Why the iPad Won't Save Newspapers

by Benjamin Domenech on 11:47 am June 2, 2010

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So the Wall Street Journal announced recently that it has 10,000 subscribers to its iPad app. And I’m disappointed, but not surprised.

Given the popularity of the iPad among those who can afford it, given the fact that the WSJ is the only newspaper in America selling more than 2 million copies every day, and given the fact that the WSJ app has been pushed very hard via advertising not just in the WSJ but elsewhere, you might have thought this number would be much higher. What’s more, according to CJR, six advertisers paid $400,000 to reach what has turned out to be 10,000 subscribers for four months. And the subscribers shelled out more than the cost of print + online access to the WSJ for the pleasure of it:

But the WSJ pricing doesn’t make sense. A WSJ.com subscription costs less than half as much—$8.62 a week. A print subscription delivered to your door costs just $9.92 a month. A print and online subscription costs $11.66 a month. But you’re going to charge $18 for the iPad app?

I suspect the fact is that the WSJ has to price it at that dollar point for it to make sense, just like Wired has to increase their iPad price dramatically (you want me to pay 50% of a year’s hard copy subscription for one digital issue? no thanks), both to satisfy Apple’s robust percentage of their intake and to make it worth their while for reorienting their entire content around what’s essentially a very niche publishing format. But Wired is just a monthly (and the most beautifully designed of all the monthlies, in my opinion), with a few updates yanked from their blogs in between, while the WSJ is constantly updated — it really should be the gold standard of this thing. Plus, Apple users have the cash to afford that price point.

Granted, there could be more buy in for something like this, and eventually the price for the iPad (if not the app) will come down. But 10,000 readers out of a marketplace of nearly 2 million iPads in the world illustrates once again why Allen Murray was right:

“I don’t know where their canard came from that the iPad was going to save old media,” Murray said. “You have these apps, but you also have a web browser. So I don’t see how any newspaper that is giving its content away for free on the web is going to be saved by the iPad because the iPad makes it easier to access that free content.”

“It’ll help but I don’t think it’s going to save anything,” Friedman agrees.

“Old media has to fix its business models, I don’t think the iPad is going to fix it for them,” Murray continued. “If everything is free on the web, you’re not going to be able to sell people an expensive app, they’ll take the free stuff.”

Other smart analysts are coming around to this shared view after initial screams of expected salvation from across the industry. It’s a Twilight Zone idea, and deserves to die a quick death.

That said, it’s worth noting which dead tree media are thriving despite the apparent coming demise of their medium: the WSJ, Politico, The Economist, Wired, etc. All have wealthy or influential readership, are well designed, give you something you can’t get elsewhere, have robust web operations, and are relatively cheap. A first-time subscriber to WSJ gets the daily paper anywhere for a year for around $100. Wired is less than $1 an issue. Time is up 5% in ad sales and 2% in subscriptions. You can be successful, just not by doing what some people do in an average and stale way — Newsweek reportedly lost $16M in 08 and $29M in 09 doing just that.

(Aside: I think maybe the best example of what Newsweek could’ve done and didn’t do is The Week. I broached this with an ex-Newsweeker who’s at Politico now the other day, and she immediately reacted. “I know! They’re doing great! I don’t get why we didn’t go in that direction.” The answer, as Lloyd Grove wrote, is that Jon Meacham wanted to turn Newsweek into a facsimile of Jon Meacham. Perhaps Henry Blodget overbid?)

My question about the future of the news industry is a simple one: what’s the profitable niche going to be in 3-5 years that no one is occupying, or has identified but isn’t properly executing, right now?

My gut feeling is that it’s going to be the hyperlocal market which reemerges as a significant space for news. The cost-savings for people and the rise of successful virtual companies ensures that a chunk of the marketplace is going to reopen old marketplaces. As people gravitate toward telecommuting and virtual companies, traveling less and then only for business, they’re going to be more interested in what’s happening that they can walk to, go to with their family, short hops skips and jumps — less interested in news from the urban, more in the exurban.

As I understand it, the Examiner is currently aiming at forming something like this — a nationwide daily news organ that doesn’t just rely on the willingness of its target markets to pay for news, because it gives the paper away for free. The Examiner gives you a mix of national and local news (without, I think, a strong enough emphasis on the local), and ensures that wherever you live, you now have something that comes to you every day for free which gives you an ad-supported chunk. I’m also curious about what TBD, the Albritton project, will turn out to look like. At first glance, it seems like a better-applied version of what the Examiner is trying to achieve.

Within journalism, I think you’ll see a shift which follows this trendline as the jobs move more to covering localities and areas effectively, where quality work is done on a more targeted level. You’ll see better journalists going into this space, providing serious reporting about small cities and county level politics from writers who, in the old days, would’ve been stuck in lower level jobs at a big city paper.

In five years, in America’s fastest growing and wealthiest areas, commuting should have declined and telecommuting dramatically increased. On weekdays, I expect most people to go to the free national sources first. On Saturdays and Sundays, I expect readers to be more interested in a local news source telling them about local sports, the county fair, farmer’s markets, book clubs, sales and community activities. Wealthy suburban communities will get a hard copy newspaper delivered to them for free, and a digital one too if they want it (in a format that cross-pollinates to any device), since they live in an area with the financial heft and influence to be attractive to advertisers. Consumers will pay for non-ad-supported content only if it fits their niche and they can afford it. And as for consumers who live in areas which don’t have this market appeal — well, their media will go entirely online, driven by the groups and individuals within the locality to a smaller audience for little revenue.

I realize in one sense I’m predicting a dramatic social change — something reminiscent of the small-city model of the early 20th Century. I think that’s going to happen. And I think media, after straining against the painfulness of it all and muddling through for a few years, will naturally follow.

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