Silicon Valley Insider
Kindle Milestone: Amazon Sold More Kindle Books Than
Physical Books On Xmas
Henry Blodget | Dec. 26, 2009, 2:26 PM | 7,738 | 16
Dec 29 2009, 05:20 PM EST
Change % Change
Amazon's Kindle hit an important and startling milestone yesterday: On Christmas, the
company sold more Kindle books than physical books.
Yes, this is obviously the result of everyone who got a Kindle for Christmas (lots of
folks) firing it up and ordering a bunch of eBooks on a day in which most physical-book
readers weren't shopping. But it's still important and impressive.
The Kindle's economics are still lousy for Amazon: The company loses money on new
releases and makes only a modest amount on older titles, thus losing an estimated $1 per
That said, Amazon's strategy is clearly to drive "ubiquity," and based on stats like those
above, it is succeeding. The more Kindle books Amazon sells, the more leverage it will
have over publishers when it tries to force them to cut wholesale prices. If Amazon's
Kindle momentum continues, the day publishers have to capitulate will come sooner
rather than later.
And, despite publishers' cries, this is not necessarily bad for publishers: If publishers cut
wholesale prices, Amazon will be able to cut retail prices. If the retail prices are cut to
nominal levels--$2.99 or $3.99 per copy--sales velocity should soar. Publishers and
writers will make less per unit, but the increased volume should make up a lot of the
Amazon's Latest eBook Deal Is A Watershed, Will
Increase Pressure On Publishers
By Rory Maher, CFA | Dec. 15, 2009, 6:10 PM |
This is a report from our premium subscription research service The Internet Analyst.
To subscribe or sign up, please visit www.tbiresearch.com.
Amazon signed an exclusive deal for the eBook rights to two bestsellers by Stephen R.
Covey. This is a watershed deal. The economics are not unusual for Amazon, but--for
once--they are good for the author. By giving writers a way to make more money by
dealing directly with Amazon, the deal could begin to put pressure on other publishers to
change the way they view eBooks.
Specifically, the deal could shift difficult discussions currently being held between
Amazon and book publishers in Amazon's favor since it:
• Sets a precedent for authors owning the digital rights for back titles, which
could lead to writers cutting out the middleman and distributing direct to
• Pays 50% royalties to the author, setting the stage for a very public case in
which an author could make more money selling e-books currently than
WHOLESALE PRICE TO AMAZON IS SIMILAR TO OTHER E-BOOK DEALS
We spoke with someone close to the deal who said that it closely resembles a typical e-
book deal, except for the larger royalty to the author.
Specifically, the wholesale price paid by Amazon to Rosetta Stone books (the publisher)
is likely close to those paid for other comparable older e-book titles. On older books, we
estimate that Amazon nets between $0 to $1 in profit per Kindle copy sold. (Amazon
loses money on new books).
Rosetta, meanwhile, is giving half of the overall revenue to the author, but it should make
a profit since there are minimal production and marketing costs involved.
LEGAL PRECEDENT GIVES SOME AUTHORS ABILITY TO DEAL
DIRECTLY WITH AMAZON
There is an important legal precedent here, one that could give Amazon a huge advantage
in dealing with authors and publishers who published books more than a decade ago. (In
those days, print publishers did not explicitly buy rights to electronic books, whereas they
Rosetta Stone went through a lengthy legal battle with Random House back in 2001 in
which it won the rights to sell e-books on its titles. This precedent will make it difficult
for publishers to successfully sue authors and digital publishing shops for the digital
rights to back titles.
The precedent should give authors the ability to "go direct" and cut better deals with
Amazon. This, in turn, may allow Amazon to acquire the rights to books for less than
they would if a traditional publisher were involved.
Publishers who do sue for electronic rights risk losing leverage in discussions
because they will likely be seen as "the bad guy" suing authors in order to squeeze
more money out of them. A better alternative may be to simply try to negotiate the best
deal possible with authors, assuming many of them don't cut direct deals with e-book
In addition, there is a competitive issue at play as well. If a large battle for e-book rights
ensues in which publishers team up in court to agressively go after digital rights, the case
will likely be led by a single publishing house with the others playing lesser roles in the
legal process. This makes the lead plaintiff look potentially worse to authors than its
competitors which could make it easier for its competitors to sign new authors. So,
publishers could have a difficult time coming together to team up on an issue like this in
AMAZON HAS NOW DEMONSTRATED IT CAN GO IT ALONE
Amazon is the largest e-commerce site in the world and already has a large installed base
of readers buying the print and audio editions of the e-books it sells. If Amazon is able to
succesfully use its massive reach to drive a material amount of book sales off of these
exclusive Covey releases it will have demonstrated to authors that it can sell e-books
directly with Amazon. This will provide more motivation for authors to cut out the
middleman and go direct to Amazon.
None of this will make any difference to the near-term Kindle reality: Amazon loses
money on most books it sells. In order for the Kindle to become the big money-maker
that most analysts expect, traditional publishers will have to cut the wholesale prices at
which they are selling eBooks to Amazon. We have seen no evidence yet that this is
Amazon Making No Headway In Talks With Publishers
About Cutting Kindle Book Prices
By Rory Maher, CFA and Henry Blodget | Nov. 30, 2009, 8:52 AM | 2
This is a report from our premium subscription research service The Internet Analyst.
The Internet Analyst is currently in beta, with a formal launch coming towards the end of
2009. To sign up for a free beta trial, please submit your name and email address here.
Kindle sales and profit forecasts are running wild. Key to the bullish assumptions is the
idea that publishers will soon cut wholesale prices on e-books, allowing Amazon to start
making money on them. In the meantime, Amazon is losing its shirt, selling e-books for
about $1-$1.50 less than the wholesale price it pays.
The negotiations between book publishers and e-reader distributors like Amazon
will determine how large and profitable the e-reader market will become. So we
called a number of book publishers to see how these discussions are progressing.
Here are the key points:
Publishers are showing no willingness to cut wholesale prices for e-books. Thus,
neither wholesale nor retail prices on e-books are changing anytime soon, which means
Amazon will continue to lose money on e-books for the foreseeable future.
Amazon is probably making a small gross profit from older titles like paperbacks -
likely about $0.50 to $1 per book. This is because the wholesale price for these titles is
lower than it is for new books. So the near-term picture for Amazon is slightly less dreary
than we originally thought.
But older books (paperbacks, etc.) only account for about 50% of sales, so Amazon's
average loss per book is likely $1-$1.50.
FOR NOW, NEITHER SIDE IS BUDGING
Industry sources indicate that neither book publishers nor e-book retailers like
Amazon are currently willing to compromise their positions. Amazon is refusing to
raise retail ebook prices, and publishers are refusing to cut wholesale prices. Unless/until
this changes, e-books will be a money-losing business for Amazon.
The book publishers can suggest a retail price, but there is very little point-by-point
negotiations occurring to work out deals that are profitable for both parties.
A group of literary agents recently visited Amazon to convince the company to raise their
retail prices. The argument they made was that prolonged discounts in pricing will hurt
sales for both parties over time because high quality authors will stop writing as much
since their incomes will have been considerably damaged (we go into more detail below).
The meetings went nowhere and both sides left having not agreed on anything.
Most publishers we spoke with believe that Amazon will eventually have to increase
its retail price if the publishers hold their ground. For now, Amazon hasn’t gained
enough leverage through sales of the Kindle to make publishers change their mind
in that regard.
PUBLISHERS ARGUE THAT BOOK QUALITY WILL DECREASE, HURTING
OVERALL BOOK SALES FOR PUBLISHERS AND DISTRIBUTORS
To some degree publishers have their hands tied since they need to compensate authors
enough to keep them writing. Enabling a further decrease in book prices only hurts their
ability to do this since author royalties are paid off of retail sales.
If e-book prices remain low, publishers argue that:
• Royalties to authors will decrease and won’t be able to support books that take
several years to research and write.
• Authors will stop writing quality books since they won’t be able to support
themselves given the amount of time and resources invested in researching and
preparing the books.
• This would lead to fewer people buying books, which would hurt revenue growth
for both publishers and e-readers.
Companies like Amazon are content to wait and see if publishers finally cave and cut
THERE ARE ONLY A FEW WAYS THIS CAN END
Publishers offered a variety of different ways the pricing battle could play out, including:
• Books are sold for less and are commoditized, leading to fewer quality books
• E-books are sold at a discount, but are sold after hardcopies are released, similar
to the way paperbacks are currently released.
• Some kind of model is developed where e-books are sold as part of a hard copy
purchase (not a lot of specifics here).
A more likely result is that Amazon wins and books are sold at lower prices. This
would likely lead to consumers buying more books. In theory, this could lead to
essentially the same amount of overall revenue for publishers, e-readers, and
In theory. But secular trends of declining book readership are continuing, and we don’t
see this trend easing anytime soon. The book, unfortunately, is an outdated format and
VERY FAINT SIGNS E-BOOKS MAY DRIVE INCREMENTAL SALES
The one thing companies like Amazon and book publishers appear to agree on is that
they both hope e-book sales will prove to be incremental, not substitiutional.
Unfortunately, most publishers we spoke with thought e-books would largely be
substitutional, which does not bode well for those hoping publishers will lower their
wholesale e-book prices anytime soon.
We caution that data is limited, but we did hear of a few examples of authors claiming e-
books sales boosted their overall book sales through incremental purchases. These
ranged from modest bumps to a 50% increase.
These were isolated examples and did not include blockbuster authors, but if this trend
continues it would support the case that e-books could drive incremental book sales or
that lowering prices on books across the board could lead to a greater volume of sales.
APPLE HAS HELD PRELIMINARY DISCUSSIONS, BUT NOTHING
Right now competition does not impact wholesale pricing much – each e-book distributor
must pay the same price and most e-book prices are currently similar across the board.
