By Greg Mills
(Note: I am writing this on Sunday, the day before the Apple WWDC keynote.) The mainstream “paper press” seems to be faltering all around the US. Most major newspapers are running in the red and have been losing money for some time now.
One paper in Honolulu bought the other paper so now there is one. Major economic changes are taking place at a breath-taking pace. This is very bad if you are part of the old content economy, but very good if you are part of the digital content delivery revolution.
What began as a novel way to send a note to someone else on line as an email became a torrent — and now the number of emails delivered each day is more than physical letters. The Post Office has complained that itss revenue is suffering because of virtually free email replacing the postage stamp model of financing written communication. The postal union is crying all the way to Congress and, sometime ago, actually suggested a tax on each email to be paid to the Post Office to offset the loss due to reduced mail volume.
We have seen postage rates go up in sort of a cascade effect where less mail and entrenched overhead makes the US Post Office a chronic money losing situation. The notion that the government should bail out aged economic systems that are being replaced by newer and better solution, is nuts.
Virtually free email, that is instantly received, will beat wasting paper and a 44 cent stamp that delivers letters days later. The overhead of physical mail is represented by the Post Office and cutting down trees, burning fuel to deliver the mail etc.
Note that on the iPad home screen, that the bloated iTunes “channel” channel, if you will, is now divided into iTunes, Videos, Books and the App Store, each with its own button. This is likely to be done on the Mac platform as well, — and soon. This underlines the strategic direction Apple is going in digital content delivery, which is represented by those channels.
The flawed notion that the existing economic models of content publishing can survive is seen in listed prices for on-line content that is often the same as for physical versions. Content “packages” in the form of software disks, DVDs, books, magazines, music, newspapers and even the US Mail are all under assault by the digital juggernaut. Given time, the economic reality will set in and free enterprise market forces will prevail and force lower prices. Digital content of all types will be priced lower to reflect the savings to content providers of going digital, while sales volume soars.
To content providers: I am tired of your whining that Internet consumers won’t pay for anything. Stop trying to gouge us and we will pony up. Pass along the savings of going digital, and we will forgo the physical media. Don’t expect to put all the savings of going to digital content delivery in your pocket.
The assault on conventional content delivery is headed up by Apple. What we have seen in the music industry in the form of iTunes is going to happen again in the publishing and entertainment industry. The Video button on iPad will become the iTunes of what is now the DVD industry.
We have seen what happened to the music industry, because Apple saw that there was money to be made in offering music on line, at reasonable prices. There was strife in the industry that wanted to force the old economic model on the new delivery system. In the end, Apple won and so much money flowed to the music industry that, begrudgingly, they had to agree with the offer Steve Jobs offered them.
Cable and satellite TV is ripe for a better technology to replace it, and Apple TV and Steve Jobs are going to do just that. Balkanization of video content represents a problem that I bet Apple will solve. Mr. Jobs told journalist Walt Mossberg the just other day in an interview that greater minds than those at Apple couldn’t solve the issues of consolidating digital content delivery, but I think “thou protesteth too much,” Steve. I expect to see Apple do the iTune thing to video content delivery.
The App Store is also spun off on the iPad with an App Store button. We have already seen that the delivery of software sold over the Internet works, and the success of the App Store is an indication that content in the form of software will also forgo physical media.
The iBooks button will become the iTunes of the publishing industry. Saving the publishing industry is shorthand for creating an Apple digital delivery “go to market” system and creating another major cash flow for Apple.
The iPad is the iPod equivalent for books, magazines and newspapers. Apple TV will become the iPod for video content. The server farm Apple is building is going to be humming soon enough. Apple is becoming the digital delivery juggernaut. If you don’t believe this, ask the music industry.
(Greg Mills is currently a Faux Artist in Kansas City. Formerly a new product R&D man for the paint sundry market, he holds 11 US patents. He’s working on a solar energy startup using a patent pending process of turning waste dual pane glass into thermal solar panels used to heat water. Married, with one daughter still at home, Greg writes for intellectual web sites and Mac related issues. See Greg’s web sites at http://www.gregmills.info . He can be emailed at gregmills.mac.)