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The integrated iPad news daily: Read all about it!

When I wrote my opinion on the future of publishing (Citizen Publisher), I focused my lens on books and magazines. Published works that have relatively low time-sensitivity and hence relatively long shelf life are quite different from newspapers which package material with very brief temporal relevance.

The print-based news industry has suffered much more than print-based books and magazines. The primary cause is that “print” plays a far larger role in newsprint-based newspapers than in books.

To give you an idea of how important the printing plant is, consider that a huge proportion of a newspaper’s assets are tied up in its printing plant. That plant is so large and so demanding that it ends up causing the whole business to revolve around it: Print runs are done at night to make sure the product is delivered in the morning. That puts a hard deadline on the writers to submit stories before the product is “frozen” into a final edition. Writers and editors and advertisers need to march in lock-step to the cycle time of a big manufacturing operation.

There are 19 presses and 17 printing plants that print the two million copies of the U.S. edition of The Wall Street Journal. To make changes to the plant require large amounts of capital investment and that capital’s depreciation is an integral part of the financial balance of the company. So much so that one wit remarked that a newspaper is nothing more than an instrument that permits the depreciation of a printing plant.

Costs of manufacturing have been slightly offset by better technology and distributed printing but newsprint itself has soared in price so the dependence on physical product has made the economics worse over time.

That’s the cost side. But if you keep following the money from the revenue side, you realize that the situation is critical. In the US, a large part of the local paper’s revenue base was wiped out by Craig’s list. Classifieds are a fading memory. With respect to regular ads, the story is almost as bad. 26% of ad spend in 2009 was allocated to print, while only 12% of time spent consuming media was spent on it. In contrast, Internet use is at 28% of time where only 13% of ad dollars are allocated.

Source: Morgan Stanley Internet Trends Presentation.pdf

It’s inevitable that advertisers will shift their budgets to follow where the attention is going. Potentially that’s a $50 billion shift into Internet advertising. The number nearly matches the $47 billion loss from print.

This future is not far off. In fact, it’s already happening. in recent years the number of newspapers slated for closure, bankruptcy or severe cutbacks has risen—especially in the United States, where the industry has shed a fifth of its journalists since 2001.

Once the printing plant is taken out of the equation, the raison d’être of the package itself ends. For this reason, the newspaper product cannot survive on-line. Reading news is still very popular, but newspapers aren’t.

So will the iPad save this medium?

As in Citizen Publisher, I argue that for that to happen, the medium needs its Orson Welles. Furthermore, to have him emerge, the business must be architected as an integrated approach to solve a new job to be done.

The latest story from The Guardian suggests that Rupert Murdoch is working on just such an approach. In another interview Murdoch explained the project in more detail:

What is the biggest thing on your mind now?

…There are so many disruptive technologies coming all the time! [This in almost a whoop of excitement.] Pretty. Damn. Interesting! Just trying to stay ahead of the technology. I’m starting a paper in six weeks. A brand new paper. It will be a bit like the New York Post . But it will be national. Have that sort of humour and attitude like the Post . It will only be seen on tablets. It will only employ journalists – and maybe eight to 10 technicians.

What sort of circulation will you need?

At the price we are talking about, that’s $1 a week – not a day, a week – we need 800,000. By the end of next year there will be 30 to 40 million iPads. I believe every single person will eventually have one, even children.

Via: afr.com

What’s more, it’s suggested that an unreformed disruptor is mysteriously involved.  One can only speculate, but the hints of autonomy, dedicated (and incentivized) creative professionals involved in a new (not re-purposed) publication with a low-cost structure bodes well.

The medium may get its Orson Welles after all.

  • Famousringo

    After downloading The Economist's iPad app, I now believe that at least some traditional print media can survive and move over to the new paradigm. I suspect there will be two simple keys to success:

    1. Your distribution costs are much lower. Deal in the consumer on some of those savings and you'll make it back in volume (this goes for all digital distribution).

    2. You need high-quality content that's worth paying for. Celebrity stalker rags are going to have a hard time competing with blogs, but I think something as high-brow as The Economist can switch from physical to digital and still justify the subscription fee. Look for an information market that wants more analysis and investigation and serve it well.