Apple has held preliminary discussions with the trade book publishers, but little contact
has been made the past six months. We believe this is likely because Apple’s tablet
release is not imminent, the company is negotiating with other content providers first, or
that the company is waiting until the last minute to cut content deals in order to avoid any
leaks about the tablet.
Spring Design Strikes Deal With Google To
Bring More Books To Its Alex eReader
by Robin Wauters on January 5, 2010
Spring Design , developer of the dual-screen Alex eReader
, has struck a deal with Google that gives users of the device access to more than one
million Google Books online or downloaded using Alex’s touch-screen browser and
search apps. Spring Design is set to debut its Alex eReader at the Consumer Electronics
Show in Vegas later this week.
The device will feature a Google Android-based platform with full Web browsing
capabilities, Wi-Fi connectivity, audio and video playback and image viewing in a variety
of formats. The Alex eReader will also be able to run a number of Android apps.
The Alex eReader boasts a 6” EPD (Electronic Paper Display) screen which allows users
to browse the Web in full color while simultaneously searching for and reading digital
books. Users can thus click on hyperlinks within online books that lead to relevant
information or multimedia content found online in order to enrich their reading
experience. EPUB digital books can be searched and downloaded using Google API
applications provided by Alex’s eReader.
Spring Design made headlines late last year when it sued Barnes & Nobles for alleged
infringement by stealing trade secrets and copying features from the Alex eReader for its
Nook product. Google, meanwhile, is still caught up in litigation with authors and
publishers over its Book Search product, although preliminary approval of a settlement
was reached on November 19, 2009.
Future Is Here: More E-Reading Apps Debut at CES
Erik Sass, Jan 06, 2010 05:40 PM
New e-reader apps and devices are hitting the market at a furious pace, and this year's Consumer
Electronics Show in Las Vegas is a favorite venue for unveiling new entries. The profusion of free
downloadable software apps, in particular, promises some kind of social and technical shakeout in
the years to come.
The most recent software app announced at CES, Blio, comes from knfb Reading Technology, a
company founded by futurist Ray Kurzweil, the inventor of voice-recognition, and the Federation
of the Blind.
Originating as an app to help people with impaired vision read digital content more easily, knfb is
marketing Blio to mainstream consumers. Blio aims to preserve the visual format of books and
magazines, including layout, type, images and colors, while also enabling an array of digital
media, like online video and interactive Web.
Compatible with desktop and tablet PCs, netbooks, iPhones, iPods and other mobile devices, the
free app allows users to make "notes" by saving additional images, video and voice content
alongside digital content. It also compiles lists of relevant Web references.
Blio offers users access to 1.2 million titles through a partnership with book distributor Baker &
Taylor, Kurzweil said. Like other e-reader services, Blio stores digital editions purchased by the
user in a virtual library, but unlike some other services, the user can access this virtual library by
various means, including mobile devices, desktop and tablets, allowing them to "transfer" the
reading experience between devices.
Kurzweil also touted its color capabilities as a significant improvement over competing services,
which are for the most part limited to monochromatic reproductions of print content, noting the
importance of color to reader experience for content like cookbooks, travel guides, how-to books,
textbooks and children's stories.
On the device front, the Consumer Electronics Association predicts e-reader sales will double this
year, compared to 2009, then again by 2012. Earlier this week, Skiff, LLC previewed its new
Skiff reader at CES. The reader, created at the behest of magazine and newspaper publisher
Hearst, has its own Skiff e-reader app, which should be compatible with content from other
Latest E-Readers Come From Samsung, Lacking a Little
Comes to Market With Google Books, but Promises More Soon
By Michael Learmonth
Published: January 07, 2010
Samsung execs believe that if they make the reader, the content will come.
LAS VEGAS (AdAge.com) -- Does the world need another e-reader? Samsung thinks so.
In addition to the flashy 3-D TVs and Blu-ray players that Samsung rolled out at the
Consumer Electronics Show in Las Vegas, the company has also jumped into the e-reader
fray with two models sporting features such as a stylus pen for writing and the ability to
share content wirelessly.
Both the E6 and bigger E101 ($400 and $700, respectively) will go on sale early this
year, but one key component is missing: content. Initially, Samsung's e-readers will only
have access to Google Books, mostly comprising out-of-print titles and books in the
Why put an expensive reader in the market without content? Samsung execs believe that
if they make the reader, the content will come. Samsung spokesman Jason Redmond said
that with Amazon's Kindle, Barnes & Noble's Nook and Sony's e-readers in the market,
Samsung would be able to reach deals with publishers.
And consumer demand
for devices and e-books
alike seems to be
growing. A new Parks
Associates report says
7% of those with
at home are considering
buying an e-reader in the
next 12 months.
Amazon, which has been
touting the success of
the Kindle but providing
no solid numbers, said
that on Christmas Day
its digital book sales
exceeded physical book
sales -- a first.
Samsung has also
launched its own app store, "Samsung Apps," which now sells applications for TVs and
Blu-ray players but will be adapted to Samsung's e-readers as well, allowing the company
to sell books and deliver them wirelessly.
Mr. Redmond kept mum, however, on the economics; Amazon keeps as much as 70% of
newspaper sales revenue, and publishers are eager to license competitors on better terms.
Last month Plastic Logic and Sony were already spotted cozying up to publishers by
offering better cuts of revenue and more information on consumers.
The Business Insider
Apple Tablet Better Positioned Than Kindle To Go
After Newspaper/Magazine Market
Rory Maher, CFA: firstname.lastname@example.org
January 4, 2010.
Apple's forthcoming tablet is emerging as a much-anticipated competitor to Amazon’s Kindle. The tablet will
likely have two competitive advantages over the Kindle when it comes to selling digital versions of
newspapers and magazines:
• Lower content delivery costs, which should enable Apple to cut deals with newspapers and
magazines that are more favorable for the publishers than Kindle deals.
• Better graphical features
LOWER WIRELESS DELIVERY COSTS WILL ENABLE APPLE TO CUT BETTER CONTENT DEALS
Newspapers and magazine e-reader files are typically a lot larger than book files since they host more
graphics and illustrations (most books are simple text). Therefore, it costs Amazon a significant amount of
money to deliver newspapers and magazines to its Kindle device since Amazon picks up the wireless bill for
content delivery, not the consumer.
An executive from an e-reader company estimates the delivery cost of a single newspaper or magazine
subscription on a wireless device like the Kindle could be as high as $3 per month. That’s a lot when you’re
only selling subscriptions for upwards of $10 a month. Here is how the executive arrives at this estimate:
• Low-single-digit cost per MB data delivery fee
• 4 GB average file size (could be bigger depending on the publication).
• 25 deliveries per month, or 100 GB total data usage per month.
Apple, on the other hand, partners with carriers for its portable devices (like the iPhone/ATT relationship)
and passes the delivery costs to the consumer through unlimited data plans. The lower overhead enables
Apple to cut better content deals with magazines and newspaper publishers, which we’ve heard
Apple has been doing.
We should note that sophisticated computing functionality could consume a greater amount of bandwidth,
which could make it difficult for Apple to pass these costs to consumers.
Industry contacts indicate Apple is offering splits of anywhere from 50/50 to 30/70 in favor of the
publisher and not asking for exclusivity. These terms are much better than Amazon’s, which typically
gives less than half the revenue to publishers.
APPLE TABLET BETTER REPLICATES EXPERIENCE OF READING PRINT MAGAZINES AND
Apple has released no details about its tablet. But, there has been plenty of speculation surrounding its
general features, which we believe are more suited to reading graphical and image-rich newspapers and
magazines than the Kindle is.
• A display size 7” to 10.”
• Full color display with illustrations and graphics.
• Touch-screen technology.
Reflections of a Newsosaur
Musings (and occasional urgent warnings) of a veteran media executive, who fears our
news-gathering companies are stumbling to extinction
Friday, January 08, 2010
Holy Moses! Media need to gear up for tablets
Most media companies are better equipped to deal with the tablets Moses hauled down
Mount Sinai than the dazzling new gizmos coming from Apple, Microsoft and a host of
other technovators. This has to change fast.
As my friend Mark Potts ably noted here, tablets have the capability of
revolutionizing newspapers, magazines, book publishing, television, movies,
communications, applications and gaming. They also will further stress the
tattered advertising and subscription models on which the change-averse legacy
media continue to rely.
Tablets will the rock media as much, if not more, than the Internet, because they
will powerfully combine ubiquitous connectivity, elegant displays, powerful
computing and extreme portability. As the future Swiss Army knife of media
platforms, they have the potential to obsolete not just print, broadcast television
and Filofaxs but also desktops, laptops and smart phones.
Tablets demand a fresh approach to content and advertising that leverages the
capabilities of this new medium in the same way TV required pictures and action,
instead of stiff announcers recycling radio fare.
The first, feeble shot of the tablet revolution was fired on Wednesday when Steve
Ballmer, the chief executive of Microsoft, showed off (video) a trio of pending
products at the Consumer Electronics Show.
Ballmer did little to take the edge off the fevered expectation that Apple will
debut a tablet of its own on Jan. 27. By most accounts, the upcoming iSlate, if
that indeed is the name of the new Apple offspring, will look a lot like an iPhone
fitted with a 9.5-inch diagonal screen vs. the 3.5-inch display on the original,
ground-breaking smart phone.
With the first tablet computers headed to the marketplace, it’s already late for the
slow-poke media companies to begin thinking about how to leverage this new
But starting late is better than not starting at all. They have a limited amount of
time to get it together, because widespread tablet adoption probably will have to
wait until iPhone fanciers can work off the two-year indentures imposed by
To their credit, a few media companies (be sure to see this must-watch video
from Sports Illustrated) have put serious cycles into thinking about tablets. But
even the best of the early efforts appear to have fallen short, because the legacy
media guys are focused – as they were when the web debuted – on repurposing
their existing offerings.
