Bloggers like simplicity. They view themselves as computer industry geniuses, as the embodiment of a fantasied future, vectors for all forms of intellectual life, culture, news, entertainment… Bloggers believe in a world where traditional publishing will soon meet a well-deserved death.
Last week, this Manichaean worldview reached a paroxysm: many self-proclaimed digital pundits were celebrating Apple’s move to lock the tablet business down, at the expense of the ever-caricatured “old media”. I’m of course referring to Cupertino’s new policy on subscriptions.
This “us vs. them” is both exasperating and completely misguided.
Last Thursday in London, I attended an INMA conference on tablets strategies — focused on dealing with Apple new rules. About fifty people, all of them using at least one Apple device, all of them eager to make their contents available on the iPad and the iPhone — as long as it is economically tolerable.
For traditional media, the transition to digital boils down to a simple equation. The industry needs to mutate from a business models that used to generate a revenue of 100, to a new one that will only yield 30 — while preserving its core product features and values.
Today’s problem is not one media versus another, it’s the future of journalism — it’s finding the best possible way to finance the gathering and the processing of independent, reliable, and original information. This is emphatically not the blogosphere’s mission statement.
We all agree: for anyone, the no-intermediary ability to reach a global audience is an exhilarating revolution. And, for old-fashion journalism, it’s been the most beneficial kick in the butt ever. Having said this, I don’t buy into the widespread delusion that legions of bloggers, compulsive twitterers or facebookers amount to a replacement for traditional journalism. No question: these new the tools accelerate the news cycle in a stunning fashion — as we can see today with Libyan tentative to cut the internet off, something the Egyptian government did with frightening efficiency ten days earlier. Social networks and microblogging services helpfully supplement the work of journalists when those are no longer able to do their job. But they can’t replace professional reporting. The echo chamber’s sound volume should not be confused with journalism’s unique combination of skills and resources.
Reporting is a métier. No one could become a decent magistrate after reading a couple of law books. In a similar way, good journalism can’t happen without training and experience. Nothing is trivial: handling sources, avoiding manipulation, watching out for ethical traps, managing the distance from facts, and their context…
Without five major newspapers lining up dozens of editors and foreign affairs specialists able to redact and contextualize the Wikileaks trove, the “cablegate” would still be a 300 million words useless swamp – while still putting at risk the life of hundreds of people. (If you want to grasp the complexity of the operation, read Open Secret, War and American Diplomacy published by the New York Times, or the symmetrical Guardian account Wikileaks, Inside Julian Assange War on Secrecy.)
Blogging zealots will object: Julian Assange could have used the vast powers of crowdsourcing to retrieve and analyze the assembled material. Sure thing. Just consider how the “collective wisdom” would have handled cables pertaining to Middle East politics. Assange knew what he was doing when he decided to work with professional news organizations.
Similarly, consider last week’s investigative piece in the NY Times. It uncovers Google’s strange blindness to JC Penney “black hat” practices. The NY Times described some of the cheating used to unnaturally push a company or a product towards the top of ordinary, “unsponsored” search results. Such an exposé is the product of painstaking journalistic legwork. It didn’t come from the many blogs covering the search business.
This isn’t an exception, it is the rule: talented as they may be, bloggers can’t provide this type of service to society.
How does this relates to the business model of news? One word: Costs. Maintaining and nurturing competencies in a large newsroom costs millions…. which have yet to materialize in digital media. In the transition to the new internet-based world, the failure of advertising and of paid-for models both threaten to make digital journalism insolvent.
Which brings us back to Apple subscription policy. Why were my colleagues at the INMA conference so upset?
Five reasons
#1 The introduction of the iPad led publishers to believe that Steve’s tablet could — finally — be the magic trick to get readers to pay for news. They’re not so sure now.
#2 As we discussed in a previous Monday Note (see Apple’s bet on publishing), subscription is the model of choice for digital publishing, as it is for most of the content industry.
#3 Arguing that publishers who pay 40%-50% in printing and distribution costs should be elated to see Apple charging “only” 30% fee is ludicrous. For one, the true number is 39% here in Europe after taking in account the Luxembourg VAT. Secondly, readers expect (rightfully so) a big discount over the price they used to pay at their newsstand. A lower price tag combined with advertising yielding a third or a fifth of the dead-tree model would call for a platform costing no more than 10%-12%.
For that matter, I totally agree with James McQuivey’s analysis published by PaidContent who says the cost structure of a digital platform should be closer to the credit card processing business (McQuivey, a Forrester analyst, predicts distribution platforms fees falling below the 10% mark at some point).
