Apple is Hurting the Tablet Market, Allegedly

March 16, 2011
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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

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