With tablets about to up the ante for the interactive publishing, here are the key
things media companies must do to adapt:
:: Enrich. Equipped with bigger and better screens, faster processors and, one
can only hope, improved network connectivity, tablets will provide dramatic,
multimedia presentation for both news and advertising. While video to date has
been an afterthought, if not to say an unwelcome intrusion, for print media, it will
be de rigueur in the tablet environment. Deeper and easily searchable video
offerings will be necessary for media outlets of every kind. Because tablet readers
will be assimilating information at unprecedented rates, graphics and other
forms of visualization will be essential to inform and engage audiences.
:: Alert. Because tablets will be highly portable, always on and the focal point for
all manner of professional and personal communication, nearly all media
offerings will have to include real-time content delivery like never before. As you
can see by sampling such early experiments in insta-journalism as the beta
versions of Nozzl News or Thoora.Com, this is easier said than done. However,
publishers who cannot efficiently produce continuously captivating news
products will suffer diminished relevance.
:: Personalize. Apart from a few users who attempt to protect their private
activities, almost everything people do on tablets will be tracked: web searches,
sites visited, articles read, videos viewed, phone calls, purchases, restaurants
reviewed, calendar entries and financial information. Owing to global-positioning
systems embedded in every unit, the devices not only will know your precise
whereabouts but also which direction you are headed. Based on where you are
standing, smart-phone applications like Urban Spoon can suggest a place to dine.
Thanks to Loopt, the GPS-enabled social network, you can figure out where to
meet friends or avoid your ex.
:: Assist. The download of more than 2 billion of the 100,000 available iPhone
applications is a powerful demonstration of the potential utility consumers will
find in their tablets. Apps do everything from dictating emails and providing
driving directions to counting calories and organizing expense accounts. There’s
even a Genius app to help you find more apps. While many media companies
have created more-or-less elegant apps to port their legacy content to the iPhone,
precious few have had the good sense to charge for them. Meantime, Mom and
Pop developers around the globe have built six- and seven-figure businesses by
selling games, virtual drum sets, alarm clocks and cocktail recipes for as little as
99 cents a download.
:: Target. By harnessing the above capabilities, publishers can create highly
individualized news and entertainment products that represent highly targetable
advertising opportunities. Putting the right pitch in front of the right person at
the right time is the Holy Grail of advertising. Marketers will reward publishers
handsomely for doing it and will forsake the ones who can’t.
Given the more than 15 years we have been waiting for most legacy media
companies to develop Internet-literate products, there is reason to fear they will
not segue smoothly into tablet computing.
Because tablets represent the last, best do-over for media companies, however,
here’s hoping the continuing erosion of their traditional businesses will impel
them to act before it’s too late.
How The New York Times Should Charge For Content
A storm has been brewing at The New York Times for a while now. Ever since
TimesSelect—the paid digital version of the Times—was canceled back in 2007, the
“content wants to be free” crowd has danced around its proverbial grave, singing the
equivalent of “ding, dong, paid media is dead.”
Now, NYTimes.com is reportedly considering erecting a new pay wall—one presumes a
shiner, prettier one than the last wall, but a pay wall nonetheless. Not to put too fine a
point on it, but this is a bad idea whose time has unfortunately come.
First, let’s look at what NYTimes.com risks by shutting off the free flow of its particular
mix of cultural elitism. For argument’s sake, let’s accept Compete.com’s view of
NYTimes.com at about 15 million visitors per month, compared to the WSJ.com‘s
smaller 11-plus million. It’s safe to assume that traffic will go down, even providing that
some brand-critical content will remain free (please don’t cut off my David Brooks drip,
please). The question is whether the traffic will get cut by 80 percent, as our survey
would indicate, or whether it will end up somewhere less damaged, cut, say, by 30
percent—though with far fewer page views per viewer because the only way to keep site
visits high is to give select content away for free, but that free content has to have a meter
on it that expires after some number of pages, typically five.
As much as I like to pick on media companies when they’re short-sighted, I don’t think
such a complaint applies in this case. In the spirit of helping to rebuild this particular
media company in the digital era, I want to offer a few pieces of advice to the folks
finalizing the details of this shift:
1. Give the highest-profile content away for free. A critical decision will be to
determine just how much content you can give away for free without undercutting
subscription revenue. Look at your sources of traffic—anything that draws dramatic
traffic from abroad is something that builds your international reputation. Give that away.
Any traffic that preserves the egos (and the skilled contribution) of specific personalities
we will avoid naming, should also be free. And, of course, the front page should be
sample-able for free.
2. Make free content sell the value of paid content. But even in these free pages, find a
way to let free readers know there’s more to be had, not just elsewhere, but even on those
free pages. For example, at WSJ.com, comments can be organized to show only those by
paid subscribers, thus eliminating a lot of the idiots who post annoyingly partisan
comments or intentionally confrontational stuff. Some people would pay to become a
commenter whose comments aren’t automatically marginalized. Others would pay to
read only those who are willing to pay that price. Too elitist for you? Um. You’re The
New York Times.
3. Brace for impact. Even if you get the balance between free and paid right, traffic will
fall. WSJ.com has about two-thirds of your traffic, even though it has 600,000 more paid
daily subscribers to its print edition than the Times does. That’s a good metric to shoot
for: a quarter as many paid subscribers as print subs, or about 250,000 in your case, with
traffic somewhere around 9 million uniques a month (using Compete.com’s metrics here,
adjust accordingly). That’s after you rebound from the initial confusion. Of course,
advertisers will still panic. Ironically, the drop in traffic will constrict supply, driving ad
rates up, but over a smaller reader base. The result will be a reduction in ad revenue of at
least 50 percent. Plan for it, send the message internally that there’s no way around this
iceberg but to try to plow right through it.
4. Don’t bet on Apple’s tablet to save you. We all know you’re timing this to coincide
with Apple’s forthcoming announcement about a media-heavy tablet. While it won’t ride
in and save the industry, it can help. Make sure Apple (NSDQ: AAPL) has a way to
enable offline access to your online content so that tablet readers on the subway don’t
suffer from low bars. And whatever you do, make sure your NYTimes.com subscription
is multi-platform—don’t ask readers to pay extra to get the pretty tablet version. Make
that a carrot rather than a stick; even the movie industry is learning that it’s not nice to
double-dip your customer. Content you buy once should be available everywhere, end of
Notice that this advice is directed to NYTimes.com and nobody else. Because there is no
other newspaper that we believe can pull this off at this time, even though a majority of
newspaper editors are considering it. In fact, other papers like the Washington Post and
the LA Times should go on the offensive and try to satisfy as many ad-funded readers as
possible, since they’ll have a shot at boasting as many monthly uniques as
Rebuilding the media isn’t pretty. You can’t satisfy everyone. But you can satisfy
customers with convenient access to good content across multiple platforms. That’s what
people are paying for more and more—in video, in music, in books, and, increasingly, in
James McQuivey is an analyst at Forrester Research, where he serves, and contributes
to the Forrester blog for Consumer Product Strategy professionals.
• New York Times Leaning Toward ‘FT’ Metered Model; Announcement Finally On Way?
• How Berlin In 1989 Is Like The Media Business In 2009
• JANUARY 21, 2010, 10:49 P.M. ET
Apple Sees New Money in Old Media
Steve Jobs's Tablet Device Looks to Repackage TV,
Magazines, Just as iPod Changed Music Sales
By YUKARI IWATANI KANE And ETHAN SMITH
With the new tablet device that is debuting next week, Apple Inc. Chief Executive Steve Jobs is betting he
can reshape businesses like textbooks, newspapers and television much the way his iPod revamped the
music industry—and expand Apple's influence and revenue as a content middleman.
In developing the device, Apple focused on the role the gadget could play in homes and in classrooms, say
people familiar with the situation. The company envisions that the tablet can be shared by multiple family
members to read news and check email in homes, these people say.
Despite its digital legacy, Apple is betting that its Tablet can revitalize television, magazines and
newspapers in the way iTunes changed music. Ethan Smith joins the News Hub panel to discuss.
• News Hub: Apple Looks to Reshape Media
• Apple Tablet on Tap
• Apple's Tablet, as Imagined by Publishers
For classrooms, Apple has been exploring electronic-textbook technology. Apple also has been looking at
how content from newspapers and magazines can be presented differently on the tablet, according to the
people familiar with the situation. Other people briefed on the device say the tablet will come with a virtual
Apple has recently been in discussions with book, magazine and newspaper publishers about how they can
work together. The company has talked with New York Times Co., Condé Nast Publications Inc. and
HarperCollins Publishers and its owner News Corp., which also owns The Wall Street Journal, over content
for the tablet, say people familiar with the talks.
New York Times Chairman Arthur Sulzberger declined to comment in an interview Wednesday on its
involvement in the new device except to say, "stay tuned."
Apple is also negotiating with television networks such as CBS Corp. and Walt Disney Co., which owns
ABC, for a monthly TV subscription service, the Journal has reported. Apple is also working with
videogame publisher Electronic Arts Inc. to show off the tablet's game capabilities, according to one person
familiar with the matter.
• Vote: What price would you pay for Apple's new tablet device?
• Discuss: What features would you want to see it have?
• Vote: Touch, voice - How would you prefer to interact with technology?
• Vote: What do you most want to buy as your next computer?
Apple's strategy contrasts with how other technology companies are approaching media. Notably, Google
Inc. offers content to consumers largely free on properties like its video-sharing site YouTube, making
relatively little distinction between clips from users and those of professional media companies, although
YouTube this week said it plans to experiment with movie rentals. Web sites like Twitter and Facebook
also provide outlets for user-generated content.
