Steve Jobs, of Apple fame, apparently has many talents. Among them are a visionary outlook, a knack for product design, a fiery entrepenurial spirit, the ability to find and hire capable staff, and most importantly… the uncanny ability to market nearly anything to anybody. The man has been able to sell rain coats and umbrellas in the desert.
Case in point, in releasing the iPad, a truly evolutionary take on the tablet computer that Microsoft failed to properly execute, Mr. Jobs commenced selling proprietary add-on services. The kicker was that this was for a device whose primary strength was capitalizing on the most open, non-proprietary technology of the century (the WWW). As he approached big media houses and ad agencies and stirred up so much interest and PR over proprietary apps to run on the iPad, complete with premium priced advertising and paywalls, I literally laughed. I was not surprised, for the man is skilled in his art, but I would think that those on the receiving end should be a tad more skilled in their arts as well. Pray tell, what would make someone thing that an expensive to build, proprietary app that costs extra money to consume and pigeon holes you into a single device that will encounter fierce competition that will probably outsell it in the medium term will successfully compete with much easier and cheaper to build, nearly comparable quality, web apps that will be available across all connceted devices whose current iteration is actually free? Yes, I know that’s a long ass sentence, but there is a lot to be said.
Those who are pouring resources into iPad ads and apps should take a step back and start running their businesses for their investors and not for Steve Jobs shareholders. I really like the iPad, and I own one. The reason is because it is an excellent tool for media consumption, primarily web content and video. Big media vendors should keep those strengths in mind when attempting to create paths that actually detract from the primary motivation for using the iPad. On that note, I introduce this update from Endgadget.com:
iPad magazine sales numbers show steep decline over a few short months
Uh oh. Since its debut, the iPad has been variously hailed as the final nail in the coffin of all physical media and the savior of the magazine and newspaper industries. A few magazines, such as Wired, had truly impressive digital launches, with over 100,000 downloads of its first issue in June. It doesn’t seem, however, that the stellar start was in any way sustainable. According to the Audit Bureau of Circulations, which collects magazine circulation data from companies willing to furnish numbers, all iPad magazinesWired was averaging 31,000 downloads from July through September, had 22,000 and 23,000 respectively in October and November. Other magazines have seen similar declines: Vanity Fair sold 8,700 downloads of its November issue, down from an average of about 10,500 from August through October; GQ sold 11,000 copies, its worst showing yet. Now, not all magazines release their numbers, of course — including The New Yorker, People, and Esquire — but the numbers we do have seem to be indicating a trend of general decline after a short burst of excitement. have seen fall offs in downloads over the past few months.
Honestly, there is relative little of practical use and interest that you can do with a proprietary app that you can’t do in HTML(5) that will justify the expense and more importantly the lock-in to Apple products. You see, Steve Jobs and Apple are not just experts at marketing pretty shiny things to mass retail consumers, they actually excel at selling the producers of the content as well. This, or course, is a good thing if you’re an Apple shareholder, but not so good for everyone else. The reason media execs were able to be sold on the iPad magazine app ideas was because they are still searching for ways to monetize the new media system of near frictionless content distribution. Back in the days, they were able to make fatter margins because there were significant barriers to entry in distributing content. Those who owned or controlled the distribution channels, owned or controlled the revenues – nearly regardless of the quality of the content. This was true for print, radio, TV broadcast, etc. Now, with the advent of the web and frictionless distribution, they have untold competition for content, which quickly commoditizes it. In addition, aggregators with difficult to replicate technology platforms such as Google, further commoditize the content, and remove the power of brand from it. Content vendors have been complaining across the board that they are having problems charging for content, and the ad model often doesn’t generate the revenues to keep the operation afloat, much less profitable. The results??? Massive and serial bankruptcies/insolvencies across the board.
Well, here’s a solution from Reggie Middleton – and it doesn’t entail you spending $300,000 to a half a million dollars customizing a proprietary app for my devices whose greatest strength is surfing the non-proprietary web. Everybody, quite now…. Are you ready??? Create better content. You see, truly capable content cannot be commoditized. I mean, really juicy, hard to come by content. I don’t mean adding flash widgets, slide shows, and other tricks and gadgets. I mean producing stuff of interest and of use. Why is Wikileaks so popular?
When news organizations started suffering due to collapsing margins as a result of their inability to grasp the power, potential and risks of frictionless distribution via the Web, they moved in the opposite direction of prudence. They reduced their staff and cut expenses INSTEAD of investing in the business. Why pare down or eliminate the investigative journalists and when they are the assets that can truly set you apart from the commoditizing content aggregators, and the run of the mill web site?
