that surreptitiously sent premium SMS texts from unsuspecting users
- the new Soundminer Credit-card number stealing trojan proof of concept
- Brand new HTC Magic phones infected with the Mariposa botnet and Conficker and a Lineage password-stealing Trojan that attempt to infect Windows PCs when connected over USB.
- Mobile Spy and Mobile Stealth apps in the Android Marketplace
- SMS Message Spy Pro and SMS Message Spy Lite spyware apps also in the Marketplace
- The 45,000+ spamware apps clogging up the Android Marketplace (as noted by Appbrain)
In contrast, despite hosting over a third of a million apps and 10 billion downloads, there have been Zero pieces of malware come through the iOS App Store. A 100% safety record. Not bad, and good reassurance for a public tired of virus-riddled PCs.
Then of course there is the side-loading of apps with absolutely any nasty thing being possible in Android and no review of apps at all in the Marketplace and we are talking a completely different level of insecurity and exposure. In addition, the Soundminer Credit-card number stealing trojan proof of concept demonstrates some of the risks inherent in Android’s far more un-restricted multitasking model.
iOS requires signed code and enforces strict sand-boxing and provides hardware encryption all of which Android lacks. Instead Android throws up a Vista-like screen of permissions for each app which the average user is not necessarily going to read or understand. 
All developers on the iOS store have far more stringent monetary and ID checks to post apps so the chances of mischief are so much less as to be negligible in comparison.
ps. Of course if you jail-break your iPhone, all bets are off.

Also, I neglected to mention that in terms of vulnerabilities, Android is a particularly bad offender:
”A shocking number of high-risk security flaws in Google’s Android smartphone OS have recently been discovered by security firm Coverity.
”We found 88 high-risk defects in Android,” it says in the firm’s 2010 Open Source Integrity Report. “25% of the Android defects discovered, including memory corruptions, memory illegal accesses, and resource leaks, are considered high-risk with significant potential to cause security vulnerabilities, data loss, or quality problems such as system crashes.” 
The report is based upon the source code analysis of the Android kernel 2.6.32 (code named “Froyo”), and they have discovered 359 flaws in total.”
-Mart

    • sabio12

      FYI, the iTunes App Store / iPhone does NOT have a 100% safety record.
      http://lmgtfy.com/?q=iphone+malware

      • Zenism

        WTF is up with the BS link? You’re a D**K-WAD.

    • Side Saddle JimBob

      OMG,Wall of text, RUN! I did the community a favor by recycling and hyper-compressing your pointless rant into this tiny space. ->|.|<- There now… one byte. :P

    • Martin Hill

      Um, Ben Swanson,
      That’s not very nice posting an old comment of mine into this forum which is about a completely different topic. The fact that it appeared as an unformatted wall of text certainly doesn’t help matters either!

      (I am flattered you appear to have liked what I wrote, but there is a time and a place for everything and this was not the time or the place)

      -Mart