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Thursday, February 03, 2011, 03:00 pm PT (06:00 pm ET)

Apple's iPad a driving force behind new newspaper subscriptions

John Ridding, chief executive of the Financial Times, named the iPad among mobile devices driving 20 percent of the paper's new online subscriptions, noting nearly a half million downloads of his newspaper's iPad app.

A report by Reuters quoted Ridding as saying, "The rapid emergence of tablet devices is a potentially profound development for publishers."

The Financial Times has erected a paywall on its website that seeks to charge viewers a subscription after reading a set threshold of stories, a business model that has run into resistance from web viewers used to accessing content for free. However, iPad users are increasingly seeking out sources of quality content, and prepared to pay for apps that deliver this. The paper said its iPad app had been downloaded 480,000 times.

Apple is seeking to set up in-app subscription support for newspaper publishers, starting with yesterday's launch of the Daily with News Corp. It is expected to release iOS 4.3 soon to deliver the technical support for billing users for regular updates.

Newspapers and journalism in general have been battered by emergence of the web, which facilitates widespread distribution with very little revenue in return. Newspaper's own print advertising has been replaced with banner ads and paid search, a market that is largely owned by Google, which has increasingly lowered the value of content producer's ad placements as it increasingly becomes the only way to monitize web content.

This all happened before

Not all Publishers are excited about the prospects of having their content published through Apple's iTunes, with a group of European publishers recently convening to discuss how this might affect their business.

Grzegorz Piechota, president of the European Online Publishers Association trade group, said that "by promoting these apps, they [content producers] promoted the device. Publishers in fact helped to make the iPad successful on the market."

His remarks sound very similar to demands once made by record label executives such as Warner Music head Edgar Bronfman Jr, who once insisted that Apple's iPod owed much of its value to the music business and should therefore be paying them, not taking a cut of the music sold through iTunes. Back in 2005, Bronfman actually said, "we are selling our songs through iPod, but we don’t have a share of iPod’s revenue. We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only."

Bronfman was clearly one of the executives Apple's chief executive Steve Jobs had in mind when he said of the music industry, "If they want to raise the prices, it means that they are getting greedy. If the price goes up, they [consumers] will go back to piracy and everybody loses." Bronfman later derided Steve Jobs' advocacy of discontinuing DRM within iTunes as "completely without logic or merit" in early 2007.

By the end of that year however, Bronfman had changed his perspective. In an interview with MacUser in November of 2007, he admitted, "we used to fool ourselves. We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding.

"And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won."

The music executive noted that "by packaging a full album into a bundle of music with ringtones, videos and other combinations and variation we found products that consumers demonstrably valued and were willing to purchase at premium prices. And guess what? We've sold tons of them. And with Apple's co-operation to make discovering, accessing and purchasing these products even more seamless and intuitive, we'll be offering many, many more of these products going forward."

Bronfman went on to praise Apple for its "beautifully designed" iPhone and its "brilliantly written software." It has a "spectacular user interface" that "throws all the accepted notions about pricing, billing platforms and brand loyalty right out the window," he said.