Apple's iPad -- Another Nail in the Coffin of Traditional Media

If you're like me, you watched Steve Jobs' extraordinary performance yesterday introducing a new Apple product that is bound to revolutionize the way we use digital media. Even as a commonly skeptical journalist, I was deeply impressed with both Jobs and the new product, the iPad. What impact is it likely to have on traditional media?

Don't believe the folks who see this as a way for mainstream publishers to get rid of their highest costs and produce content at a profit. Some analysts are contending that the iPad platform enables newspapers and magazines to convey information in new and exciting ways. "Going forward, authors and designers will move away from a static presentation of information into one that is multimedia-based with video and other media content," Needham & Co. analyst Charles Wolf told the Mercury News. Great stuff, right?

For what it's worth, I see the iPad as little more than another nail in the coffin for print media. Why? Unless traditional media begins to charge for its content, the iPad, the Kindle, and other e-readers make it easier for users to access and conveniently read books, newspapers, and magazines at well below the costs to produce that content. When I ran BusinessWeek's online operations as editor-in-chief of BusinessWeek.com, we were among the first magazines to offer subscriptions on the Kindle. Now you'd think that was a great idea: we can charge people for our content, without incurring the high costs of production and distribution.

But for every monthly subscription BusinessWeek sold through Amazon for the Kindle, we received 75 cents--about 15% of the $4.95 cost of a single copy on the newsstand or a tiny fraction of the $49.99 price BW is asking on its website today for a year's subscription. That's right. A monthly subscription to a weekly magazine on the Kindle returned less than a buck to our company--far below our costs to report, write, edit, art, and design the contents of the magazine. Amazon sells a BusinessWeek subscription via Kindle for all of $2.49 a month, a rate that is profitable to Amazon but pretty much a disaster for a traditional media publisher. Though Apple has yet to create contracts with traditional publishers for the iPad, you can expect more of the same.

The obvious question is why would a publisher agree to such a low return? Most enter into these deals under the assumption that something is better than nothing. They also succumb to the pressure of agreeing to unprofitable deals to show others that they are "with it." Who wants to be left behind? If your key competitors are buckling under the pressure to give away their content for a pittance, you're likely to do the same.

Google & Media: Biting the Hand that Feeds You

A few days back, before I left for China and before the holiday season descended upon us, we tackled a key question: "What's the Biggest Mistake Media Companies Make Online?"

I received several solid answers from followers of this blog, including Frymaster who immediately took sides in the ongoing war between Traditional Media and Google. Wrote Frymaster:  "I reject out-of-hand the assertion that Google is profiting from others' content. Rather, I say that Google profits from connecting users to content. It is a service that most web publishers appreciate greatly. Google, unlike any other search engine ever, goes to great pains to deliver the least-skewed results possible. Google is constantly on the hunt for people who game their system. That's why they succeed. There is a direct connection between Google's user-centric, community-oriented approach and their financial success."

Rupert Murdoch's protestations aside, there is no doubt that Google is driving vast amounts of traffic to websites run by traditional media companies. In recent years, most of BusinessWeek.com's growth came from search optimization and direct traffic. Up until only three years ago, the number one referring domain at BusinessWeek was always a portal until Google's popularity replaced Yahoo Finance and MSN Money as the top referrer. Search--largely Google--now accounts for some 45% of the traffic  at BW.com, up from less than 20% in 2006. That simple little box is driving vast amounts of advertising inventory (and therefore revenue) to the site and it's no coincidence. In common with every other media brand, we did lots of things to make our site search friendly. We rewrote headlines, simplified URLs, hired an on-staff SEO expert to lead seminars in search optimization. In other words, we courted Google and the search traffic we achieved. It's a similar story everywhere else.

I'm liking this logo design done by my incredibly talented podcast producer Jaime Beauchamp. Jaime worked on our design group at BusinessWeek for many years, designing one of my favorite covers years ago. What do you think?

Off to China

I'll  be taking a break from my blog this coming week for an exciting reason: I'm off to China to meet with Chinese entrepreneurs, government officials, artists and non-profit leaders. Most of my time will be spent in Beijing, the cultural soul of China, and Shanghai, the financial go-go capital of the country. This will be the first time I have ever ventured to China so I'm very much looking forward to a deep dive into the country's culture, economics and people. A full report to come.

My Final Podcast for BusinessWeek

I left our 46th floor multimedia studio for the last time this week after recording my 209th "Behind the Cover" podcast as BusinessWeek's executive editor. It feels like only yesterday when I walked into that studio for the first time in September of 2005 to begin these weekly podcasts in which I interview the author of the magazine's cover story. Since then, more than 12 million of these podcasts have been downloaded and it has consistently ranked among the top business podcasts in the world on iTunes. For years, I have been honored to receive countless letters, emails, and phone calls from listeners who told me how much they enjoyed these recordings. Dozens of fans also have approached me at conferences, seminars, and panel discussions at which I have participated, each of them going out of their way to say thank you. So let me (yes, that's me above in the studio) return the thanks to all of you for listening.

The Biggest Mistake Media Companies Make Online

Yesterday, Media Industry News asked me three questions, one of which I shared with my Tweeps: What is the biggest mistake media companies make online? Nearly two dozen people weighed in with their own answers--and almost all of those responses are very good. Yet, I have my own take on this question that differs from most of the answers I received.

For all the talk about the importance of digital media, most traditional brands boast cultures, people, and processes that protect their dying assets (ie. print) at the expense of what is growing (ie. digital). There are a lot of reasons for this, and some of them are good ones. Print still brings in the vast majority of revenue. It somehow feeds in a more satisfying way the ego of editors and writers. And because the most resources are always devoted to the print product, the digital side remains a stepchild to the so-called main act--even when that act is unprofitable and dying.

As John Gardner once observed, most of the things that prevent the renewal of an organization can be found in the mind. It's not a matter of new ideas. "There is usually no shortage of new ideas," wrote Gardner in Self-Renewal. "The problem is to get a hearing for them. And that means breaking through the crusty rigidity and stubborn complacency of the status quo." Yet the rules, customs, and procedures in organizations always favor the past. That's why culture trumps strategy all the time. The cultural cues are that print (the past) is more important than digital (the future).

Thoughtful Questions: Do You Have Answers?

Next week I'm being honored by Media Industry News as one of its Top 21 Social Media Superstars. I'm flattered to receive this award, especially after having been inducted into MIN's Digital Hall of Fame a year ago. But want to make clear it was my BusinessWeek team that really made the difference in using social media to deeply engage our audience on blogs, Twitter, Facebook, Ning, and other social media tools. I'm disappointed that I won't be able to pick up this award in person at the Grand Hyatt in New York on Dec. 9th, but BW's online news editor, Dan Beucke, will stand in for me.

In any case, MIN just asked each of the 21 honorees to address one of three questions when they go up to accept the award. These are fabulous questions so I want to repeat them here and engage in a dialogue with you about them:

What is the one piece of technology you would bring to a desert island and why?

What is the biggest mistake media companies make online?

What is the biggest game-changing technology or service for media companies in the past several years and why?

The fast answers to these questions might well be the iPhone, the failure to make meaningful changes in culture which almost always trumps strategy, and mobile. But let's be more creative than that. What do you think?