Mr. Jobs has a longstanding strategy of devising new ways to access and pay for quality content, instead of
reinventing the content. Apple's iTunes Store, for instance, became the world's largest music retailer partly
by making it easy for people to buy music, most of it from major record labels, by the song instead of by
the album. Its digital-media receiver Apple TV was also designed so people can buy and rent movies and
Mr. Jobs is "supportive of the old guard, and [he] looks to help them by giving them new forms of
distribution," says a person who has worked with the CEO. "What drives all of these changes is technology,
and Apple has an ability to influence that."
Apple's divide with Google over how it views media content also drives the wedge deeper between the two
companies. Apple's iPhone, for example, currently closely integrates Google's mapping and search
technology, but a person familiar with the matter said Apple was in serious discussions with Microsoft
Corp. to incorporate its Bing search engine into the iPhone as the default search and map technologies.
Microsoft declined to comment. The talks were reported earlier by BusinessWeek.
Details of how Apple charges for the content on its tablet couldn't be learned, but people familiar with the
company's thinking say Apple could change conventional payment structures. One person familiar with the
matter said the company was discussing with the New York Times how it could charge for news through
iTunes. It is unclear how people will access content wirelessly off the tablet.
An Apple spokesman said the company "doesn't comment on rumors and speculation." Mr. Jobs didn't
respond to a request for comment.
Mr. Jobs' effort to repackage and resell more media content isn't without obstacles. He already has faced
resistance from television companies and cable-network providers over Apple's desire to license just their
best content rather than all of it.
Many music executives complain that it has become a powerful gatekeeper between the labels and
customers. What's more, the iTunes Store's music downloads haven't grown fast enough to offset the
decline in CD sales for music companies.
On Monday, Apple sent out an invitation to a media event on Jan. 27 "to see our latest creation." The tablet,
which Apple currently plans to ship in March, will have about a 10- to 11-inch touch screen, say people
familiar with the situation.
Apple CEO Steve Jobs spoke during an event in September 2009.
Apple's tablet foray faces several obstacles. Analysts say demand will depend on its price, which some
believe will be about $1,000. Apple must also convince consumers the product is worth buying in addition
to an iPhone and a laptop computer. And Apple faces competition from cheaper netbooks and other devices
such as Amazon.com Inc.'s Kindle e-book reader.
The tablet's success will depend "on how this product can fit into the user's daily life... and whether you
have enough content to make it important enough to use it," said Henry Lu, senior vice president of
Taiwanese computer company Micro-Star International Co., which failed at selling a tablet computer a few
In the academic arena, Apple could face hurdles wooing universities if the tablet doesn't meet their needs or
isn't compatible with other computing devices that students are using.
Amazon had been hoping to target the market with its 9.7-inch screen Kindle DX e-book reader, for
example, but schools said the device wasn't sufficiently interactive and lacked basics such as page numbers
and color graphics.
One person familiar with the matter said Apple has put significant resources into designing and
programming the device so that it is intuitive to share. This person said Apple has experimented with the
ability to leave virtual sticky notes on the device and for the gadget to automatically recognize individuals
via a built-in camera. It is unclear whether these features will be included at launch.
Apple's content-related efforts heated up in the fall. In October, Apple sent representatives to the Frankfurt
Book Fair, the industry's largest trade fair, according to one person familiar with the matter.
At the same time, Apple pitched media companies on a "best of TV" subscription service to television
networks under which customers would pay a monthly fee for on-demand access to programs from a
bundle of participating TV networks, giving consumers another way to readily access television content.
At a meeting in New York with one network in October, an Apple executive said the company was
specifically looking to access four to six shows per channel, said one person familiar with the meeting.
Apple also has been planning a revamp of its iTunes music service by creating a Web-based version of it
that could launch as soon as June, say people familiar with the matter. Tentatively called iTunes.com, the
service would allow customers to buy music without going through the specialized iTunes program on
computers and iPhones.
People familiar with Apple's plans say a central part of the new strategy is to populate as many Web sites as
possible with "buy" buttons, integrating iTunes transactions into activities like listening to Internet radio
and surfing review Web sites.
In November, Apple hired Tracy Augustine, a former executive at textbook publishers Cengage Learning
Inc. and Pearson Education Inc., as the director of world-wide education. Ms. Augustine is responsible for
"driving global strategy and revenue for the education online store for students," according to her LinkedIn
Ms. Augustine didn't respond to a request for comment.
— Geoffrey A. Fowler
and Russell Adams
contributed to this article.
January 20, 2010
Amazon Unveils New Kindle Royalty Option; Incentive
To Keep E-Book Prices Down
As word spreads of book publishers talking to Apple (NSDQ: AAPL) about a possible
deal for its anticipated tablet device, Amazon (NSDQ: AMZN) is taking a preemptive
strike by offering a plan that gives content owners a greater share of the royalties for e-
books sold through the Kindle. The new option completely reverses Amazon’s standard
70 percent take of the revenue split from Kindle e-books. This new pricing plan will
become available at the end of June. Amazon is clear that this new pricing plan will be
in addition to the standard revenue deal the company offers to authors and
publishers and is not a replacement for it. The e-tailer also points out that e-book
publishers who choose the new option will receive 70 percent of list price, net of delivery
costs. In order to take advantage of the special revenue plan, authors and publishers will
have to adhere to a strict set of requirements on pricing and features.
First of all, the new option covers only those books that are priced between $2.99 and
$9.99. Also, the e-book’s list price must be at least 20 percent below the lowest physical
list price for the physical book. Titles in this plan have to be available for sale in all
geographies where the author or publisher has rights. Most importantly, Amazon will not
allow books that are sold for less in other stores—both physical and electronic—to
participate in the new plan.
Despite these restrictions, the additional royalty option is meant to soften some of the
complaints from publishers who have felt that Amazon’s existing revenue share model is
tilted to far in favor of the e-tailer.
In its announcement, Amazon points out that authors often receive royalties in the range
of 7- to 15 percent of the list price that publishers set for their physical books, or 25
percent of the net that publishers receive from retailers for their digital books. It’s hard to
say what impact Amazon’s plan will have on existing challenges from Sony (NYSE:
SNE) and Barnes & Noble (NYSE: BKS). But it does show that whatever potential threat
is coming from Apple, Amazon is already putting its defense in place. Release
The New York Times
January 21, 2010
Apple Courts Publishers, While Kindle Adds Apps
By BRAD STONE and MOTOKO RICH
SAN FRANCISCO — It’s a formidable high-tech face-off: Amazon.com versus Apple
for the hearts and minds of book publishers, authors and readers.
Amazon’s Kindle devices and electronic bookstore now dominate a nascent but booming
market, accounting for more than 70 percent of electronic reader sales and 80 percent of
e-book purchases, according to some analysts. And on Thursday it will take a page from
Apple and announce that it is opening up the Kindle to outside software developers.
Apple’s much-anticipated tablet computer, which is widely expected to be announced
next Wednesday and go on sale this spring, will be a far more versatile (and expensive)
device that will offer access to books, newspapers and other reading material through
Apple’s popular App Store on iTunes.
Book publishers, who rail against the dominance of Amazon and its insistence on
discounting new releases to $9.99, are now playing the tech titans against each other.
In the process, they may be rushing from the clutches of one tenacious chief executive,
Jeffrey P. Bezos, into the arms of another, Steven P. Jobs, whose obstinacy over pricing
has given the music industry similar paroxysms of anxiety.
“Will Kindle pricing trump Apple sex appeal? Isn’t that the question, really?” said
Richard Charkin, executive director of Bloomsbury Publishing in London, who has been
watching developments in e-book sales with keen interest. “I haven’t the faintest idea. All
I would say is, great. The more people that are out there marketing books in digital or any
other format, the better.”
There are now almost daily tactical moves by various parties in the business, with no end
In its announcement Thursday, Amazon will say that it is letting programmers create
what it calls active content — similar to applications — for the Kindle and keep 70
percent of the revenue from each sale after paying for wireless delivery costs.
Amazon will release a set of programming guidelines that other companies — including
publishers of books and periodicals — can use to create and sell applications for the
Until Amazon introduces more advanced models of the Kindle, developers will be
limited by its slow-to-refresh black-and-white screen.
Ian Freed, vice president for the Kindle at Amazon, said he expected developers would
devise a wide range of programs, including utilities like calculators, stock tickers and
casual video games. He also predicts publishers will begin selling a new breed of e-
books, like searchable travel books and restaurant guides that can be tailored to the
Kindle owner’s location; textbooks with interactive quizzes; and novels that combine text
“We knew from the earliest days of the Kindle that invention was not all going to take
place within the walls of Amazon,” Mr. Freed said. “We wanted to open this up to a wide
range of creative people, from developers to publishers to authors, to build whatever they
The move may also represent a shift in Amazon’s relationship with newspapers and
magazines that make digital editions for the Kindle. Many executives at those
organizations have expressed dissatisfaction with their 30 percent cut of subscription fees
on the Kindle and lack of a direct relationship with those subscribers.
With a Kindle app store, those media companies will be able to sell more profitable
Kindle applications, and present news that is updated throughout the day.
Amazon may be rushing to change the rules of its Kindle platform with an eye toward the
fanfare that will no doubt greet Apple’s long-awaited tablet. The devices, to be sure, are
fundamentally different: Amazon has positioned the Kindle as the ultimate reading
device, easy on the eyes and slow to deplete its battery. Analysts say that to buyers of an
Apple tablet, playing video or video games may be more important than reading.
But for book publishers, Apple’s introduction provides a potentially golden opportunity:
the chance to counter Amazon’s control over the e-book market and regain some leverage
over sensitive matters like pricing.
