My family makes made an income from the forest industry for a long time, generations actually. The last thing I want to do is talk down the price of wood in an already decimated market- but printing news on mashed up trees is really expensive.
Let’s just go through it with The New York Times because its costs, circulation and subscription numbers are easy to find… and because Apple has the spiffy graphic of the iPad with the NYT already in it.
The New York Times almost assuredly spends well over $400 per year on the paper and printing of a years subscription worth of newspapers… I’m going to leave the delivery of the dead tree version out of the equation because I’ll just use it to wash the online delivery costs off the table.
They in turn charge less than $300 for for this and make up the difference, then the profit, with ad sales.
It would actually be in the Grey Lady’s best financial interest to offer a two year subscription to an iPad Edition for $600 and throw in the iPad for “free”. This is actually less than their NYT Kindle Edition that costs $336 for one year.
I couldn’t find a picture of the Kindle DX with the NYT on it and didn’t feel like ‘shopping up something that bland, so I went with the smaller Kindle… but even the DX doesn’t bring the sexy like the iPad. This makes me unhappy since Jeff Bezos builds space ships, which makes him approximately 42,583% cooler than Steve Jobs will ever be… at least outside the influence of his Reality Distortion Field.
Where was I? Oh yeah. The NYT could surely get a discount off the Apples MSR of $400 if they purchased a half million of them. They have over 800,000 subscribers for the two year option so I don’t think ordering 500,000 iPads would be too optimistic with half coming up for renewal in any given year – and the new subscribers that would be drawn in by the “Subscribe and we’ll throw in an iPad!” deal.
The biggest problem might be Apple getting production high enough to meet demand.
Apple may be a closed ecosystem that won’t let their products play outside of their own sandbox- but I’m also pretty sure that the publisher could cut some kind of deal with Apple for distribution through iTunes to cost less than the current hundreds of trucks handing out stacks of paper to a kid on a bicycle to roll up and throw in a puddle at your front door?
Now, the consolidation of print, radio, movies and television into media giants actually work to make this even more viable. While The New York Times only owns about two dozen other newspapers, they could sell bundles of the NYT+Local or they could allow you to add on subscriptions for a nominal fee.
They could also do replacement advertisements for the regions that they have newspaper department in place. A local ad in the New York Times has little value for the advertiser when the person reads it in Boston. The NYT could offer the advertisers in their Boston Globe a deal to “localize” the New York Times iPad edition by inserting their local Boston ad in place of a local New York ad.
You’d have to leave the Fords and Cokes out of this since national advertisers would have a legitimate beef if their ad got pulled in a market where they actually service customers; but the Copacabana wouldn’t be too concerned about running its “Grand Opening at 760 8th Avenue” advertisement in Boston.
How does this play out for Canada?
Shaw Communication just got the okay from the bureaucrats to purchase the controlling interest in Canwest Global Communications so lets take that through the MBA mindgrinder.
You don’t want to get me on a rant about letting the state, who couldn’t make money with a whorehouse in a goldrush, make business decisions for anything more complex than a neighbourhood lemonade stand… nix that, your average ten year old would have a better handle on that.
So let’s stick to Shaw and how they can best use the iPad. It is a moving target, with deals being struck in all directions- but right now, with this purchase, they look to be acquiring 13 daily newspapers across the country and another 26 community papers.
Those 39 newspapers right there would make it almost an autopilot move for them to offer that free iPad with a two year subscription to one daily newspaper+your community paper. It would be quite short sighted of them not to.
It gets even better for them when we start looking into their other holdings and how they can be leveraged on a computer supplied and set up by Shaw.
Canwest Global has at least 11 portal websites, 12 localized Global websites and another 12 portals for their bigger specialty channels. It doesn’t take much business acumen to see the benefit these 35 (wholly or in part) advertisement driven websites would get from a Shaw iPad that had them integrated into the Homescreen.
Then there are the television holdings themselves. The flagship broadcaster is Global which reaches pretty much 100% of the televisions in Canada. Now add to that the 21 specialty channels that run on cable that is in a good part owned by Shaw.
Will Shaw see the potential of using the iPad as a portable media player and DVR for a nominal fee on their monthly cable bill? Could it replace, in part, the DVRs that they are offering right now at a discount with long term contracts? How many more pay-per-views could they sell to the mobile crowd killing time on the Sky Train?
Vertical and horizontal integration would make the iPad a massive force multiplier to a media conglomeration like Shaw – or are they going to let this opportunity slide on by for another five to ten years?
If they aren’t going to do it, over on 777 Jarvis sits Rogers Communications.
Everything I pointed out for SHAW works for Rogers and their 70 consumer magazines, 51 radio stations, couple dozen TV stations, handful of internet portals, massive mobile network and their own cable distribution system.
Just thinkin’ out loud, maybe Rogers could sell off the Blue Jays for the estimated $286 million and use the money to bring in a fleet of transport trucks full of iPads? It strikes me as a better use of resources for a media and distribution company.