A 30% rate could be acceptable for managing complex applications such as games that requires sophisticated development tools and technical approval; but not for contents-based apps such as newspapers.
No one says Apple should have left a backdoor for digital subscriptions open, but the Cupertino guys should probably consider a more flexible approach based on real costs.
#4 The same blogosphere misconception applies to the collection of customer data. Many digital pundits praise Apple’s Opt-In for allowing the release of customer data, arguing that medias are responsible for the deluging mailboxes with unwanted mail. That, again, is nonsense. A newspaper or a magazine subscriber costs as much as $300 to recruit. Does anyone really believe that a subscription department will try to squeeze a few dollars per record by leasing its precious database ? Of course not.
And by the way, I find quite funny to see such idea propagated by those who lay socially naked on Facebook, enjoy sharing their breakfast menu on Twitter or flock into email sucking engines such as Groupon.
#5 The least acceptable part of Apple subscription policy is the impossibility for a publisher to propose a cheaper subscription elsewhere. This is probably the most legally challengeable aspect of the newer terms of service. It goes against one of the most basic laws of retail: prices reflect the cost of the distribution platform. The Korean convenience store open 24/7 is more expensive than WalMart.
In itself, this restriction could be the main motive for publishers to quietly exit an overly constraining App Store.
At last week’s INMA conference in London, most the people I spoke with were considering alternatives to Apple’s lockdown. Others solutions are emerging. The most obvious ones rely on HTML5. Today, a set of pages and UI functionalities reproducing the deepest iOS features (such as GPS or sensors management) can be downloaded with a single http request and allow 15 or 20 megabytes of offline reading — sufficient for a digital publication with no video. Of course, such wizardry is still in its infancy and development requires a great deal of tinkering, but it’s improving fast.
There is no such thing as a durable lockdown in the internet world.
—frederic.filloux@mondaynote.com
Related columns:
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- Providing oxygen to publishers Tweet22% of Internet users in the United States said they stopped their subscription to a printed newspaper or a magazine. Why? Because they could access the same content online, according to a study released last week by the Center for the Digital Future. And it was only one in a string of bad news for [...]...
- Mobile publishing — Why publishers should grab the iPhone TweetNews publishers remain obsessed with the question: what will be the main distribution platform for their contents, and what will be the subsequent business models? For clues, let’s zoom in the iPhone’s recent performances as well as its immediate prospects. The smartphone introduced a year ago by Apple has become the tool of choice for [...]...
28 Comments
Frederic,
I totally agree with you, but am curious whether your “self proclaimed digital pundits” comment includes your co-author JLG( who I happen to be a fan of despite his below comments). He accused me of a “sad disregard for the facts” for making essentially the same argument about how 30% is too much and that many content providers (like music and books) dont have that kind of margin to play with.
His full comment is included below:
“Sad disregard for facts: investors’ like for the stock is nothing but a reflection of customers’ like for the product. Further, publishers will have access to customer data for subscriptions through the App Store, something they didn’t have before. Last: compare the 30% take to the customer acquisition costs publishers have to pay through their usual channels. JLG”
The piece he is commenting on is here:
http://whydoeseverythingsuck.com/2011/02/rip-pandora-kindle-on-iphone-and-many.html
I’m really just trying to stoke an internecine blog fight
Regards,
Hank
You, sir, are the René Descartes of the digital publishing ecosystem.
Chapeau!
For all the chit-chat about the economy of abundance an the link economy there is none but the Real Economy (or the Real Management), which is about *costs* and pricing. Those are the sound principles. all the rest is hot air.
Best article yet on the matter. I love this blog. Especially the little nuances that a foreign tongue (I’m in the USA) bring to each discussion. Wonderful stuff!
I don’t believe apple’s move on licensing makes such a difference, it’s rather a consequence of a change that is taking place.
About journalism future, i agree with you. That’s the real bet.
I personally stopped buying printed newspapers and owning and watching tv on july the 2nd 2001.
And ever since i relayed on free online media only. I have now an uncomparably more effective take on what’s around me, what really matters, how to run my business and how to invest.
I am both richer and happier than when i tried to understand the world through the blind eyes of paid journalists.
Then for me traditional journalism has no fututre.
I confess I’m not terribly sympathetic to existing cost structures, business models or newspapers’ desire to know my personal information. However, I do not want to see great publications, like the New York Times, starve to death. Let’s hope a solution is created to satisfy all these competing demands.
If it costs $300 to acquire a new subscriber, why is Apple’s commission considered high when it gives access to a proven buying audience over 100M?