    I'm not sure if Murdoch's new 'paper' will meet point two, but I'm willing to give it a shot.

    • dchu220

      As for point number 2, I'm not sure the content quality needs to be as high as the economist. Not to discount what the economist has done, I think they are the only magazine to increase subscription rates in the last couple of years.

      But I think the key to success is to simply get the news people want as quickly and seamlessly as possible.

      That isn't possible with the other magazine apps I've tried so far with the exception of the economist app. They are over bloated (surprise! Made with Adobe products), slow to launch and slow to navigate.

    • Ted_T

      I agree with you about The Economist — it is the first print publication on the iPad done right — font size is readily changeable via pinch and zoom, you get the entire print publication product in recognizable and easily navigable form, the layout is excellent, the app is stable, there is no fear of articles suddenly disappearing a la NY Times. Even with the one iPad only feature seemingly broken (the audio download keeps failing for me over WiFi), it is fantastic and moved to page one of my iPad. Apparently there is no subscription problem (I am print subscriber and had to just log in, no further issue) which leads me to believe that other publications were demanding some sort of special deal from Apple — not that Apple wouldn't allow subscriptions or free access to existing subscribers as has been reported.

      The NY Times on the other hand is the poster child of the iPad app done wrong. It is NOT the question of needing a new paradigm or Orson Wells (and Orson, for all his immense filmmaking talent was a total failure in the film *business* department — his films didn't make money). The NY Times needs one competent designer and a few competent programmers. Their current app is a crash happy mess. Aside from stability which is a must, what's wrong with it is that it is neither fish nor fowl. The Economist sticks to the print paradigm and succeeds brilliantly. The NY Times mixes together print and web and fails miserably at both. It has no working hyperlinks — no need to go into any more details of why it is a complete failure as a web type publication. On the print level it fails by losing the recognizable format of the print edition:
      - you no longer have recognizable page ones of various sections;
      - losing the the differentiation from one day's paper to the next — is a given article from the Monday or Tuesday Times?
      - even though it claims to keep things for 7 days in the preferences, most things (example: Opinion) disappear after one day.
      - stuff is missing altogether — where are the four political cartoons from the Week in Review section?
      - It doesn't pre-load everything, no matter what the settings say, thus when read on the subway (no internet), many of the pictures are missing.

      Whoever designed this mess should be fired immediately. And who programmed the buggy disaster — it smells of Adobe to me, anyone know?

  • Robbo

    I would absolutely pay $1 per week for a good quality newspaper. At the moment the Economist wants $8NZ per issue (weekly) which is a bit much in my opinion. Last time I looked, Time magazine was $6NZ per issue, which more than the print issue!

    • Famousringo

      In my neck of the woods, The Economist on iPad is 25% cheaper than newsstand price. And let me assure you, the quality of The Economist's analysis is well worth a 33% premium over Time. I suggest you at least try out one issue.

      I'm seriously considering subscribing. If I do, my cost plummets from $6 per issue to a little over $2.

  • Alexkhan2000

    Very interesting. The iPad does indeed have the potential to revolutionize the publishing market – newspapers, magazines and books. It is especially intriguing to ponder the effect it can have on the print newspaper industry. For sure, it's probably an industry that has been suffering as badly as the music industry over the past decade. I myself can't remember the last time time I bought a daily newspaper but I still have fond memories of reading the NY Times everyday (especially the mega Sunday edition) when I grew up there as a kid in the 70's.

    The iPad just may bring that intimate immediacy of holding the newspaper in your hands and flipping through the pages – something that's lacking in browsing different news sites or a portal like Yahoo! or MSN, etc. on a computer. I also believe this is where the 9.7" screen size form factor (or perhaps even a little larger in the future) would really give the iPad a distinctive advantage over its 7" size rivals. I'm all for this development. Apple indeed has the tiger by the tail here.

    • dchu220

      Say what you will about Murdoch as a person, but there is probably no better person to disrupt the news industry than him.

      When creating a new market, you have very little quantitative data to go by. A lot of decisions have to be made by intuition. As a veteran of the news industry and someone who has thrived through several disruptions in the news industry, I think he has the best chance to succeed.

