July 22, 2015 Last Updated 8:30 am

Journalists look at Apple stock through a keyhole; iPad and digital edition sales linked?

Apple stock price is run up by investors prior to release of Q3 earnings, now stock is being taken down – so, of course, reporters assign deep meaning to phenomenon

It is sometimes said that consumers have short attention spans, which is why news events become overblown at first, then fade away so quickly. But it seems the same could be said for reporters, as well, as they see what is in front of them but fail to bother to look any deeper.

Yesterday Apple reported earnings and when the statement was released its stock immediately fell around 8 percent in after hours trading. Suddenly the sky was falling and reporters were immediately coming up with reasons for the decline in price.

Kevin Kelleher of TIME, who really should know better, wrote what I’m sure he thinks is a deep analysis of Apple’s dependence on the iPhone to drive revenue growth, speculating that investors have come to the conclusion investors were actually disappointed in the latest earnings, despite them beating forecasts.

“So yes, Apple beat expectations, but it really just kind of squeaked past them, whereas it typically leaps over them with a substantial margin. In other words, beating the numbers isn’t enough. Investors expect Apple to thrash them,” Kelleher wrote.

Henry Blodget of BusinessInsider, who has been saying the sky has been falling regarding Apple for about as long as Apple has shown growth, called yesterday’s earnings a “whiff”. This morning BusinessInsider interviewed 12 Apple analysts half of whom are “bullish” on Apple, the other half “neutral” – guess Henry doesn’t read BusinessInsider, good idea.

Trying to do an instant analysis of a stock’s upward or downward trajectory is rather risky but it would have helped a bit if the reporters would at least look at the trading chart. In Apple case, the stock was trading below $120 a share as recently as July 9 before beginning a sharp rise up to nearly $133 on Monday. Yesterday Apple stock fell a bit as did the market as a whole, but closed at $130.75, still a 9 percent rise in less than two weeks. That the stock will now open at around $122 is not exactly “sky is falling” territory, now is it?

TNM has been tracking Apple iPad sales since the beginning, and has produced a chart for a few years. In fact, the chart I use shows its age, created when my skills at such things was far less than now, but I admit to being too lazy to redo the thing.

Here it is again:


The reason for tracking iPad sales so closely is because it was believed that the rise of the iPad would lead to a cooresponding rise in the sales of digital editions. Back in 2010, the most often heard reason why publishers were not jumping into building digital edition apps was the lack of iPads in the market, some telling me they simply didn’t see many people using them in public. That changed quickly as sales went from just over 3 million units per quarter to nearly 10 million in a year. Q1 2014 was the peak (October-December 2013) when Apple launched the iPad mini for the holiday shopping season. That quarter Apple sold over 26 million iPads.

Since then Apple’s iPad sales have fallen 6 quarters in a row, when compared to sales of the same quarter the previous year.

But digital editions sales started to fall before then, and clearly that trend is not tied to iPad sales. One digital publishing platform CEO told me months ago that they saw trouble back in 2012, still at a time when publisher’s statements were showing digital circulation growth. This CEO placed the blame on Apple for creating the Newsstand then not spending any marketing dollars promoting it, and its way of sending push notifications to monthly subscribers. But mostly he blamed publishers for creating replica editions and not taking digital media seriously, despite all their bluster that their companies were becoming so-called digital first.

I think the reasons digital edition sales are so poor is all of the reason above plus more. Like the eBook market, digital publishing of newspapers and magazines are a fragmented market with far too much control for sales out of the hands of publishers. Next Issue Media is about as close as we have to a publisher controlled newsstand, limited in selection on purpose, and with a standardized way of producing the digital editions (Adobe DPS, though they can be native or replica). No surprise that those publishers still showing digital growth are doing so through Next Issue.

So wither the digital edition app? For me, as someone who first became a magazine publisher in the early ’90s, the answer is easy: the digital edition is still an important segment of a magazine’s total circulation but should be treated like other elements of a magazine’s brand. What many publishers wanted was for the digital edition to replace the printed edition, and for a few titles that may still happen. But I think the true place for the digital edition should be as part of the mix that includes the print edition, the magazine’s website, its other publishing products such as books/eBooks, events and more.

But just as the success of a magazine’s website is tied to the quality and effort put into that website, so too will a digital edition require investment and commitment. It will also require something else, something publisher’s have not show much of – patience.

TheEconomist-iPadIt has taken magazines and newspapers many years to build up their audiences online. At first many saw their first websites as little more than digital billboards for their brands, places where readers would come to sign up for their print subscriptions. Later some began to see their websites as digital alternatives to their print editions, places where readers would come and buy a digital subscription in order to access the articles from the print magazine. Harper’s is a good example of this.

But more recently, magazines have begun to see their websites as competing in the same world as the digital natives and have changed their publishing philosophy – instead of the majority of the content coming from their print editions, now content appears more frequently, often appearing first online and maybe later in print, often never appearing in print. More content, published more frequently, leads to larger traffic numbers and presumably more revenue.

So, too, will the digital edition evolve from merely an unreadable replica of print to a separate digital media product. There is no reason for a digital edition to share the same publishing frequency, design, or even content as its print counterpart. The best digital editions will be the result of the same creative energy that has created the print magazine, or created by digital natives enthusiastic about the medium.

Nothing good can come from a publisher more concerned with producing cheap and easy publishing products than with producing a product readers and advertisers are excited about. If a publisher isn’t excited to see the release of their latest digital edition the same way they are excited when the print edition arrives from the printer, then they can’t expect to have success with that product.

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