A view of the iPad – from the sales side of the house

4 Feb

Note: My friend and former colleague Bill Day is one of the sharpest sales-side guys I ever worked with. He’s adept at dealing with traditional, agency-driven advertisers and their massive buys – and maybe even better at bundling together innovative ideas like events, direct marketing and promotions to tap revenue from people who rarely advertise with local media. Bill has sold and serviced tens of millions of dollars in print ads – and quite a bit of online revenue for me, too.

He offers this guest post, from his seller’s perspective, on the publishing-industry frenzy over Apple’s iPad.

By Bill Day

Much is being made of the iPad as a vote of confidence from Apple for traditional publishers like The New York Times.  Boosters point to the resurrection of the music industry on the backs of iTunes and the iPod.  They predict a similar resurrection for publishers with the pending release of the iPad. 

Poynter has an interesting take on the potential impact of the iPad on publisher subscription models here.  It’s  kind of like the cell phone loss-leader model – giving away flashy tech toys for long-term subscription revenue.  It’s not a terrible idea.  It just misses the point. 

What’s lost in these discussions is a firm grasp of the mechanics of revenue generation for old-line media. As in “what’s the advertising model?”

 Look, record companies made their money on product sales – LPs, 8-tracks, CDs, concert tickets – before the advent of the digital age.  Apple didn’t change that model – it simply converted CDs to digital downloads.

 Publishers and broadcasters, by contrast, rely on ad revenues to drive top-line revenue.

 Subscriptions and newsstand sale are proxies for audience engagement – not dedicated revenue streams that are large enough to fund content creation.  Ad revenues, particularly high-value sales of limited or exclusive audiences, are the foundation of the old-media economy.  Apple’s forthcoming iBooks or iNews or iStuff will only accelerate the trend towards separating those who produce content from those profit from its distribution.

 Traditional media organizations have struggled for years as digital innovations have eroded advertising pricing power, destroyed their marketplace effect and hammered their content dominance. The emergence of tablets only further fragments content delivery mechanisms. 

Mass media and fragmentation are not friends.

 My two cents – Bill raises a powerful point. Largely lost in the iPad love-fest is any discussion of carrying ads inside the iPad content-publishing apps. I hope that Arthur Sulzberger (or even better, Eliot Pierce) has  had those discussions for NYT – but I haven’t heard anything that makes me think there’s a solid answer there yet.

Without those sort of clear advertising plays, we’re left with a hail-Mary pass: Maybe the industry can make enough in iPad subscriptions to save our phony-baloney business model!

That highly unlikely. We’ll run some numbers on that, and post ‘em in a couple of days.

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