  • Xm

    Orson wells wasn’t a right-wing maniac though. Murdoch is a dangerous pedlar of trashy, made up news. He is not any kind of saviour

    • Angel Lamuno

      The point is not Murdoch but his idea.

    • asymco

      The point in the article is not that Murdoch is a savior but that he is in a position to develop a business that takes full advantage of the new medium and thus allows the creative potential to emerge.

      The type of content does not make much of a difference. Hugh Hefner and William Randolph Hearst were, after all, also publishers who changed their industry and were vilified for their content.

    • Alexkhan2000

      When there is money to be made, even the most diametrically opposed in the ideological realm will get together and form an alliance. We all know that opposites attract (although this one does seem like the most strange of bedfellows) and the potential for good to come out for both sides is big.

      Does anyone think that Apple will dismiss or ignore the "right-wing" market base because people in that base think differently from Jobs or most folks at Apple? Their money is as green as that of the most liberal technocrats in Silicon Valley or the high-browed academicians in Boston.

      Apple's insistence on a squeaky clean image for its App Store and corporate governance in general is a good example of Apple courting the business of the conservative base with a zeal. This is a business. Corporations go to where the money is.

      Jobs and Murdoch may view each other as "loons" privately, but they can't deny the success of each other either and probably do share a great deal of mutual respect and admiration in their respective fields. Unlike our government with its endless partisan bickering, effective businesses hurdle together and get things done.

      I've been reading comments from some on other Apple-related boards that they will not buy another Apple product ever again if Jobs and Murdoch partner up on this. Really? What makes these people think that the likes of Dell, HP, and foreign PC vendors like Acer, Lenovo, Toshiba and Sony won't jump at an opportunity like this to hook up with Murdoch?

      Let's say you were running a high-end gourmet restaurant in NY. Let's say Murdoch walks in for dinner with some other high-brow associates of his that will gross well over $2000 for you on one bill. He and his buddies like what you do and could become good repeat customers while spreading the word to more of their affluent friends. Are you going to tell him to take a hike at the door because you believe he's a right-wing maniac?

  • dchu220

    I think there is a market for timely news that isn't filled with 'click-bait.'

    The problem with online newspapers and blogs is that their economic model is dependent on page views. This is directly in misalignment with readers who want timely news that is in a format that is easy to read and to navigate.

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  • davel

    Harace,

    Great article. I did not know that Craigslist and others had pulled the economic lifeblood away from the papers.

    I like the line about papers are an instrument to depreciate the plants.

    I don't know if murdoch will get it right. but you are right in that the industry has to go through a revolution to find a model that works.

  • Atul Barry

    I've downloaded the Economist iPad app, and it is excellent. I do think it needs some minor changes, like ability to change font and have some space between paragraphs (for better viewing). Also, the app needs to offer additional features that exploit the abilities of the iPad, like audio/video content.

    For any print media to succeed, it has to offer the electronic subscription at a price which is about 20-33% less than its regular price for the paper copy, IMO.

    Regarding the Murdoch's foray with an iPad exclusive paper, the price is right, although I am unhappy with the reports that it will be like the NY Post in content. Look how he is changing the WSJ; it is becoming more and more like the Times of London. I wish some other publishers, like the NYT, will offer a similar deal with content, outlay and price.

  • davel

    This has nothing to do with the news app, but i read that samsung sold 600k of their new 7" tablet.

    pretty good numbers. it seems as if the ipad may have some competition.

    • Alexkhan2000

      Samsung sold their tab into their massive distribution channels but it seems that the sell-through at retail hasn't been good at all and that Samsung is cutting back production, which isn't surprising. Retail sell-through is what's important.

      • asymco

        I agree. Let's wait for the sell-through numbers. Samsung could put a dozen of the devices in every shop they sell through and they would easily fill up the order book.

    • http://www.tablazines.com Tablazines

      A 7" tablet sucks for reading magazine content on though due to the fact that you spend more time zooming in to read content that the experience is not an enjoyable one.

      At least match the iPad's screen size and then let's talk.

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  • berult

    News ain't what it used to be. 