They allowed salesmen to sell them web widgets and gadgets (ex.Flash apps, iPad apps, etc.) that will magically bring profits and sticky readers to their respective businesses. I pray thee, tell me, since when do web programmers and technology company execs know more about the media business than media execs? If they would have taken the resources spent on creating fancy schmancy gadgets and put them into their investigative journalism departments, they would have a thriving operation with content that runs across all devices (you know, regular text, pictures and video?). Again, why is Wikileaks so popular? Much of their content could have been ferreted out by a strong investigative staff. Don’t believe me? Look at what my little skeleton staff was able to dig up, with a budget akin to lunch money, as excerpted from Who is Reggie Middleton!!!
Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts to uncover truths, seldom if, ever published in the mainstream media or Wall Street analysts reports. Since the inception of his BoomBustBlog, he has established an outstanding track record, including but not limited to, the call of….
- The housing market crash in September of 2007: Correction, and further thoughts on the topic and How Far Will US Home Prices Drop?
- Home builders falling and their grossly misleading use of off balance sheet structures to conceal excessive debt in November of 2007 (not a single sell side analyst that we know of made mention of this very material point in the industry): Lennar, Voodoo Accounting & Other Things of Mystery and Myth!
The collapse of Bear Stearns in January 2008 (2 months before Bear Stearns fell, while trading in the $100s and still had buy ratings and investment grade AA or better from the ratings agencies): Is this the Breaking of the Bear? | After the collapse, a prudent bullish call as well… Joe Lewis on the Bear Stearns buyout Monday, March 17th, 2008: “The problem with the deal is that it is too low, and too favorable for Morgan. It is literally guaranteed to drive angst from the other side. Whenever you do a deal, you always make sure the other side gets to walk away with something. If you don’t you always risk the deal falling though unnecessarily. $2 is a slap in the face to employees who have lost a life savings and have the power to block the deal. At the very least, by the building at market price and get the company for free!” | BSC calls are almost free and the JP Morgan Deal is not signed in stone Monday, March 17th, 2008 | This is going to be an exciting, and scary morning Monday, March 17th, 2008 | As I anticipated, Bear Stearns is not a done deal Tuesday, March 18th, 2008 [Bear Stearns stock goes from $1 and change to $10, front month calls literally explode from pennies to several dollars]
- The warning of Lehman Brothers before anyone had a clue!!! (February through May 2008): Is Lehman really a lemming in disguise? Thursday, February 21st, 2008 | Web chatter on Lehman Brothers Sunday, March 16th, 2008 (It would appear that Lehman’s hedges are paying off for them. The have the most CMBS and RMBS as a percent of tangible equity on the street following BSC. The question is, “Can they monetize those hedges?”. I’m curious to see how the options on Lehman will be priced tomorrow. I really don’t have enough. Goes to show you how stingy I am. I bought them before Lehman was on anybody’s radar and I was still to cheap to gorge. Now, all of the alarms have sounded and I’ll have to pay up to participate or go in short. There is too much attention focused on Lehman right now. ) | I just got this email on Lehman from my clearing desk Monday, March 17th, 2008 by Reggie Middleton | Lehman stock, rumors and anti-rumors that support the rumors Friday, March 28th, 2008 | It appears that I should have dug deeper into Lehman! May 2008
- The fall of commercial real estate in general (September of 2007) and the collapse of General Growth Properties [nation's 2nd largest mall owner] in particular (November 2007): BoomBustBlog.com’s answer to GGP’s latest press release and Another GGP update coming… (among over 700 pages of analysis, review the January 2008 archives or search for “GGP” for more research).
- The collapse of state and municipal finances, with California in particular (May 2008): Municipal bond market and the securitization crisis – part 2
- The collapse of the regional banks (32 of them, actually) in May 2008: As I see it, these 32 banks and thrifts are in deep doo-doo! as well as the fall of Countrywide and Washington Mutual
- The collapse of the monoline insurers, Ambac and MBIA in late 2007 & 2008: A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton, Welcome to the World of Dr. FrankenFinance! and Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion
- The overvaluation of Goldman Sachs from June 2008 to present): “Can You Believe There Are Still Analysts Arguing How Undervalued Goldman Sachs Is? Those July 150 Puts Say Otherwise, Let’s Take a Look”, “When the Patina Fades… The Rise and Fall of Goldman Sachs???“and Reggie Middleton vs Goldman Sachs, Round 2)
- The ENTIRE Pan-European Sovereign Debt Crisis (potentially soon to be the Global Sovereign Debt Crisis) starting in January of 2009 and explicit detail as of January 2010: The Pan-European Sovereign Debt Crisis
- Ireland austerity and the disguised sink hole of debt and non-performing assets that is the Irish banking system: I Suggest Those That Dislike Hearing “I Told You So” Divest from Western and Southern European Debt, It’ll Get Worse Before It Get’s Better!
- The mobile computing paradigm shift, May 2010: More on the Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars! »
Has the Web and the Blogosphere ushered in the Death of Radio? Monday, November 17th, 2008