Amazon had exclusionary price policies with publishers for a long time: not a peep from pundits until evil Apple counteracted.
You keep repeating Apple is somehow imposing a 30% tax. Not true. It’s taking that cut on business generated from within the App Store.
On what planet, would a company build and maintain the largest app store but then be forced to let competitors park their free apps in the store in order to lure potential customers away from it? Nuts.
I explored the logic behind Apple’s move in:
“Store Wars: Opt out, opt in, sell out, capitulate?”
http://bit.ly/eVYCWa
Store Wars: Opt out, opt in, sell out, capitulate?
Steve Jobs would like nothing more than to have excellent content created with html5. His goal is to deliver a great product that displays your great content, and nothing else. He knows that Apple can win under such circumstances.
Great piece as usual.
Agree with you to say that Applet too profitable 30% cost could usher a move to HTML5, especially with the apparently cheaper Google One Pass system.
What I don’t understand though is the dichotomy between “journalist” and “bloggers”, mixing up a skill (journalist) and publishing mode (a blog).
I have seen “blogs” with highly edited deep analysis content like…yours
I have also seen “newspapers / journals” with basic gossiped biased content.
I think the real and highly interesting debate you were really thinking about is triple :
Professional vs. Amateur : no question that “you can’t be a magistrate by reading 2 book laws
Collective vs. Solitary : what are the real forces of a collective today ?
Agregated vs. Unitary : personally my almost sole portal to news of the world on digital channels is today my RSS Readers, where I agregate on my own the flow of Unitary channels I’m interested in. The real challenge of news “paper/agregator” will be to (re) create a “reason for agregation”
I only disagree with point four here. In my experience publishers sign me up for mailings and other crap i do not want. Maybe its only here in the US or just the publisher i have chosen (high-minded penthouse and the like)
On small amounts of money credit card companies charge a minimum fee that can easily be 30%…how much of Apple’s 30% is being eaten up by credit card fees?
I for one am elated that the “publishers” are so upset…. that you are obviously upset. no one is going to pay OVER CHARGED content when we all get news and articles for free with advertising, and the TV has shown that news and articles and specials work just fine using advertising… just because you haven’t figure it out, only means you are in the same camp as these other idiot publishers who actually try to charge more for a digital subscription than print….
to argue that the printing costs should not be factored in is just plain stupid on your part, I guarantee, and am backed up by “Wired” and other publishers, that they would have charge the same price, IF NOT MORE for digital content, if they could do it for free even on the iPad, THEY ARE THE VERY essence of greed and stupidity. 50% of the costs in printing and another 30% in costs for retail mark up Apple was saving them and Wired and other publishers wanted to charge MORE for the same material as a digital form… STUPID idiots.
Now they have to rethink their greed, now instead of charging people 120% of the print subscription, they would charge 150% of the print price, which of course is as ludicrous as you saying that some how it is Apple’s fault that your idiotic countries charge a VAT tax on digital apps…. HEY TAKE IT UP WITH YOUR GOVERNMENT and whine to them, that you don’t have the back bone as a people and put your foot down on taxes… that is why people in the US make so much money and have a standard of living that is much better than yours, because we stand up to over taxation….
so now it is Apple’s fault that a publisher charges MORE for a digital subscription WITHOUT 50% of the print costs, and blame apple again for then another 10% or more for your Country’s decision to TAX the hell out of you…. and then the Mailing costs or retail store mark up 30% or more… ya, might as well throw that on there too… must be Apple’s fault, everything else is….
and now you are complaining because Apple just saved the publishers 70% to 80% of their costs for a 30% fee???? hello?????
good luck with that argument. this is really simple, if you don’t like the policy, then don’t put your content on an iPad, go to your tried and true method of doing it on the web, you know how successful that has been for the last 10 years of trying to get people to pay OVER PRICED charges for magazines that they could get cheaper delivered at home.
what this forces Publishers to do is to offer content free of a subscription, and to pay for that content through ads… and by golly just like the TV networks, some smart publisher will do it, and show how it is done…. then the rest will go, oh wait, this does work…
unfortunately “smart” publishers are few and far between, as you illustrate, where they have had 10 years to figure this out… and have not… now they are going to be forced into being smart….
I’m exploring an open-access, mass-sponsorship payment model — it’s like advertising at one end and sponsorship at the other. Sell a link “containing” any purchased number of downloads — e.g. 200, meaning that 200 people can click on the link for a free download.
The sponsor can include a short message to the 200 users. These end users never need to register, sign in, or pay; they are encouraged to share the paid content that’s free to them; and can purchase their own sponsorship if they wish, with a simple e-commerce transaction.