    News has become an addiction. If people can't get their fix with premium grade News, and they largely can't, they'll make do with the cheap, dangerous, high risklow reward stuff. Today's news stories don't inform as much as they steer the senses toward enabling fatalist passivity. They numb the capacity to act upon reality-based conundrums, and inflame deflected passion and wherewithal with fictionalized dramas and opinionated circumvolution. News has been migrating massively into LaLaLand, an all too efficient processing "power" plant and convenient repository, for "top-down" hidden agendas.

    Journalism now offers opiated serendipitous panacea where once was slaughtered mercilessly any, for some, some, for any, deleterious causality.
         
    Printed news used to be bottom-up Journalism for toiling Realism inked on a main stream grid. An Orson Welles sort of proposition. There was nothing fictional about the life-sustaining noise of the Printing Press, the dawning aroma of freshly laid ink on column aligned prints, the pounding hearts and running sweat of on-beat Journalists, and the methodical symbiotic run-time of the two-legged, two-wheeled "delivering", microcosm editorializing, hearty boy next door… And how it made for great and uplifting story-telling in a construct of democratic ideals.

    Orson Welles would simply be sliced, diced, and priced out of this synapses-interfering news world. This is henceforth Murdoch's back-roomoard-room territory. From ground-hogging, street-wise awareness, to on-tweet, Tinsletown's "bad news is good news-good news is bad news" meme, Millennium Journalism aims to "cross the Rubicon" into irreversible, predictable, dopamine-rewarded, "try it, it'll grow on ya" beta-news consumerism.

    A new Paradigm indeed, a Murdoch's Yin in dire need of a Jobsian's Yang if you cared to ask me…    

    • skylark

      @berult

      I feel that your comments would be better made if you looked up the following words; bombastic … verbose … and ironicaly the grandiloquent word "grandiloquent ".

      … and get off the drugs.

      • skylark

        @berult

        Apologies to you, I wholeheartedly withdraw the >> get off the drugs << comment.

      • berult

        It reads like a memo Murdoch would send to his last standing Journalist. "Here we write with the pen laid flat on the surface. We might not be surgically astute, but we're sure gumming for the truth…!"

    • http://www.moneylife.in Debashis Basu

      this is brilliant writing. would still be brilliant in iPad

  • Tim

    One minor point of note:

    Craigslist hasn't had as much of an impact as you suggest – employment, auto dealer and real estate ads are the lifeblood of classifieds sections, and most of those channels are not being decimated by Craigslist, but rather by vertically-aligned search sites (autotrader.com, trulia, monster, etc).

    Craigslist has largely been popular in rentals and "private party" (for sale by owner) channels, among others, which command very low ad rates and in many cases are given away to retain audience. CL has had significant impact on employment in a few major metros where it has begun charging for employment ads, but it's the exception rather than the rule.

    • asymco

      Thanks for making this point. I should have said Craigslist et. al. The impact of eBay as well can't be underestimated. This is exactly the low end disruption in effect. The least desirable customers (from the paper's point of view) are happily dispensed with. However, over time, more and more of the mid- to high-end migrates out of print. I've heard that luxury and fashion brands are re-evaluating their ad spending to move away from print. This would have been unthinkable a few years ago.

  • http://modoku.com Nicholas

    A decade I wrote about the woes of educational (book) publishers and the plight that they would soon find themselves in, and the realization was similar. I called that infrastructure distribution however, simply because book publishers also have storage overhead. I believe that it equals out ultimately, and that say 85-90% of the business is actually about moving physical stuff.

    The problem is that these businesses need to shed this overhead before they can emerge more efficient and competitive. The dilemma for investment is that competition is at a high level with specialized sources. There will be a lot of hats to put that dollar or two in. As many papers relied on name journalists to draw readership, these new efforts will need authentic content to compete. They apparently do not see this.

  • SierraHotel

    Your point is well taken, but I do agree that Craig's List had a large impact. The paper used to have literally pages of private party ads.. especially in autos… no more. I was selling a car two years ago, decided to give the paper atry since they also put your ad in their online edition. Got ONE call in a thirty day day ad run… cost me $68. Put the same ad.. same price on Craig's List… eight calls in five days…. car sold.

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