Apple representatives have been in New York this week talking to the largest trade
publishers, according to industry executives. They said Apple had proposed an
arrangement under which publishers would get to set the price of their books, with Apple
taking a 30 percent commission and the publishers keeping the rest. Steve Dowling, an
Apple spokesman, declined to comment on what he called “rumors and speculation.”
Depending on whether Apple sets an upper limit on pricing, its model could be much
more appealing to publishers, who resent how Amazon has aggressively discounted their
books. Typically, Amazon charges $9.99 for new releases and best sellers, a price that
other e-book vendors, including Sony and Barnes & Noble, have effectively been forced
While Amazon pays publishers a wholesale price typically equivalent to half the list price
of a print book — meaning that Amazon generally sells new e-books at a loss —
publishers fear that Amazon has accustomed buyers to unreasonably low prices. They say
that if Kindle were to maintain its dominant position, it could force publishers to lower
their wholesale prices.
The probable entry of Apple and its tablet into the e-book market gives publishers hope
that they might gain some leverage in negotiations with Amazon. They could, for
example, delay the release of e-books in the Kindle store while selling more expensive
versions for the Apple tablet.
“There’s a battle going on for what is the value of a digital book,” said a publishing
executive who did not want to be quoted by name because of the delicacy of discussions
with Apple. “In that battle, Apple has put an offer together that helps publishers and, by
extension, authors.” Some publishers warn that Apple’s terms can be restrictive in other
ways, and that a model that looks good in theory may not be as attractive in practice.
And Amazon has moved to counter Apple’s appeals as well. On Wednesday it announced
it would improve the royalty terms for authors or publishers who publish e-books directly
onto the Kindle — essentially beckoning authors and their agents to split off e-book
rights and sell them directly to Amazon.
Under the new terms, Amazon says it will offer authors and publishers who set e-book
prices below $9.99 a royalty rate of 70 percent of the digital list price (after delivery
costs, typically about 6 cents a book) — an obvious echo of Apple’s offering.
But publishers can anticipate another high-tech heavyweight entering the business:
Google, which has pushed its own plans to begin selling e-books.
“The more companies that control consumer transactions, the more important the
publishers’ role will be,” said Mike Shatzkin, chief executive of Idealog, which helps
publishers develop digital strategies. “If Apple enters this market, and in three months
Google follows, we may be looking at a completely different e-book world in the next
Silicon Alley Insider
'Canvas' A 'Perfect Name' For Apple Tablet, Says Apple
God John Gruber
Dan Frommer | Jan. 22, 2010, 3:40 PM | 3,294 | 18
Tags: Gadgets, Apple, Big Tech, John Gruber, Apple Tablet
AAPL Jan 25 2010, 05:20 PM EST
Change % Change
What is Apple going to name its tablet computer? iSlate? iPad? Slate? iBook? MacBook
touch? iPod touch HD?
How about Canvas? (Or iCanvas?) That's one of the potential names emerging from the
Apple nerd camp, via Daring Fireball blogger John Gruber.
Why? Because the invitation Apple sent to reporters -- splashed with paint blotches --
looks like it could be the canvas for a kid's preschool art project.
Gruber writes today, "Even without considering the invitation design, I love this name. It
looks good, it sounds good, and it evokes the right feelings and ideas: thin, light, clean,
crisp, blank, the thing great artwork is made upon. It’s a perfect name."
Click here to see 20 Apple tablet design concepts →
January 28, 2010
With Its Tablet, Apple Blurs Line Between Devices
By BRAD STONE
SAN FRANCISCO — After months of feverish speculation, Steven P. Jobs introduced
Wednesday what Apple hopes will be the coolest device on the planet: a slender tablet
computer called the iPad.
For all the hoopla surrounding it, however, the question is whether the iPad can achieve
anything close to the success of the iPhone, which transformed the cellphone and forced
the industry to race to catch up.
Apple is positioning the device, some versions of which will be available in March, as a
pioneer in a new genre of computing, somewhere between a laptop and a smartphone.
“The bar is pretty high,” Mr. Jobs acknowledged. “It has to be far better at doing some
Half an inch thick and weighing 1 1/2 pounds, the device will vividly display books,
newspapers, Web sites and videos on a 9.7-inch glass touch screen. Giving media
companies another way to sell content, it may herald a new era for publishing.
But the iPad, costing $499 to $829, also lacks some features common in laptops and
phones, as technology enthusiasts were quick to point out. To its instant critics, it was
little more than an oversize iPod Touch. A camera is notably absent, and Flash, the
ubiquitous software that handles video and animation on the Web, does not work on the
Another thing missing is an alternative to the AT&T data network, which is already
buckling under the strain of traffic to and from iPhones. Some versions of the iPad can,
for a monthly fee, use a 3G data connection like cellphones, but the only carrier
mentioned was AT&T.
The event, in typical Apple style, was tightly scripted and heavy on theatrics and
hyperbole. But the success of the iPhone, and the hive of rumors and leaks surrounding
the iPad, raised expectations and made this perhaps Mr. Jobs’s most highly anticipated
product unveiling yet.
It was one that he clearly cared deeply about. Mr. Jobs, a consummate showman,
presented the iPad to an enthusiastic crowd of around 800 employees, business partners
and journalists, some of whom shoved their way in when the doors opened to grab the
best seats. It was only his second public appearance since a leave of absence for health
reasons last year.
Mr. Jobs posited that the iPad was the best device for certain kinds of computing, like
browsing the Web, reading e-books and playing video.
The iPad “is so much more intimate than a laptop, and it’s so much more capable than a
smartphone with its gorgeous screen,” he said in presenting the device to a crowd of
journalists and Apple employees here. “It’s phenomenal to hold the Internet in your
One question Apple faces is whether there is enough room for another device in the
cluttered lives of consumers.
“I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod
Touch,” said Charles Golvin, an analyst at Forrester Research, adding that he expected
the iPad to mostly cannibalize the sales of other Apple products.
Mr. Golvin said book lovers would continue to opt for lighter, cheaper e-readers like the
Amazon Kindle, while people looking for a small Web-ready computer would gravitate
toward the budget laptops known as netbooks.
But other analysts say they have heard similar criticism before — once aimed at the
iPhone, which has now been bought by more than 42 million people around the world.
These believers say Apple’s judgment on the market is nearly infallible.
“The target audience is everyone,” said Michael Gartenberg, vice president for strategy
and analysis at Interpret, a market research firm. “Apple does not build products for just
the enthusiasts. It doesn’t build for the tens of thousands; it builds for the tens of
Apple says the iPad will run the 140,000 applications developed for the iPhone and the
iPod Touch, but the company expects a new wave of programs tailored to the iPad.
One of the most significant applications for the iPad may be Apple’s own creation, called
iBooks, an e-reading program that will connect to Apple’s new online e-bookstore.
Mr. Jobs said Apple so far had relationships with five major publishers — Hachette,
Penguin, HarperCollins, Simon & Schuster and Macmillan — and was eager to make
deals with others. Publishers will be able to charge $12.99 to $14.99 for most general
fiction and nonfiction books.
Apple’s announcement that it was diving into the growing e-book business put the
company on a collision course with Amazon. Mr. Jobs credited Amazon with pioneering
e-readers with the Kindle but said “we are going to stand on their shoulders and go a little
John Doerr, a Silicon Valley venture capitalist who serves on Amazon’s board and is also
an adviser to Apple, said there could be room for both companies, noting that Amazon
sells many books to iPhone owners who use its Kindle application, which will also work
on the iPad.
“I don’t think Jeff Bezos is going to leave the e-book business,” he said, referring to
Amazon’s chief executive, “and I don’t think it will be confined to the Kindle.”
Three models of the iPad, $499 to $699, will connect to the Internet only via a local Wi-
Fi connection. Three other versions will include 3G wireless access and will be available
later in the spring, costing an additional $130 and requiring a data plan from AT&T.
Owners of the iPhone who already pay at least $70 a month to AT&T will not be getting
Other companies have sold tablet computers for years, but they never caught on with
consumers. In 2001, Bill Gates predicted at an industry trade show that tablets would be
the most popular form of PC sold in America within five years.
“The fact that he and Microsoft didn’t deliver is surprising,” said Tim Bajarin, a longtime
industry analyst. “It has taken Apple to bring this to consumers and make it work.”
Apple has been working on a tablet computer for more than a decade, according to
several former employees. Improved technology has helped the company to finally bring
a model to market, as has the ubiquity of wireless networks.
The success of the iPhone and its cousin, the iPod Touch, have shown a path for tablets.
People have been willing to pay to customize those devices with applications, turning
them into video game machines, compasses, city guides and e-book readers.
The iPad will be a big opportunity for software developers, said Raven Zachary,
president of Small Society, an iPhone development company based in Portland, Ore.
“Although I think some of us were a bit surprised we only have 60 days until it launches
to develop for it.”
Jenna Wortham contributed reporting from New York.
Does Apple's IPad Take a Bite Out of Web Advertising?
Media Will Work Great on the the Device, but Your Ads May Not
By Ian Schafer
January 27, 2010
We've known for quite some time about the iPhone's inability to render Flash content
within the mobile Safari browser, and based upon Apple's announcement of the iPad
today, it looks like that device isn't going to do it, either.
Touted as a savior for the publishing business, this device will potentially revolutionize
the delivery and commercialization of content.
But most publishers are publishing their content to the web. Via websites. And for those
that don't yet have paywalls, they support their websites with advertising. Those ads are
almost 100% rendered in Adobe's Flash. So when people use the iPad's web browser to
visit their favorite newspaper (as Steve Jobs did in his keynote; see photo at right,
courtesy of Engadget), they won't see the ads at all. That either means advertisers will
need to stop building ads in Flash (no chance) or publishers will need to build app
versions of their publications upon the iPad SDK (software development kit), resulting in
a lot more work, a lot more time, a lot more resources.
