Monday Note

1. Design

The iPad is all about design, and interface expectations. From a graphic design standpoint, with the iPad, the quantum leap is its ability to render layouts, typefaces, page structure. No more web HTML lowest common denominator, here. What comes out from an art director gets WYSIWYGed on the iPad — if the implementation is right.
Two things will be needed, though : talent and tools. Talent requirements for the iPad won’t be limited to conceiving great graphic arrangements fitting the 9’7″ (25cm) screen. As in multimedia  journalism where storytelling talent is to be enhanced by technical skills, layout and contents will have to be supported by great technical implementation. Clumsiness is not an option.
As for the tools, there is a need for what I’ll call “the first  layer” of content creation, i.e. the design phase that stands above the hard coding. What we need is a set of tools to be used by production people to arrange contents; it is badly needed: consider how often multimedia designers rely on… PostIt to sketch their projects out. Apple could provide this toolkit, of course. As for others, don’t count on Quark Xpress, they badly missed the web design train, but rely more on Adobe, they’re said to have an iPad design toolbox in the pipeline.

The WSJ.Com – OK for a Generation 1 app, but...

2. Innovation / Disruption

The app market is likely to split into two different paths. “Generation 1″ iPad applications will be a direct translation of the print reading experience, slightly improved using the finger-as-a-pointing-device feature for browsing and zooming. That’s the Wall Street Journal way. No point in blaming their designers; like everybody else, they had to crash-code their apps: game developers are handled console prototypes 12 to 24 months in advance of the actual release; for the iPad, it was just weeks. (We’re told many apps never “saw” an actual iPad before they shipped, they were written and tested entirely on the software simulator that comes with the Apple development tools…)
“Generation 2″ apps will have to reinvent navigation, the invitation and handling of user input, the integration of videos or animated graphics, a key challenge.
Publishers will be well advised to stimulate out-of-the box thinking by drilling into new pools of designers, through public, crowdsourced contests. Inevitably, great stuff will emerge; it will not be applicable before a year or two, but this innovative/disruptive stimulus approach is essential (not only for media, but also for books).

3. Pricing

Go to the iPad App Store and see for yourself. The first thing you’ll notice is a major price hike for the many apps you already use. What was inexpensive for the iPhone is now significantly costlier on the iPad (or will soon be, for the news related apps, once the promotional period is over). Development costs are only part of the reason. Designers and content providers are also willing to take advantage of the new platforms to adjust what seemed to be too low a pricing system. In other words, with the iPad, the era of cheap apps could be over. What used to be a 2.99 dollars, euros, or pounds for a news-related app on the iPhone is now likely to jump to 9.99.
In most cases, the rise will be justified. $3.99 for the Guardian’s iPhone application is too low for the service it provides (by far the best of the market, powered by a great paper).
Excess is also looming. I have been gladly paying about $100 a year for the Wall Street Journal on the web, I won’t pay any extra monthly fee to access it on any mobile device. Not the $17.29 a month Rupert will ask.
A single subscription has to offer multiple access : office, home, on the go. A hundred whatever a year seems to be in the right ball park, plus maybe the price for the app itself, say $10 a year for the iPad. Think about it fellow publishers: my $110 a year, minus the 30% Apple Store commission, translates into a nice $77 yearly ARPU (Average Revenue Per User). Compare it to the $1to $10 an ad-supported free website makes per year and per unique viewer.

4. Installed base

Looking at raw numbers, any bean-counter would be entitled to hit the brakes for all iPad-related expenses other than a low-cost adaptation of an existing website. And many will. Of course, according to Piper Jaffray’s Gene Munster, something like 600,000 to 700,000 devices were sold in the first day. This, if confirmed, would be more than three times the numbers of iPhones sold on day one. But even with sales expected to be in the 5 million range for this year, and twice the next, it will take a while to reach critical mass. Compare this to the iPhone + iPod Touch duo cruising at about 75 millions units, let alone the “basic” web viewership estimated at 1.74 billion people by Internet World Stats.
Of course, the accountants’ green eyeshades are not the most relevant here. Creating a mind-blowing application that renders (and preferably enhances) existing content is a strategic move and deserves to be treated as such.

5. Contradiction

All the publishers I spoke with over the last two weeks are scratching their heads; they wonder: how to adjust a web strategy — today mostly free — to the upcoming paid-for mechanism on the iPad. Let’s put it this way. You have a web site, mostly ad-supported. You design a great iPad application with a better user experience and richer content. Enough to charge for it, something like $9 a month.
Now the reader’s perspective: I enjoyed the free website on my beautiful iPad browser. What could lead me to pay for the same content in an iPad application? Much better graphic? No. Much better navigation? Probaby not.
To provide oxygen for the paid-for app system, publishers will inevitably have to off-load content and features from their free web — a lot of them.
This could lead to two major evolutions of digital media:
1 / Acceleration of paywall deployments as publishers will move toward triple play paid-for offers: one subscription access to static (PC); mobile (smartphone) and half-nomad (iPad) platforms.
2 / The progressive transformation of free rich websites into stripped-down versions with little or no value-added contents. In other words, news material expensive to produce, high value analysis and prominent bylines will be available on the triple-play system described above. At the same time, the free web will carry “commodity news” (that will be universally accessible everywhere, especially on portals), and cheap blogging, games and services.

6. Advertising

Amazingly, over the last months, we have seen great demos produced by media companies, but very little from advertising agencies. In normal times, the prospect of such an innovative device should have kept the ad-creative people up at night. Innovation in this field is almost non existent. The ad community seems numb. Publishers and media production people I talk to are a bit concerned with what seems to be a low point in digital creation. As the advertising people are slow to jump aboard the train, it will further favor the emergence of paid-for content. Maybe new models – and new managers – are required in this field too…  But it better occur fast.

7. Data & marketing

The iPad come with a native feature that Apple would be wise to unleash for good: audience data, identity and behavior. Newspapers publishers always suffered from not knowing who read what in their product. Digital medias will make this fuzzy logic disappear. For the iPad, it will be easy to reconstruct each user’s readings in a very precise manner. Very useful for marketing as well as strategic editing purposes. But the obsessively secretive Apple is not ready to provide such data. This will have to change. Who knows, Apple might find a way to monetize such treasure of information.
Of course, this list is to be updated over time. We are dealing with a completely new device here, and it is likely that new designs and new business models have yet to be invented. This is what makes our times fun, after all.

—frederic.filloux@mondaynote.com

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