The iPad newsstand is just a rumour for now. If it should become a reality, what is Apple’s strategy with regards to content sale likely to be?
From a user-experience point of view, Apple’s strategy will be to make buying content incredibly easy and very pretty – that’s how they succeeded in music, and are gaining market share in ebooks.
Financially, it’s likely that Apple’s newsstand will work in much the same way that iBooks and the App Store work: publishers set prices, and Apple takes 30% of each sale. Of course that would be the public figure, and the deals might differ among very large publishers like Hearst, Time Inc., Conde Nast, and so on. While many magazines aren’t used to retailers taking that much of the retail price (unlike book publishers, where retailers often take more than 40%), Apple’s market share means all but the biggest publishers have to go along with it.
The far more important issue is customer information: the analytics of user behaviour that publishers can gather from digital sales. In retail, those who “own the customer” top the food chain. Apple will want to keep customer details and user analytics to themselves for the most part.
And then, a big, unresolved question: DRM. We don’t yet whether Apple will use its FairPlay DRM system to lock down magazine content as it does with ebooks. If it does, that’s a huge loss to consumer friendliness, but makes Apple’s walled-garden even more walled. Apple may claim DRM is the publishers’ choice, but strategically DRM is far more important as a tool for keep customers locked to a particular supplier than to protect intellectual property from illegal copying.
What sort of impact will this Newsstand have on Amazon and the Kindle, especially with regards to the publishers?
Amazon will see its market share in digital magazines and newspapers shrink a little, but Kindle has never been a major magazine and newspaper delivery platform, it wasn’t ever built for that. Moreover, the Kindle offering (the device as well as the whole buying experience) is utterly different from that of the iPad. It may be a favourite conversation topic to compare the iPad and the Kindle, but it’s not a useful comparison. It’s not comparing apples with apples (excuse the pun), or even apples with bananas. It’s like comparing apples with chocolate bars.
The iPad is arguably a superior ebook consumption device, because it has more features in it, and isn’t “locked” into Apple, like the Kindle is locked into Amazon. Will we see an exodus away from Kindle to the iPad?
The short answer is no. We’ll see an increasing number of people buying iPads and an increasing number buying Kindles, since each have their own great selling points.
The longer answer: There is a lot of misunderstanding about this.
First, features don’t make for a better device. My motorbike has more features than my bicycle, but I love both. Kindle is simply brilliant at what it does: both the device (the e-ink screen is a feature not a bug) and, more importantly, the whole ecosystem of apps, catalogue, pricing, and purchasing experience.
Second, the iPad is just as locked-in as Kindle. If you buy a book from iBooks, you can only read it in on an iPad, iPhone or iPod Touch. If you buy a Kindle ebook, you can read it on your Kindle or on any Kindle app for PC, iPhone, BlackBerry (US), or Android phone. Each DRM scheme is owned by the platform. Neither natively supports Adobe DRM (the third major DRM player), obviously, and both can open and read DRM-free ebooks (for Kindle, you need to convert .epub to .mobi; for iBooks, from .mobi to .epub).
Any other comments you’d like to make?
Apple’s newsstand is going to happen, without any doubt. It’s only surprising it hasn’t happened already. The great thing is that it will make it much cheaper for magazines to sell their content digitally. Till now, magazines have had three options for selling their content on the iPad: build a free website with ad revenue, build a website with a paywall, or develop an app for the App Store. The first makes no money, consumers hate the second, and the third is expensive to set up. An Apple newsstand is a much more appealing option.