The View From The Tree: iPadded Profits?
As much as industry pundits rail against waste and inefficiency in the newsstand system—and there's certainly plenty of both—the economics of newsstand sales look pretty sensible to consumer magazine publishers. The development cost per issue is only a few hundred bucks to create separate subscriber and newsstand versions of the cover.
Even if only 40 percent of those $5.99 copies sell, the publisher's net may be more than $2 per copy sold.
Those newsstand copies have other benefits as well. Sold copies count toward the ratebase (minimum number of paid copies) promised to advertisers. Some will generate new, highly desirable direct-to-publisher subscriptions. Even unsold copies increase the number of eyeballs exposed to the issue's ads and generally raise awareness of the brand.
The iPad: "A Solution in Search of a Business Model"
As much as industry pundits sing its praises, the iPad still looks to many publishers like a solution in search of a business model (sort of like my blog, The Dead Tree Edition). If the much-hyped Wired offering is dropping like a rock, what does that say about the app prospects for the rest of us who can't generate the same amount of buzz and don't have such an early-adopter audience?
It's still hard enough to get traditional ad agencies to understand how the Web works, or why and how they should advertise on a site with a million monthly page views. How are we going to sell them on tablet editions that have only a few thousand buyers?
The typical response of media pontificators is that publishers have to do something—anything—to break into the app world because tablets are the future of media. We've seen, and suffered through, that movie before.
A decade or so ago in a galaxy not so far away, the pundits preached that publishers had to do something—anything—to break into the Internet. They were partly correct; the Web did fundamentally alter our business. But the "anything" included the ill-conceived Pathfinder portal that burned a multimillion-dollar hole in Time Inc.'s pocket and the $690 million purchase of About.com that nearly sank Primedia.