Apple Publishing Inc. (1)

Threat or Opportunity? – We sometimes wonder how much Google can be allowed to be dominant in the sector of web search, but what about Apple? Some people are warning the industry – like at last week’s Ad Age digital conference. Apple has just launched a device that has the potential of changing the world of portable computing, just as it did with the iPod and portable music. But with the iPad – basically a big iPod Touch – it’s not just offering another smart, shiny new consumer device, but it’s also tightening its grip on its platforms as it transforms into a media company. It’s complicating relationships in media, to say the least! Somebody, on the other hand, called it “standard (US) symbiotic oligarchy” (or: nothing has changed).

The NYT recently opened an article on the iPad saying: “the print world welcomed Apple’s new iPad on Wednesday, eager to tap into the 125 million customers who already have iTunes accounts and are predisposed to buying more content from Apple”. A very optimistic view. Think about it: Apple has control on the hardware (the iPad), how publishers create content (the software-development kit), how consumers access media (the App Store) and, since its announcement last week, also advertising (iAd).

And don’t forget the 30% share Apple is forcing on traditional publishers taking their off-line publication on the iPad. Apple chose which publishers would be on the iPad launch platform and hand-picked his favorite papers and magazines. Some welcomed Steve Jobs as the new messiah. Tables were turned. A new digital magazine format inviting publishers to offer their content on it! To put it even clearer: can or will Apple Publishing Inc. decide which media will be available on iPad? Or are they just a media retailer and not a publisher? Kindle from Amazon didn´t create a problem in book publishing either (apart from book price pressure).

Originally, the iPad was an answer just to Amazon’s Kindle and Sony’s Reader, purely aimed at digital book publishing. In negotiations with Apple, publishers agreed to a business model that gives them more power over the price that customers pay for e-books. Publishers had all but lost that power on Amazon.com’s Kindle e-reader. In a newly set price range, Apple will keep 30% of each sale, and publishers will take 70%. This fixed agreement with Apple gives publishers leverage to negotiate with Amazon on future pricing. Apple’s strategy could bring significant changes to the e-book market, where Amazon has so far captured more than 90 percent of the market. Apple just brought back competition in a market dominated by Amazon.

Five of the six largest publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin and Simon & Schuster— had signed on to provide e-book content for the new tablet. Only one book publisher did not sign (yet) on to the iPad: Random House, the world’s largest publisher of trade books.