Now, creating a parallel platform to the web may be the right thing to do if a $499 tablet
becomes as ubiquitous as the iPod, but this is another classic example of Apple making
development and distribution on their platforms more proprietary. It also makes
publishers more reliant upon, in all likelihood, Apple's own ad-serving platform which
was created through the acquisition of Quattro Wireless.
Whereas the iPhone created a marketplace for new content (apps), the iPad seeks to
revolutionize existing ones (content publishing). If the company that owns the platform
also owns the ad network, the ad format, and the ad tracking, is that too much control?
Now, this is all speculation at this point. I'm sure this will all play itself out as we get
deeper in the SDK, and into the device itself, but this is definitely something to be
discussed at your next ad sales meeting if you're a publisher. Media planners are going to
have to get up to speed with a whole new platform. And creatives are going to have to
learn to build in formats that take advantage of multitouch gesturing, video and a whole
slew of other new possibilities without using Flash.
And maybe HTML 5 just got a whole lot more important.
Home > Online & Technology > E-Media Tidbits
Tools: Text Size or , Print , RSS , Subscribe via e-mail
Watching Kindle, iPad and e-Readers?
Openness is Key
Posted by Dorian Benkoil at 11:27 AM on Jan. 28, 2010
Dorian Benkoil Even before the launch of the Apple iPad, pundits were declaring it the
Kindle killer, and hours after its unveiling others were adding their
A group voices. But I smelled trouble for Amazon's e-reader weeks earlier.
the intersection Though I own a Kindle and have also read its books on my iPod Touch,
of news & the last three or four e-books I've bought were from Barnes & Noble and
technology O'Reilly publishing.
The reason? It's not that I own B&N's Nook or some other e-reader (yet);
rather, those e-books come in formats that enable me to consume them
on many devices, share them with friends and even grab portions to send
to the world. The lessons, I think, are instructive for publishers and
others who make their content available on digital devices.
I predict we'll start to see market share of non-Kindle e-readers
increasing, and not only because those manufacturers are working to cut
deals with publishers that are more favorable than the what one analyst
calls Amazon's "wolfish" shares of revenues and restrictive terms.
As consumers discover the flexibility they have to consume e-books on a
PC, a Mac, a BlackBerry, and an iPhone, iPod Touch or iPad, as well as
other devices that can read PDF, .mobi, Android or ePub files, I predict
they'll gravitate toward the more open formats.
Because the open formats also allow cutting and pasting with ease, e-
books published that way also have a better chance of catching on via in
social media and blogs. And links in books, magazines, newspapers or
other media can easily take users to relevant Web pages. Even when the
function does work on the Kindle, the Web surfing experience is less
Some open publishing formats allow the purchaser to share a book with
one or more people at a time. Some allow customization of colors,
background, fonts and other visual elements that a) allow a consumer to
read the way her or she likes rather than one that's imposed or b)
appreciate the e-book's artwork, coloring and typeface. This morning,
publishers are saying they look forward to getting their art books on the
Reading on a Kindle can be absorbing, but it can also be a flat, gray, text-
laden experience that makes it hard to consume graphics and charts.
For a final pièce de résistance, open formats let users mark up the text
and use speech synthesis applications to have a book read aloud by a
computer -- something I've done many a time while cooking, doing
laundry or washing the dishes.
Again, I'm not saying that publishers should eschew the Kindle. I
negotiated a deal to get a blog network on the device because there was
no exclusive arrangement, and any additional revenue from subscribers
was essentially free, with no additional work required once we created an
appropriate feed. Plus, the Kindle now has a large embedded base, and
publishers who want as large a readership as possible should publish
their works in the Kindle format for years to come. Kindles have also
proven a decent way to promote unheralded authors.
Looking at it from Amazon's side, I can understand the business model to
milk its first-mover advantage after building the first device that
seamlessly integrated a readable screen, portability, long battery life,
easy navigation and, perhaps most important, a big library of books (and
other material) purchased easily and accessed wirelessly. Amazon was
able to create a closed device, and a constrictive business model, because
it provided so much that others hadn't matched.
But, as I've written before, there are a lot of
other features the Kindle doesn't have: the
ability to look at the books on multiple
screens (it was manna from heaven when "iPad includes iBooks
its e-books were made available on the app, may be Kindle
iPhone/iPod), share and blog, and more. killer," by Damon
(OK, the uber-geeks in the room might Kiesow, Mobile Media
raise their hands and say you can do most
or all of these things with a Kindle. Indeed, I have unscrewed the back of
the device, installed an SD card, transferred material to the card, plugged
it into a reader, manually converted the text into a manipulable format,
and then sent it along. But how many people will go through that
We'll see if the iPad takes hold and how much it is able to cut into the
Kindle's base. The device can reportedly use the iPhone/iPod app that
enables users to read Kindle books, and if it can also display other
formats, it may instantly make all the other e-readers obsolete. The iPad
also can play video and music, which gives it and publishers a powerful
competitive weapon. Apple has a store that can compete with Amazon's,
If users can also cut and paste, blog and otherwise manipulate their
media, the iPad will have yet more ways of knocking pure e-readers to
Whatever happens with the iPad, though, publishers need to pay attention
and provide material on any popular digital platform, and customize that
content when possible to make the experience on each platform as
positive as it can be. Amazon is apparently courting developers to help it
stave off the iPad threat, and I wouldn't be surprised to see others follow
suit. All of that will benefit consumers, and perhaps publishers. Note how
much better smartphones have gotten as makers rush to seize momentum
created by the iPhone.
As I wrote in another recent column, digital media is not and never will
be a one-platform or one-device game for long. Openness to multiple
platforms will ultimately win the game.
Silicon Valley Insider
Steve Jobs Says Book Publishers Hate Amazon's Kindle
Jay Yarow | Jan. 29, 2010, 8:49 AM | 9,026 | 38
Steve Jobs told Walt Mossberg that Amazon's e-book prices are likely going higher than
After Steve presented the iPad, Walt Mossberg managed to talk with him briefly while
people were testing the iPad. Kara Swisher filmed them.
Walt asks Steve, "Why should she buy a book for $14.99 on your device when she can
buy one for $9.99 from Amazon or Barnes & Noble?"
Steve responds somewhat knowingly, "That won't be the case."
Walt says, "You won't be $14.99 or they won't be $9.99?"
Steve says knowingly, "The prices will be the same."
Then the video cuts, then Steve says, "Publishers are actually withholding their books
from Amazon because they're not happy."*
Steve also tells Walt the iPad does 140 hours of continuous music playback, and battery
life will not be an issue on the iPad.
Says Steve, "Ten hours is a long time, you're not going to read for 10 hours."
It's cool to watch the video to see Steve Jobs interact with Walt, he's much taller, as he
rocks back and forth nervously. The action starts around 1:45 in the clip below.
*We originally heard Steve say "pull their books" from Amazon when we listened to it
the first four times with headphones, but the fifth time we listened on speakers and heard
it as "withholding."
January 31, 2010, 11:37 pm
Why the iPad Web Demo Was Full of Holes
By NICK BILTON
apple.com A still from a video demo of the iPad on Apple’s site. Note the missing Flash
element in the middle of the Web page.
Adobe’s Flash will probably not come to the iPhone, iPod Touch or iPad, but for many
people with these iProducts, this may prove to be a nonissue, as I report in Monday’s
While Apple may not make an official statement on the topic of its lack of interest in
supporting Flash, its actions speak louder than words.
Think back to the Apple keynote last week. Here’s Steven P. Jobs, master of ceremonies,
the wizard in front of the curtain, sitting on a stage before hundreds of technology
reporters, and he quite happily pops around the Web on the iPad, showing Swiss-cheese
holes in pages where the Flash player can’t be displayed.
Apple’s iPad demo was coordinated down to the second. Teams of Apple perfectionists
practiced every aspect of this, meticulously organizing everything down to the color and
angle of the armchair on stage. Mr. Jobs knew what we would all see as he navigated to
nytimes.com: a blank square instead of a Flash video player. Apple could have picked
any Web site without Flash, but instead it practically sent out a press release stating its
stance on the topic: Flash will not work on the iPad.
To help push this point further, as PC World reported on Saturday, all of the demos on
Apple’s site for the iPad now show missing holes where Flash player videos would
appear in a normal browsing experience. The Web-page mockups in earlier versions of
the demos showed images of Flash content.
It’s been over three years since Mr. Jobs stepped on stage and demonstrated the first
iPhone, and since then there have been upgrades to the iPhone’s memory, processing
speeds, software developer kits and everything in between, but no mention of Flash
With over 60 million iPhones and iPod Touches in the marketplace, content providers
have been given two choices: either stand with Adobe and stick with Flash or make the
switch to non-Flash technologies and reach this huge audience, most of whom don’t
really care about a format war — they just want to get the content.
Numerous developers and executives that I interviewed for my article said there was a
trend toward offering users an alternative to Flash video, the predominant video standard
online, in the form of HTML5, an open standard.
Senior-level managers from many of the top video sites online, including YouTube,
Vimeo, Blip.tv and Flickr, all agreed that video online is starting to splinter, and as some
test out HTML5 for video distribution, many will begin offering both formats as the iPad
makes its way onto the market.
Andrew Pile, vice president of product and development for Vimeo, said, “Some people
rightly or wrongly blame Flash for poor video performance on the Web, and although
HTML5 has its limitations, too, we will most likely create a version of the site using
HTML5 for the iPad.”
Douglas Alexander, general manager of Flickr, said he planned to start experimenting
with HTML5 video in the coming months. And Justin Day of Blip.tv said he had an
HTML5 player in the works that the company plans to introduce soon.
