Will the iPad Save Publishing? Part 2

Developing Appropriate Business Models

By Rebecca McPheters
Media Industry Newsletter
April 26, 2010

Unlike the Internet and to the delight of publishers, the iPad comes with a mechanism in place to readily monetize content – making revenue-based models significantly less elusive. While iPad business models are in their infancy, there are a number of critical questions that publishers must keep in mind as they seek to maximize the profitability of their developing applications and to use the iPad to rehabilitate both the earnings and the image of the magazine industry.

Who Is Your Competition?
The iPad represents a radical new way to deliver content – not only for magazine publishers, but for other media as well. It is a new medium with unique capabilities. These capabilities allow it to augment – and perhaps ultimately supersede – traditional delivery mechanisms for most traditional media. The iPad allows magazines to retain and expand upon their core strengths to an extent not possible on the web. But if publishers are to be successful, their iPad versions must leverage the capabilities inherent in the new platform.

Magazine apps will be in direct competition with those of other media, and any publisher who does not take full advantage of these capabilities to optimize the consumer experience will be quickly outflanked by those who do. Nothing should be allowed to limit the iPad definition of a magazine, nor should any publisher allow their print version to constrain the development of their iPad version.

Who Benefits & How?
The primary beneficiaries of the iPad are consumers who can read, watch, or listen to what they want, when they want and where they want more readily than ever before. For publishers, the opportunity is to distribute content for which they are paid without incurring costs for paper, ink, printing, or postage.

But for advertisers – and for publishers in search of ad revenues – the opportunity is more complex. Since the iPad is a personal device, iPad versions will generate limited pass-along readership – and since apps allow readers to access the specific content they find of greatest interest without flipping through every page, those who do read will be less likely to see every page of the magazine – and less likely to see every ad. Links to websites or videos can be built into ads, but they have the potential to both compromise and attenuate the magazine experience.

Consumers will doubtless perceive some advertising as obtrusive and interruptive and avoid it. However, many magazines and newspapers are read now and will continue to be read, at least in part, for their advertising. While the audience for individual ads will be less than that of a printed copy, the engagement of readers who choose to see the ads – and their demographics – will be superb.

What Is the Role of Advertising?
In Steve Smith’s column last week (min 4/19/2010), he posited that the best business model may be a sponsored one – like that currently being utilized by The New York Times app – as opposed to that now used by most magazine applications in which many advertisers are represented. We think that both will prove to be viable. For some publications, either might work equally well – but most publishers know whether their publication is one in which consumers expect and value advertising as an important part of the content being offered or one for which readers are more likely to find the advertising intrusive. Vogue is an obvious example of the former, while others just as clearly fall into the latter category.

For this group, a sponsored model may well be preferable – while also offering substantial value for the sponsoring entity. For those publications for which consumers are typically interested in the ads, it will be important that the ads be presented in a way that consumers find both appropriate and satisfying. Turning page after page of ads on an iPad is a wholly different experience than flipping through the front of an ad-filled magazine – with the potential to adversely affect consumer perceptions of value.

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Rebecca McPheters, the former New York Times Magazine Group group executive and Simmons president, now heads McPheters & Company. The company specializes in strategic planning and research for brands and for companies in media-related fields, including media owners, advertisers, and ad agencies. She can be reached at RMCPHETERS@MCPHETERS.COM.