Dave’s Take

Despite the encouraging signs that the ad business may finally be on the uptick, the news for magazine and newspaper publishers continues to be abysmal. Many publications are fighting for their lives with no real hope on the horizon. Their business model has been undercut by the immediacy and no charge aspects of the Internet, for which few see a solution – until now. With the promised new wave of tablet computers about to hit stores, publishers may have finally found a way to make their publications relevant again.

The new tablet laptops are rumored to begin going on sale as early as January of next year, with Apple’s offerings leading the pack. Mac’s new tablet is, according to industry insiders, to be based upon its iPhone operating system. Early reports depict the Apple 10” tablet as having six times the resolution and seven times the touchable surface area as their iPhones currently offer. They will supposedly feature at least two different versions, 3G and regular.

The big news for publishers about tablets is content. Apple (among other computer makers) has created a distribution model that will allow newspaper and magazine publishers to actually make money on their content. While the details are sketchy, the plan is to license content from providers across the board. In addition to fees for editorial and news content, the new tablets will also provide a host of new features only dreamed about with previous print projects.

Sports Illustrated has jumped onboard and is so excited about the new platforms that they have created a video on their website that touts how cool their tablet content will be for readers. In addition to their printed version, S.I. interactive will offer features sure to please any sports fan. Think how much better (if it’s possible) the swimsuit issue will be when you can click on video footage of the shoot. For actual games, the sites will allow fans to interact with their teams. Pulling live game stats and checking for up to the minute injuries are just a couple of the state-of-the-art possibilities soon to be available. And while all types of applications will be available, S.I. will still remain in control of their product. “We want a hand in all that, because that’s what we think people will pay for,” said Terry McDonell, editor of the Sports Illustrated Group.

Spokespeople for other publishers including Time and Conde Nast have also voiced their optimism for the new possibilities offered by tablets. They see numerous applications that will generate profits, including interactive advertising. Editors envision ads that will allow readers the ability to download coupons and other premiums with the press of a button to shake up the malaise print ads have suffered. Subscription drop cards will become a thing of the past when all one has to do is click on an icon to receive a publication into their in-box on a regular basis.

The new wave of digital storefronts aren’t expected to really get kicking until the second half of 2010, when up to five different manufacturers are expected to release tablet type laptops. Early guesses on the Macintosh tablet put the price somewhere near the $1,200 price point, which will surely drop when the competition heats up. Not only will news and magazine publishers benefit from the new platforms in terms of revenue, but readers will also have the chance to rediscover their favorite magazines and newspapers in a whole new way. Anyway you look at it, these are just the tablets the doctor ordered.

With the continual death spiral of newspapers ever increasing, the debate over paid versus free content continues to rage. Basically, the entire debate is a catch 22—if the demand for newspapers keeps falling, how do you entice readers to pay more for less? I firmly believe the “pay to read” micro movement is destined to fail and fail badly.

First of all, how many local papers can compete with the Internet? Sure the good ones have kept at least a skeleton crew to cover local crime, sports and politics, but when you really drill down, how can a local paper that has to wait to be printed compete with bloggers, columnists and YouTube for the immediatecy that news depends upon? The short answer—they can’t. There is no way a local rag can generate enough unique content to justify a paid fee for readership.

Don’t get wrong, I love newspapers. I love the smell, feel and look of newsprint—I love the way they fold for easy access to box scores and crossword puzzles–always have and always will. On a daily average, I probably read between three to six local papers online. Due to my propensity for moving every two to three years, I have developed a daily addiction to reading about and keeping up with my previous cities of residence. I scroll through the Salt Lake Tribune, Las Vegas Review Journal, Las Vegas Sun, Anchorage Daily News and San Jose Mercury News just about every morning while I recaffeinate myself. Yet as much as I love these papers, if they forced me to subscribe for online access, I would have to bid them all aloha.

Like the vast majority of web surfers, I try to not divulge any more personal information than is completely necessary. And signing up to subscribe to read news is not compelling enough to fork over credit and personal info to the great Internet database. I used to be a big fan of Salon.com and even bought a platinum membership for a year—until they made me give them credit information. I didn’t renew once I couldn’t just send them a check. I must not have been alone, as Salon now seems to provide the majority of their content for free.

The only paid content news sites that may continue to work to some degree is in the area of custom publishing. Sites like the Wall Street Journal and New York Times seem to keep enough fish on line to continue limited subscription services. I think the majority of their online subscribers aren’t paying because they think the info is so unique as much as they are die-hard capitalists who think everything should cost someone something.

And it’s not only news-based content that cannot support paid online plans. Just look at online video as one example. Google, the company that will own the world one day, tried a paid video service and got their hat handed to them by the likes of YouTube. People love to watch wacky videos online, but only if its free. It’s only logical—who is really going to pay hard earned money to watch a cat play the piano? (Outside of the crazy cat lady every town seems to have.) User generated video is only as popular as it is free. The toothpaste has left the tube. The world is used to watching video for free on the Internet and that’s not going to change in my lifetime.

Finally, the reason I know paid content is dead on arrival is because of the proliferation of ad-supported sites. This is the base model the Internet has developed and the overwhelming majority of surfers agree with its fairness. I don’t mind seeing a few ads appear with the content I seek—as long as it’s passive and not annoying. There are literally thousands of companies willing to spend billions on banner ads, pop-ups and search related sponsorships. This acceptance is why paid content will never be able to level the playing field in hopes of surviving as a workable revenue stream.

As one online pundit recently wrote, “Paid content is like putting a tollbooth on the freeway.” I couldn’t agree more. Maybe if say ten or fifteen years ago, the Internet powers that were decided to go with a subscription-based income model it may have worked. But now it’s about as feasible as a screen door on a submarine.