Week in Review

Short reads on a Saturday morning:

• iPad pricing was the issue of the week. With users set to receive their iPads starting one week from today, publishers that want their products available in the iTunes app store need to submit, price and get approval of those apps. A WSJ story slipped in a reference to their iPad pricing strategy at the end of a story concerning magazines and the iPad. Stating casually that the WSJ would charge iPad users a $17.99 a month subscription fee, a fee higher than what the journal is current offering readers for a combination of both the print edition plus online access. Was it a trial balloon, or Rupert Murdoch giving Apple the finger. (Later that week the WSJ ran a critical story about Apple’s board of director.)

If to prove that Murdoch was deadly serious about paywalls, Murdoch’s UK newspapers, The Times and Sunday Times announced that it would begin charging web readers £1 per day, or £2 per week for access to their online news. Will Tories start reading the more liberal Guardian? (Sorry, that was a joke.)
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• App makers are gearing up for the iPad, as well. On Monday I interviewed Handmark’s Jon Maroney, senior veep of mobile publishing, about what the vendor had up its sleeve. Handmark is already a leading developer of mobile apps for publishers, supporting not only the iPhone but other platforms such as Android and Blackberry. Maroney appears excited about the move to tablet publishing stating that “the whole beauty of the iPad is that you can pull in all kinds of additional information. We’re going to see an explosion of innovation over the course of this year around that.” The Daily News recently launched an iPhone app (iTunes link) developed by Handmark. It will be interesting to see if the paper is among the first on Apple’s tablet, as well.

• Not everyone is jumping on board, of course. Although large publishers like HarperCollins, Hachette, Penguin, Macmillan and Simon & Shuster have all signed agreement to sell their books through Apple’s iBookstore — set to launch the same day as the iPad, April 3 — Random House has decided to opt out for now.

To recap, for those just waking up, there are several ways one can sell their books on the iPad: through Apple’s iBookstore and their selling their own individual apps through the iTunes app store.  The iBookstore will employ an “agency model” where the publisher sets their own price and receives 70 percent of the transaction, with Apple grabbing a 30 percent commission. This is the model Apple has used inside the app store to great success.
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The other way is to develop your own apps, something Penguin Books CEO John Makinson (the gentleman to the left) said his company will explore. The disadvantage of this approach would be the development costs — each book would require the creation of a new app. The advantage, though, would be that each book could receive special treatment — adding multimedia elements like audio and video, as well as interactivity, even games. Also, because product would be unique, they could sell at a premium.

I might add that there is no reason a publisher couldn’t take advantage of both models. One could sell a text and picture only version of a history book for the standard $9.99 in iBookstore, for instance. Then sell a much higher priced app version, complete with videos and interactivity, through the iTunes app store. The record labels already do this to a certain degree.

• The NAA put out is final report on the state of newspaper advertising for 2009 and it was down right ugly: print revenue declined 28.6 percent. Additionally, online advertising declined for the second year in a row — by 11.8 percent in 2009 reflecting the dismal economy. This makes the fourth year in a row that newspaper print revenue has declined, and the seventh down year in the decade.

• On the bright side: neither RBI nor Nielsen Business Media announced major divestitures this week — not that there is much left of the two formerly major B2Bs. But don’t expect this to last as RBI, in particular, have several groups that would be very attractive to buyers. Any PEs out there want to invest? Just give me a call.

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