Apple iPad: A Learning Curve and Digital Tollbooth to Consumers

(MoneyWatch) 
Apple's new iPad provides an intriguing hybrid option to print and video producers and advertisers seeking a better toll bridge to digital consumers.

They are limited only by their wiliness to innovate and break with convention on what is proving to be a steep digital learning curve.

Content providers and marketers who grasp the potential of interactive connections will seize the opportunity to hoe their own road to revenues by putting the iPad and other digital devices to work. Their return on investment is a critical issue: how much do they need to spend and how much will customers be willing to pay for their products and services on an iPad platform?

That is the fundamental issue everywhere in the developing the digital world while media loses more of their traditional earnings power. Best to make use of the iPad for the catalyst it can be to forging a new digital economy with its seamless interface and vibrant user connections. It will be whatever content producers and advertisers are willing to make it. It also depends on whether the iPad delivers on the exceptional functionality promised.

Content partners were not singled out during the wildly anticipated announcement Wednesday that overtaxed the Internet. Several game developers demonstrated what they could do with the iPad's dazzling 9.7-inch touch screen and zippy performance. Apple CEO Steve Jobs said the ongoing discussions with publishing, television, film, video game and other content providers begins in earnest today. It will be up to Jobs and company to show them the way, and it will take time.

While there has been virtually no nod to marketers and advertisers in demonstrations of the new device, the iPad provides fertile ground for making fast, functional and potentially lucrative consumer connections. Apple clearly has marketing and advertising in its sights. There has to be an ad serving iPad role somewhere for Quattro Wireless, the mobile advertising app provider it recently purchased.

Immediate access to the tools needed by developers to create new iPad apps will open the door to advertisers and agencies smart enough to customize digital marketing and commerce solutions in another challenging economic year.

Apple also is sure to pursue enterprising iPad arrangements with content providers in newspapers and magazines, television and film, video games and even textbook publishing to support their paid ties to consumer. That could include a a range of subscriptions, sample pricing, and all-you-can-consume arrangement with major players such as Walt Disney, which plays in all content categories.

There clearly is so much more to come from Apple and Jobs about how this new device and the overall iPlatform will advance the digital march. It is a little too soon to definitively call winners and losers. "We want to create something that joins the best of print with the best of digital all rolled into one...This is just the beginning," said Martin Nisenholtz, New York Times senior vice president of digital operations, while demonstrating the newspaper's content apps during the iPad launch conference.

As Jobs wowed devotees with the supersized iPhone-like qualities of the iPad during the two-hour conference, he hinted at how the connective dynamics of the new device will provide print and video producers, as well as advertisers, a better way to interact with consumers and generate revenues.

--Apple provides three digital tollbooths for content producers to be paid for their products: the existing iTunes store and Apps Store, and the new iBookstore. Although Apple will likely continue taking 30 percent of the proceeds as a facilitator, content providers 70 percent of revenues they can generate using Apple's ecosystem. More than three billion of Apple's more than 140,000 Apps have been downloaded in the past 18 months. As the largest online content catalog, iTunes just posted a record quarter. Skeptics understandably want to know how.

-- iPad's affordable price points will hasten the rollout of this and other hybrid copycats along with their zippy content, service navigation and underlying mechanics . (Apple stock jumped $10 a share when Jobs announced a Wi-Fi iPad would start at $499, and the fully loaded top of the line 3G model would be $820.) Whatever pay-for-access arrangement content providers can work out here will go universal that much quicker. Think back to Apple's first iTune's paid download arrangement with Disney three years ago.

--Apple's nearly $200 billion market cap and boundless reach and resources (and nearly $60 billion in anticipated revenues this year) can throw technical and financial clout behind its collaboration with content partners. Jobs and company are describing the iPad as "a distribution device."

Disney CEO Bob Iger told CNBC following the event that iPad will generate more revenues for his company because it provides a "compelling," boundless content platform. It is likely Disney, in which Jobs is the largest shareholder and board member, will play a similar leadership role with iPad.

While the iPad is not the be-all and end-all (there are plenty of features the first generation device does not have), it represents an important integration device that makes the digital revolution more tangible on many fronts. There remains a lot of healthy skepticism on all fronts.

Splashy multimedia, multifunctional portable connected devices will not work for every consumer. Some just prefer to read on their Amazon Kindle, text on their smart phones, and play video games on their Xbox consoles-all of which have their own paid systems and platforms. There likely will continue to be a big market for stand-alone devices that allow consumers to focus on a handful of meaningful functions without the interruption and distraction.

But it is not an either-or proposition. It's all part of the same learning curve: content providers and marketers maneuver and mastering all the digital tricks to sell their stuff to consumers.