Apple iPad's Jump Start for Media Digital Revenues

Last Updated Jan 27, 2010 1:54 PM EST

The most important breakthrough Apple's much ballyhooed iPad tablet can make is to jump start the digital economy by providing an iTunes-like payment platform and iPhone Apps functionality in a new multimedia sandbox where everyone can play and make money.

Apple has blazed the trail in the 18 months since it opened its App Store and in the three years since it launched its first iPhone, which now drives the company's massive earnings. Some are referring to the new iPad tablet as an advanced iPhone with a 10-inch screen.

Providing advanced mechanisms for ordering, buying and sharing all content, products and services on a hybrid video-reader-game player with characteristic Apple simplicity would be especially significant for print and video media a still groping to find their financial digital footing.

Among other things, the iPad could provide newspapers, magazines and even textbook publishers an iTunes-like turnkey for digital sales that could even become a default on their mostly free home websites and franchise App extensions to create new revenues streams.

The same is true for video content, which is on the brink of a major tug of war among disparate players. Google's YouTube has entered video rentals, Hulu will soon charge for select streaming online TV programs and films, the likes of TiVo and Netflix are aggressively repositioning, and cable, satellite and telecom operators scrambling for their share of the on-demand wireless market.

Apple could best its iTunes cherry-picking for consumers by offering all-you-can read or watch bulk print and video subscriptions for a monthly fee of at least $25.

Based on its recent acquisition of Quattro Wireless (which deals in ads on mobile web sites and applications), Apple may also provide a new approach to creating and selling interactive marketing for print and video using the Tablet's virtual keyboard and Wi-Fi functionality.

Given its maverick track record for filling market void and creating new market niches, Apple's latest moves have the capacity to provide an economic boost to recession weary media.

Ultimately, it depends on the willingness of traditional media companies to step out of their comfort zone and embrace the two of the few successful digital business models -- in the Apps and iTunes stores - and any others Apple creates. It may even provide new ways to integrate social media into the process, which could give the likes of YouTube, Twitter and Facebook a revenue springboard.

Apple has been in discussions with a myriad of media players including Hearst Corp., Washington Post, New York Times, Dow Jones, McGraw-Hill, Walt Disney and CBS. Apple's far flung talks also have included textbook and consumer book publishers such as HarperCollins and Hachette, and video game makers like Electronic Arts about on-demand or "best-of" content selections.

Just last week, The New York Times announced it will launch a paid metered system for its content beginning next year. The Wall Street Journal and Hulu are considering new ways to charge for content despite the fact consumers increasingly indicate an unwillingness to pay. Boxee and other on-demand video providers have been raising the bar on payment platforms in anticipation Apple's heightened involvement. Amazon's Kindle, which dominates about 80 percent of the e-reader market, is adding Apps in an effort to head-off the competition.

The ability of Apple to play well with others - and not just wipe out the competition - is a formidable factor in its eventual success. With an estimated $600 to $1,000 price tag, it will take time for the iPad to become mainstream. It would be the first in a long string of failed electronic tablets to do so.

But the enterprising access and payment, advertising and other revenue-generating mechanisms Apple can introduce with the Tablet can be more rapidly embraced and implemented industry-wide. That is just what all media needs right now to make a digital go of it.

To that end, it is unclear how much of a help or hindrance Apple's Walled Garden approach to controlling the content and apps allowed in and out of its devices will be to the economic promise its new iPad tablet can provide.

Analysts estimate the sale of 5 millionTablets this year could generate nearly $3 billion in revenue for Apple, compared with more than 37 million iPhones expected to sell in 2010.

What consumer need and will increasingly clamor for is a universal way to quickly find, easily access and reasonably pay for content of all kinds once, and have it apply to all other digital devices and platforms. Call it a la carte on steroids.

Whether Apple can or wants to forge a more universal game plan for content providers conducting their digital business may not even be part of the company's agenda. It may be too altruistic a goal for Apple CEO Steve Jobs, who doesn't just to change the world, but rule it single-handedly.

  • Diane Mermigas

    Diane Mermigas has been a contributing editor and columnist at Mediapost, The Hollywood Reporter and Crain Communications as well as writing for such sites as Seeking Alpha, TrueSlant and BNET. In addition to speaking and television appearances, Diane consults with companies in digital transition, and is completing a book on the future of media.