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Apple Finally Reveals its iPad - Now Publishers Have Work To Do

Important Details: Apple is well known for generating mystery and excitement around new product launches, and it outdid itself yesterday with the unveiling of its new iPad -a handheld tablet computer whose entry to the market had been rumored for years. A small group of journalists were invited to attend the event in person. The rest of the Apple faithful had to watch it unfold through grainy images and audio streams that hearkened back in quality and in hype to the first lunar landing. But watch it they did. Over 75,000 people alone tuned in to UstreamTV’s live coverage and many many times more people followed it via other online and offline means with some reports indicating traffic around it may have ’slowed’ traffic on the web.

So at first pass, was this seemingly small step for Apple a giant leap for mankind? Outsell believes yes - though it might not be apparent immediately. We believe this clearly creates a new category that is not merely wedged between smartphones, e-readers, and laptops but takes on home entertainment systems as well. In short, it is a personal media device that creates a need not around any one task but instead around performing a host of daily activities in new and much better ways. We would go so far as to state that in a few years it is likely many of us will wonder how we lived without it or a similar device. That is certainly our opinion of the iPhone today, and it was not our reaction the first day they were announced a few short years ago.

Implications: So what will this new device mean for publishers, and what steps should they be taking today to stabilize existing or create new money flows?

First, a publisher will want to recognize that while the iPad presents many opportunities, it also poses a significant new threat as well. As a universal media device, it will require content providers to compete against all forms of entertainment in ways they never had before. It is a single device that enables a compelling experience for consuming games, TV, books, movies, music, newspapers, magazines and even journals, so an individual publisher will be competing for attention against all those items every time it is picked up off a table or out of a bag. Yet while this is a device that can do many things, it is also a device that can only do one thing at a time. That means it will remove the peripheral noise of emails, text messages and the like that many readers have grown accustomed to when consuming content today, so publishers will have an opportunity to own a user’s attention in ways not unlike the print medium. But to keep that attention they will need to offer a highly relevant, engaging, and sticky experience, or else with the push of a button their reader will disappear.

Understanding how that translates into a particular publishers’s approach is another step. This device is a clean and sleek new container for content, but its impact on established money flows in publishing will vary dramatically depending on the type of content one has on offer. With its built-in web browsing capability, many user habits from the tethered web will likely reappear here. This means tasks like scanning and digesting news headlines may not diverge much from how they do today. Publishers in that space are advised to keep their focus on existing efforts to boost their share of online advertising.

However, for those publishers with a strong brand that are able to garner more of a user’s online attention, there is an opportunity to take an application based approach to their content on such a device. Primarily, this will be the realm of trade and consumer magazines such as Sports Illustrated (see Insights A Tale of Two Companies - AOL and Time Warner Go Separate Ways, December 18, 2009) but as we have seen in recent announcements there are similar opportunities for leading newspapers and B2B publications as well. And this is good news for those publishers as it will likely allow some to recoup subscription revenue previously lost to the open web.

That said, while some growth is likely, it is unlikely users will download, use and subscribe to scores of new titles. This means that, for all but the largest of publishing houses, developing new software applications embedded with unique rich multimedia content is unlikely to justify the added complexity and cost. The good news for everyone here, however, is that the need and opportunity around collaboration has already been recognized prior to Apple’s entrance. Efforts underway like Skiff in partnership with among others Hearst Corporation and those driven by Microsoft are all targeting this space as well. Publishers are advised to seek these partners to generate strong contenders and keep the balance of power across the sales channel from tipping toward Apple and away from themselves.

As for book publishers, this largely becomes merely another sales channel to compliment digital efforts already underway. Yes, there will be challenges and headaches around yet another ‘standard’ format, but the task of porting their content to this device will be much simpler then creating a truly new experience as described above. Further, they immediately gain collective advantage in having yet another serious competitor in the e-reader device market. That is good news at a time when Amazon’s growing strength saw already saw it dictating many of the terms for which publishers had to play. To that end, a handful have been working with Apple in the build-up to the launch. HarperCollins, Macmillan, Penguin, Hachette and Simon & Schuster (and, presumably), McGraw-Hill will all have books available for sale via Apple’s iBook store, the book world’s equivalent of iTunes for music. Existing Kindle owners will likely opt to continue securing books via Amazon, since an iPad application will immediately make new and existing purchases readable on it as well.

In short, the iPad countdown has begun. The time is now for publishers to hammer out the terms of their relationship with not just Apple but all participants in the tablet marketplace. While this new opportunity will not erase the disruption of the tethered web, it is providing a chance to once again participate in authoring a new set of business rules.

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