URLs giving free access to otherwise-paid content will get attention for emails and blogs. This system is DRM-agnostic — but forces pirate copies to compete with legitimate free ones.
I’m thinking music — but journalism could find sponsors who like a story for commercial, ideological, personal, practical, or other reasons, and will pay to send it out through their networks. Some news could use it, some maybe not.
Our guesstimate is that about 98% of users can be free and registration-free — paid for by the 2% who are not paying for content, but to get their message out through whatever social networks they select.
And the “smart URLs” will never expire, since they will always offer more sponsorship for sale.
In the US “old publishing” and “professional reporters” are nearly useless. With the exception of very few, they are industry shills.
Will blogging make it easier for companies to put their message out there and affect journalists? yes. But it will also make it harder for them to be seen as legitamate, especially when other writers would be seen as equal.
As it is now we basically have shallow, right and center right views on public TV, softball interviews, and an obsession with scandal and daily headlines, not issues. The blogs I read are often far more informed, well written and clear than the drivel on CNN and MSNBC. Those writers would do well to learn a topic and specialize.
I for one, cannot wait for old media to go down. It is an “us vs them” mentality. That is how they see it, and how it is. The news and views US Corporate media want to report come from the top, while the stuff a real journalist should be looking at comes from the bottom.
As far as I am concerned, the real reporting on Egypt came from blogs I read from political scientists who were there, not CNN. Your examples of professional journalism fall short: The Wikileaks stories are there for all to see and report on: fraud in the Iraq war and corporate thievery are clear to most thinking Americans. Many news outlets did not even investigate these topics, were not interested them, and are still fighting to shut them down, and shut down Wikileaks. Wikileaks should not even have to exist if journalists were doing their job.
Google’s blindness to JCPenny ad targeting? Small fish, and nothing will happen. Any investigation on the bail out? I mean REAL, persistent investigation on the front page? Nope. Lies about Wisconsins fiscal situation, growing income inequality, lack of job development, Democrats becoming “Republican-lite”? Also real stories that need investigation and discussion.
US media is failing its public and will hopefully fall apart. They have no interest in the public good.
Hi Frédéric
I also got an email from JGL whom I respect, but found it a bit off hand. His take seems to be if Apple brings the sub they get 30% if the App Provider brings the sub then they take the full 100%. This is just Apples soft spin and what is a hard to the core realpolitik move.
Before adding 5¢ to the huge amount of current analysis, I’d like to reframe the question away from can Apple get away with it, what is their motive, etc etc to this:
). As the iOS / iTunes segment of Apple approaches M$ of the 90s dominance in the ‘truck’ era, Apples actions need be scrutinised for the ethical implications even more.
Is it the right thing to do? Or to put in Steve’s vocab, is this a cool thing for Apple to do?
To me this is the only question that really matters. And it’s one I thought Steve Jobs was better at that most CEOs today (we all get disillusioned eventually
I first wrote to you and JGL a few months ago about this when I didn’t realise a free-from-Apple-rent external subscription model did exist, say if I develop an iOS app that provides large amounts of content that isn’t suitable for web delivery, say an illustration based medical encyclopaedia and sell in the App store, totally fair enough that Apple takes 30% (they provide Cocoa, XCode, AppStore customers who feel safe buying etc). If I employ writers and illustrators to extend and improve the content, then sell the update for say $15, Apple wants $5 of that for providing zero in the way of additional service, zero by way of hosting content (possibly they can host if whole app gets upgraded) and (presumably) I have to wait for their approval before it goes on sale.
Apple has set the rules so that anybody re-subscribing in App is not going to leave the app to do so b/c Apple have precluded incentives to do so and disallow links anyhow to just make sure. It’s a total stitch up trying to look to, on the face of it, like a simple minded magistrate like a fair-enough 50-50 kinda thing.
The fact that Jobs said “This is our philosophy…” is kind of telling to me. Firstly there’s no philosophy involved at all, because philosophy is not about we win, you lose, that’s about attitude, at best. It is in fact just a position, and a very short sighted one to my mind. Remember Apple came out punching at the Green my Apple campaign, how dare you, don’t you know who we are, we invented the PC you idiots, then after seeing little benefit in denial, they belatedly got their house in order, more so than most other manufactures anyhow.
What Apple is doing is Rent as understood in the financial industry, the kind banks get away with in high fees in my country (Aust) because there are so few of them providing the service of taking my deposits and lending it a high rates or gambling with it overnight on currency trades (in return for cash dispensing ATMs). In UK, an academic study found Banks provided a net disservice to the total economy of a few £B a year.
