Gadfly

The iPad Lost Years for Apple's Media Partners

The iPhone maker took newspaper and magazine companies on a detour to a boondoggle.
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Photographer: Mario Tama/Getty Images

Apple Inc. is revamping its digital bookstore in another attempt to take on Amazon's dominance. I can't help thinking: What if? 

Not what if Apple had succeeded the first time around, when it introduced a way to purchase electronic books with the 2010 debut of the iPad. No, Apple is the most valuable public company in the world, and its iBooks digital book store and e-reading app was always going to be an immaterial part of its business.

The missed opportunity was for Apple's business partners, particularly newspaper and magazine companies, which Apple persuaded to turn themselves inside out to take advantage of the iPad. It turned out that Apple was leading those partners to a dead end. 

Bookish

Amazon overwhelmingly dominates the market for U.S. digital books

Data: AuthorEarnings; graphic by Bloomberg Gadfly

The eighth anniversary of the iPad's introduction was on Saturday. Allow me to take you on a trip back to that time. Steve Jobs set off on a sales pitch to media companies that he hoped would make the new tablet computer more useful. Jobs was a true believer that the iPad would be an amazing opportunity for books, newspapers and magazines to reimagine their products, capture readers and patch up their ailing business models. 

To book publishers, the iBooks store was his pitch to companies eager for an alternative to Amazon, which then (and now) was a powerful gatekeeper for both print and electronic titles. Jobs also courted newspaper and magazine companies to persuade them to refashion their titles for the iPad or to create new concepts to take advantage of a format that he said combined the best aspects of print and the web.

Some of Apple's business partners had misgivings, but many devoted time, people and money to tailor newspapers and magazines to the iPad. News Corp., publisher of papers including the Wall Street Journal and the Sun in the U.K., created daily newspaper versions for the iPad and an iPad-only publication called the Daily. The parent companies of Esquire magazine, Fortune and Better Homes and Gardens were among the print companies that created a joint venture to sell a Netflix-like subscription for dozens of iPad magazine titles.

Tapered Off

Sales of iPads peaked in 2013, and have been declining since then

Data: Bloomberg; graphic by Bloomberg Gadfly

Note: Apple's fiscal year ends each September.

In hindsight, it was a waste, and Jobs led them all on a costly detour. While the publishing companies focused on the iPad, people were slowly starting to embrace smartphones. About 300 million smartphones were sold worldwide in 2010, according to research firm IDC, and Apple sold 7.5 million iPads in the first few months the device was for sale. Last year, Apple sold 44 million iPads, and people bought about 1.5 billion smartphones. The iPad is important, but it never became the ubiquitous, world-changing computer that Jobs pitched in 2010. Instead, the smartphone -- including Apple's own iPhone --  changed the world.

Dial Up

Smartphone sales have exploded since Apple started selling the iPad in 2010

Data: IDC; graphic by Bloomberg Gadfly

I'm not saying News Corp. or Conde Nast, publisher of Vogue and GQ, would have been worth as much as Google if they hadn't bought into the iPad hype. But they did lose precious time and money following Apple down the iPad rabbit hole when they could have focused on Facebook, internet video, smartphone apps, mobile websites, their own subscription products or other promising areas. Newspaper and magazine publishers no longer treat the iPad as a priority, if they devote resources to it at all. 

David Carey, a former Conde Nast and current Hearst magazines executive, said in a recent interview that the iPad foray was worthwhile because companies need to try new things. "We spent a fair amount of time and a modest amount of money. It didn't quite play out. In the world of having to constantly interrupt what you do and to innovate, it was a success," he said. 

In one spot of good news about the media industry's iPad lost years: It turned out pretty well for book publishers. Even though iBooks hasn't been successful, Apple helped the book publishers shift the business model for e-books in a way that has let them -- and not Amazon -- set the consumer prices for e-books. That resulted in the Justice Department’s 2012 lawsuit contending that Apple conspired with big book publishers to fix prices, but the end result was to flip the economic model back to book publishers’ favor. 1

At least the iPad had a happy ending for someone. But for newspaper and magazine companies, Apple's coming revamp of iBooks is a reminder of media’s detour into iPad land. The trip barely made a ripple for Apple but proved costly for its allies.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
  1. The lawsuit was settled in 2014, and Apple exhausted the appeals for its fine in the case in 2016. 

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