As John Gruber of the Mac blog Daring Fireball aptly explained on Saturday, developers
and the Web will go where the users are. Mr. Gruber writes:
What’s Hulu going to do? Sit there and wait? Whine about the blue boxes? Or do the
practical thing and write software that delivers video to iPhone OS? The answer is
obvious…. Hulu isn’t a Flash site, it’s a video site.
So what can Adobe do? One option would be to completely open-source Flash, but based
on my talks with Adobe employees, this is highly unlikely. Or, if it wants to continue
selling software for building Flash Web sites, it can continue to innovate along its current
path, allowing developers to output their work in both Flash and non-Flash formats.
In a recent blog post, Lee Brimelow, an Adobe “platform evangelist,” said his company
was not “against” HTML5. “On the contrary, we see it as an exciting development for the
Web,” he said, adding that Adobe planned to introduce tools to help people use it. Sounds
like a wise move on Adobe’s part, given that things don’t seem to be moving in Flash’s
January 29, 2010
Steve Jobs and the Economics of Elitism
By STEVE LOHR
The more, the better. That’s the fashionable recipe for nurturing new ideas these days. It
emphasizes a kind of Internet-era egalitarianism that celebrates the “wisdom of the
crowd” and “open innovation.” Assemble all the contributions in the digital suggestion
box, we’re told in books and academic research, and the result will be collective
Yet Apple, a creativity factory meticulously built by Steven P. Jobs since he returned to
the company in 1997, suggests another innovation formula — one more elitist and
This approach is reflected in the company’s latest potentially game-changing gadget, the
iPad tablet, unveiled last week. It may succeed or stumble but it clearly carries the taste
and perspective of Mr. Jobs and seems stamped by the company’s earlier marketing
motto: Think Different.
Apple represents the “auteur model of innovation,” observes John Kao, a consultant to
corporations and governments on innovation. In the auteur model, he said, there is a tight
connection between the personality of the project leader and what is created. Movies
created by powerful directors, he says, are clear examples, from Alfred Hitchcock’s
“Vertigo” to James Cameron’s “Avatar.”
At Apple, there is a similar link between the ultimate design-team leader, Mr. Jobs, and
the products. From computers to smartphones, Apple products are known for being
stylish, powerful and pleasing to use. They are edited products that cut through
complexity, by consciously leaving things out — not cramming every feature that came
into an engineer’s head, an affliction known as “featuritis” that burdens so many
“A defining quality of Apple has been design restraint,” says Paul Saffo, a technology
forecaster and consultant in Silicon Valley.
That restraint is evident in Mr. Jobs’s personal taste. His black turtleneck, beltless blue
jeans and running shoes are a signature look. In his Palo Alto home years ago, he said
that he preferred uncluttered, spare interiors and then explained the elegant craftsmanship
of the simple wooden chairs in his living room, made by George Nakashima, the 20th-
century furniture designer and father of the American craft movement.
Great products, according to Mr. Jobs, are triumphs of “taste.” And taste, he explains, is a
byproduct of study, observation and being steeped in the culture of the past and present,
of “trying to expose yourself to the best things humans have done and then bring those
things into what you are doing.”
His is not a product-design philosophy steered by committee or determined by market
research. The Jobs formula, say colleagues, relies heavily on tenacity, patience, belief and
instinct. He gets deeply involved in hardware and software design choices, which await
his personal nod or veto. Mr. Jobs, of course, is one member of a large team at Apple,
even if he is the leader. Indeed, he has often described his role as a team leader. In
choosing key members of his team, he looks for the multiplier factor of excellence. Truly
outstanding designers, engineers and managers, he says, are not just 10 percent, 20
percent or 30 percent better than merely very good ones, but 10 times better. Their
contributions, he adds, are the raw material of “aha” products, which make users rethink
their notions of, say, a music player or cellphone.
“Real innovation in technology involves a leap ahead, anticipating needs that no one
really knew they had and then delivering capabilities that redefine product categories,”
said David B. Yoffie, a professor at the Harvard Business School. “That’s what Steve
Jobs has done.”
Timing is essential to make such big steps ahead. Carver Mead, a leading computer
scientist at the California Institute of Technology, once said, “Listen to the technology;
find out what it’s telling you.”
Mr. Jobs is undeniably a gifted marketer and showman, but he is also a skilled listener to
the technology. He calls this “tracking vectors in technology over time,” to judge when
an intriguing innovation is ready for the marketplace. Technical progress, affordable
pricing and consumer demand all must jell to produce a blockbuster product.
Indeed, Apple designers and engineers have been working on the iPad for years,
presenting Mr. Jobs with prototypes periodically. None passed muster, until recently.
The iPad bet could prove a loser for Apple. Some skeptics see it occupying an uncertain
ground between an iPod and a notebook computer, and a pricey gadget as well, at $499 to
$829. Do recall, though, that when the iPod was introduced in 2001, critics joked that the
name was an acronym for “idiots price our devices.” And we know who had the last
laugh that time.
February 1, 2010
Publisher Wins Fight With Amazon Over E-Books
By MOTOKO RICH and BRAD STONE
After a weekend of brinksmanship, Amazon.com on Sunday surrendered to a publisher
and agreed to raise prices on some electronic books.
Amazon shocked the publishing world late last week by removing direct access to the
Kindle editions as well as printed books from Macmillan, one of the country’s six largest
publishers, which had said it planned to begin setting higher consumer prices for e-books.
Until now, Amazon has set e-book prices itself, with $9.99 as the default for new releases
and best sellers.
But in a statement Sunday afternoon, Amazon said it would accept Macmillan’s decision.
On Friday, Amazon removed “buy” buttons from thousands of titles published by
Macmillan, including recent best sellers like “Wolf Hall” by Hilary Mantel and “The
Gathering Storm,” by Robert Jordan and Brandon Sanderson. Customers who wanted to
buy print editions could do so only from third-party sellers. Digital editions made for
Amazon’s Kindle device disappeared.
In a strongly worded message on its Web site on Sunday, Amazon said that while it
disagreed with Macmillan’s stance, it would bow to the publisher’s plan.
“We have expressed our strong disagreement and the seriousness of our disagreement by
temporarily ceasing the sale of all Macmillan titles,” Amazon said. “We want you to
know that ultimately, however, we will have to capitulate and accept Macmillan’s terms
because Macmillan has a monopoly over their own titles, and we will want to offer them
to you even at prices we believe are needlessly high for e-books.”
The face-off had set the already anxious publishing industry on edge. “I think everyone
thought they were witnessing a knife fight,” said Sloan Harris, co-director of the literary
department at International Creative Management. “And it looks like we’ve gone to the
As of Sunday evening, the “buy” buttons had not yet been restored to Macmillan titles on
Amazon. In a statement to Publishers Marketplace, an online industry newsletter, John
Sargent, chief executive of Macmillan, said: “We are in discussions with Amazon on how
best to resolve our differences. They are now, have been, and I suspect always will be
one of our most valued customers.”
Under Macmillan’s new terms, which take effect at the beginning of March, the publisher
will set the consumer price of each book and the online retailer will serve as an agent and
take a 30 percent commission. E-book editions of most newly released adult general
fiction and nonfiction will cost $12.99 to $14.99.
Those terms mirror conditions that five of the six largest publishers — Hachette Book
Group, HarperCollins Publishers, Macmillan, Penguin Group and Simon & Schuster —
agreed to with Apple last week for e-books sold via the iBookstore for the iPad.
For more than a year, publishers have been fretting about the price of digital books,
which Amazon, as the dominant player in the fast-growing market, had effectively been
able to set.
Last Thursday, Mr. Sargent flew to Seattle to explain the pricing and new sales model to
Amazon. He said Amazon could continue to buy e-books on the same terms it does now
— allowing the retailer to set consumer prices — but that the publisher would delay the
release of all digital editions by several months after the hardcover publication.
Amazon buys and resells e-books in the same way it handles printed books, by paying
publishers a wholesale price that is generally equivalent to half the list price of a print
edition. Because Amazon has discounted the price of most new and popular e-books on
its Kindle e-reader to $9.99, it loses money on most of those sales.
Amazon’s goal has been strategic: it aims to establish a low price for e-books that will
have the ancillary benefit of helping it sell more Kindle devices.
Amazon’s decision is also a victory for Apple’s chief executive, Steven P. Jobs, who first
pitched the idea of selling e-books under the agency model to book publishers earlier this
year. Now Apple, whose iPad tablet is due in March, can compete on fairly equal footing
Book publishers, meanwhile, are volunteering to limit their digital profits. In the model
that Amazon prefers, publishers typically collect $12.50 to $17.50 for new e-books.
Under the new agency model, publishers will typically make $9 to $10.50 on new digital
Apple’s stance in allowing publishers to set their own e-book prices (albeit within a
limited range) is also a bit of a reversal. That is precisely the kind of arrangement it
declined to offer TV networks and music labels, which have long railed against the 99-
cent price of songs in iTunes.
Analysts say Amazon, which accounts for 15 to 20 percent of domestic book sales,
probably realized it could not compete with Apple if it wasn’t offering the same range of
content. “Amazon figured out pretty quickly that this was a battle they could not win,”
said Mike Shatzkin, the chief of the Idea Logical Company, a consultant to publishers.
Amazon may still hope to play one asset to its advantage. Loyal Kindle users routinely
give low ratings to books they perceive as too costly, or whose digital editions are
delayed past the publication of the hardcover edition. These consumers could ostensibly
reject costlier e-books.
February 1, 2010
IPad Can’t Play Flash Video, but It May Not Matter
By NICK BILTON
Where was the Flash?
Web designers — and a fair number of Web users — noticed something missing from
Steven P. Jobs’s demonstration of the Apple iPad Wednesday. On some of the Web sites
he displayed on the tablet computer’s screen, blank squares appeared where video or
animated content would normally be displayed.