While I was concentrating on small developers, obviously content providers and resellers with tight margins are being given their marching orders. Apple has decreed that iBooks must become iTunes even though the industries, Apple’s leverage and Apples lead to market are all completely different. They wont get away with it twice, I’m guessing. In the case of music Apple arguably created value for all, win-win-win. Here it’s a case of Apple: win – customers: minor UI improvement but definitely lose services so net loss – App providers: lose 30% gross on subs (50-150% net of profit).
Apparently Woz used to sell stock to cover apples ethical blues back in the day, he could begin to cover this one.
This tension between open and closed has always existed at Apple. Just reading on Woz site last month when they launched the Apple III, which was expensive, closed and a flop, Apple ][ was paying all the bills but they wouldn't invest any money or advertise it for over a year. He? kicked up a fuss and they launched the IIgs which sold well. Woz credits the great success of the Apple ][ to it's openness, read 6 slots. Pretty humble because there's a lot of his IP in that box that apart from the slots.
It interests me that Frédrick thinks HTML5 can do slick UI based offline content provision to the tune of a 20MB download. That's certainly news to me.
You take on newspapers is only half-true. Yes they are expensive to run, no that doesn't mean they provide better content than other sources, only more mainstreamed and slick. Yes Journalist are better trained, no they don't always have time or inclination put that training to good use. Most stories are PR Media Release rewrites. The notion of 'balance' ie. 'both' sides of the story (as in truth and fiction) has resulted in dim-whits dragging the climate debate into fairyland for over two decades. The hatchet job they are doing on Julian Assange is in response to Wikileaks suing them (in case of NYT) for breach of contract. The ny times was completely unethical in the way it handled the material and broke all the rules of the contract and forced the early publication of the Afgan war material before the material was fully redacted and Wikileaks was ready. MSM are also more exposed to very real political payback like denial of access to power and punishing the proprietors next time the fine print of cross media ownership rules or bandwidth sales is up for negotiation (realpolitk again). Wikileaks doesn't need access to power nor cross-ownership favour nor radio-waves, which is what has a bunch of politicians calling fatwa and my govt deny his basic national rights to diplomatic assistance.
You may have missed this exclusive:
SBS Dateline | Assange Speaks http://bit.ly/f8QdnS
Merci Monsieur – a great article comme d’hab.
Just 3 things.
1. Even the guardian resorted to crowd sourcing the analysis of the MP expenses. Yes, they facilitated this well, but used AWS to provide the bursts of server resources, the same anyone can use at a reasonable cost.
2. I could be wrong, but I’m sure the JCP black hat story is old or very similar to ones I read a while back uncovered by bloggers.
3. I’m not sure what the exact meaning is of metier, but in the UK it’s traditionally a trade, not a profession. I know they still like shorthand skills, but I think that’s just a way to filter cvs.
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“What Apple is doing is Rent as understood in the financial industry, the kind banks get away with in high fees in my country (Aust) because there are so few of them providing the service of taking my deposits and lending it a high rates or gambling with it overnight on currency trades (in return for cash dispensing ATMs). In UK, an academic study found Banks provided a net disservice to the total economy of a few £B a year.”
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[...] -Monday Note, Feb. 20, 2011 Filed under: Uncategorized Leave a comment Comments (0) Trackbacks (0) ( subscribe to comments on this post ) [...]
[...] Depuis une semaine, les publishers (comme on les appelle outre-atlantique) sont en colère. Apple a présenté ses nouvelles règles concernant les abonnements “in app” (pris via les applications iPhone et iPad) pour la presse. La firme, qui détient plus de 90% des tablettes, prendra 30% sur la vente de contenus à l’unité et sur les abonnements, tout en interdisant les médias de renvoyer leurs lecteurs vers des abonnements hors application. En Europe, ce sera même 39% (afin de prendre en compte la TVA bruxelloise, explique Frédéric Filloux). [...]
[...] Bloggers, publishers and the Apple lockdown | Monday Note (tags: apple subscriptions journalism) [...]
[...] Depuis une semaine, les publishers (comme on les appelle outre-atlantique) sont en colère. Apple a présenté ses nouvelles règles concernant les abonnements “in app” (pris via les applications iPhone et iPad) pour la presse. La firme, qui détient plus de 90% des tablettes, prendra 30% sur la vente de contenus à l’unité et sur les abonnements, tout en interdisant aux médias de renvoyer leurs lecteurs vers des abonnements hors application. En Europe, ce sera même 39% (afin de prendre en compte la TVA bruxelloise, explique Frédéric Filloux). [...]
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