The holes, observers correctly assumed, meant that the iPad would not display videos,
animations or any other features created using Flash, a type of multimedia software made
by Adobe. Flash is one of the world’s most ubiquitous applications, appearing on 98
percent of all computers. YouTube videos run on it. It is what animates millions of
graphics and advertisements on Web sites around the world. Adobe says the technology
supports nearly 75 percent of video on the Web and 70 percent of online gaming sites.
But Apple’s support for Flash has been flagging. While Flash is present on nearly every
Apple desktop and laptop computer, the company decided that Flash would not be used
on the iPhone. Apple has argued that the Flash technology is too slow and unduly taxes
laptops and netbooks. The company also has concerns over Flash’s vulnerability to
viruses and other malware, as well as the way Flash-based content can voraciously
consume battery life.
Adobe, unsurprisingly, disagrees — and has its own theory about why Apple remains
hostile to Flash. Adrian Ludwig, group manager for the Flash platform product at Adobe,
said he believed Apple’s opposition was a way for the company to control its iTunes
system. “I think it’s pretty clear that Apple wants to regain control of the content
consumers see online and the content Apple offers for their devices,” Mr. Ludwig said.
But concerns over the lack of Flash in the iPad and iPhone may be short-lived. Many
online video sites have been experimenting with a new Web language that can support
video, called HTML5. Unlike Flash, which is a downloaded piece of software that can
interact with a computer’s operating system, HTML5 works directly in a Web browser.
And although this new video format does not work in all browsers, it will allow iPhone
and iPad users to enjoy more Web-based video content.
YouTube announced this year that it was testing the new format for select videos. In the
past, YouTube videos were encoded in Flash, but were re-encoded for the iPhone.
The popular video-sharing site Vimeo.com is also experimenting with new platforms,
based on comments from its online community. “We received a tremendous amount of
feedback from our users saying that they wanted to have HTML5 as an option for their
videos,” said Andrew Pile, vice president for product and development at Vimeo, an
online video service. Mr. Pile does not see this new format replacing Vimeo’s Flash-
video inventory, but will instead offer it as an option for its viewers.
Other video sites, including Blip.tv and Flickr.com, Yahoo’s photo and video-sharing
Web site, also hope to start experimenting with alternatives to the Flash video platform in
the coming year.
But migrating the entire Web to the new format will not be fast, or easy. Flash has all the
advantages any entrenched technology enjoys and remains the standard multimedia
language for a vast majority of developers and programmers. And while HTML5 may
help standardize Web video, it does not necessarily address the needs of other types of
online content created in Flash, including animated advertisements and online gaming.
Andrew Frank, research vice president at Gartner, believes it is impossible for Apple to
maintain a walled garden around the content and advertising people consume on the iPad.
Mr. Frank said, “I think we’re a long way from the iPad having enough influence on the
advertising market to affect the decisions and process around online display advertising.”
But even if the standoff between Apple and Adobe continues, these advances in Web-
based video mean that iPhone and iPad users will start to see fewer blank squares online.
This article has been revised to reflect the following correction:
Correction: February 3, 2010
An article on Monday about the absence of the multimedia software Flash in Apple’s new
iPad tablet computer referred incorrectly to the Web language HTML5. While HTML5
can support video, it is not itself a video format. The article also misstated the ownership
of HTML5 patents. HTML5, like other versions of Hypertext Markup Language, is open
source; it is not owned by a group of companies, including Apple. (Many Web sites that
are starting to use HTML5 are using a particular video encoding program called H.264,
which has shared patent pool, of which Apple is a part.)
February 1, 2010
The Media Equation
To Deliver, iPad Needs Media Deals
By DAVID CARR
Short of landing in a flying saucer and having a tablet teleported into his hands, there was
no way that Steve Jobs could have lived up to the hype before last Wednesday’s iPad
But he came pretty close. By the time the bells, whooshes and clicks died down, I
couldn’t say the future had arrived, but I’m pretty sure we can see it from here.
“It was like someone came back from five years into the future and handed this to us,”
said John Gruber of Daring Fireball, a respected tech blog.
The iPad’s promise was hinted at before Mr. Jobs hit the stage. The set was dominated by
a large, comfy chair. Since the birth of the personal computer, we have been hunched
over, squinting at screens — great big terminals, laptop displays, tiny screens on PDAs.
With the iPad, the screen has come to us as we lean back in ease.
Critics who suggested that Apple unveiled little more than an iPhone that won’t fit in
your pocket don’t seem to understand that by scaling the iPhone experience, the iPad
becomes a different species. Media companies now have a new platform that presents
content in an intimate way.
“Looking at it through the lens of whether or not it has new features and applications
misses the point,” said Craig Moffett, an analyst at Bernstein Research. “It is nine times
larger than an iPhone, and that is fundamentally a new application.”
That application isn’t work, not without a keyboard (touch-typing with all fingers on a
virtual keyboard is miserable) or a camera. This is a device for consuming media, not
creating it. So are the media providers ready to deliver?
Yes and, sadly, no. The iPad’s glories as a media consumption device open up a whole
new frontier for developers and publishers. But they also raise large questions about the
business models that will drive that content to the screen.
For gaming, the iPad manages to be both a remarkable display device and a large,
engaging controller, and the App Store from the iPhone should accommodate a new
generation of games played on a bigger field. But when it comes to other dynamic media
like television and movies, the iPad is running into the familiar trouble.
Apple has limited agreements with movie studios, so movies received very little play last
Wednesday. The movie “Up,” a fancy piece of software produced by Pixar, looked great
during the presentation, but most studios have yet to come to terms with how their work
will be monetized and displayed on the iPad.
The iPad won’t play Flash, the Adobe software which powers a great deal of animation
and interactivity on the Web, so for the time being, iPad’s utility as a surfing device is
significantly compromised. You can’t, for example, watch Hulu, the popular site that
offers a free buffet of network TV shows.
Apple and many others have problems with Adobe’s Flash because they don’t control it,
but it also means that people who want to see those shows on their iPad will have to pay
for them on iTunes rather than watch them free on Hulu. (And according to The Financial
Times, just before Apple introduced the iPad, the company pressed television studios to
cut the iTunes prices for their programs in half.)
Of all media, books had the most real estate in the presentation — with good reason. The
reading interface on the iPad is almost as sexy as the gaming, with no waiting for e-ink or
pages to load. Readers can literally page through books in an interface that replicates the
tactile romance of reading. And the forthcoming iBooks marketplace means that Amazon
no longer has absolute authority on the price of electronic books (an authority Amazon
tried to impose on Friday by refusing to sell books from Macmillan after the publisher
insisted on pricing similar to the iPad; Amazon backed down Sunday night, saying it
would “capitulate and accept Macmillan’s terms.”)
But the book industry seems ill-prepared to take advantage of many of the new worlds
the iPad opens up. Although five of the top six publishers signed on, there was little
indication that they would use some of the muscle the device displays. Readers on the
iPad should certainly expect that when they buy a cookbook, building in cooking demos
would be a no-brainer, but it may be a long while before the industry has the ability to
produce books that incorporate multimedia.
Newspapers and magazines will have far less trouble changing the wheels on the car as it
goes flying down new roads. Martin A. Nisenholtz, senior vice president for digital
operations at The New York Times, took a turn on the Apple stage with a demonstration
that displayed the new flexibility and range of the iPad.
But many people could not help but notice that no magazine companies were involved in
Wednesday’s presentation. “I saw iBooks today, but no iMagazine,” said Sara Ohrvall of
Sweden’s Bonnier Corporation, which owns a number of American magazines. And
many magazine companies have been working on prototype applications for a device that
would seem to be a dream come true.
Writing on the Pentagram blog, the designer Luke Hayman said the iPad will
“revolutionize the way we read magazines.” (Tell that to Condé Nast, which just put the
finishing touches on a prototype of a gorgeous digital magazine — in Flash.)
But there’s a sticking point here, too. The consumer side of both newspapers and
magazines is in the database business, trying to expand their base of credit cards and
information about consumers. In a world of applications, a share of the revenue will go to
publishers, but the information about customers mostly belongs to Apple. The big
question for publishers is, will Apple allow them to develop their own relationship with
Despite that doubt, Terry McDonell, editor of Sports Illustrated, liked what he saw, in
part because the product that was unveiled fit nicely with a prototype that the magazine
“I saw the Mac demo’ed by Steve Jobs in 1984 in the offices of Newsweek, and I knew at
the moment it was going to change everything because of its capabilities for desktop
publishing,” he said. “I felt the same way watching this presentation. There are huge
potential gains for us here.”
Even as business models have yet to evolve, the iPad is clearly a next-generation media
consumption device. The iPad is less gadget than pure frame on content. During the
hands-on demo, I was so intent on what was on the screen that I all but forgot I was
holding a piece of technology.
A lot of things are clearer in this gorgeous new environment, except that part about
turning the iPad into a cash register for media companies.
Comparing E-Readers | January 2010
How Do E-Readers Stack Up With iPad In The Mix? Use Our
Chart As A Guide
Amazon Amazon Plastic Logic
Apple iPad & Noble Daily
Kindle 2 Kindle DX Que proReader
Link iPad Kindle 2 Kindle DX Nook Daily Que
Available Now Now Now Now Mid-April
Price $259 $489 $259 $399 WiFi/3G/8GB:
8 x 5.3 x 7.7 x 4.9 8.13 x 4
.5 inches 10.4 x 7.2 x 8.5 x 11x .33
Size 0.36 x 0.5 x 19/32
thick 0.38 inches inches
inches inches inches
Weight 1.5 lbs. 10.2 oz. 18.9 oz. 12.1 oz. 12.75 oz. 17 oz.