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Steve Jobs Doesn’t Want to Kill Publishers, But Apple’s Subscription Strategy Will


This guest post is by Tien Tzuo, founder of Zuora, a subscription billing company. Previously, he was chief strategy officer and employee No. 11 at

Publishers have been struggling for years. Now local newspapers, magazines and even the New York Times, that Grey Lady, are being treated like old ladies by Apple, stealing their pocketbooks while they’re trying to stay on a fixed income.

This week, Apple announced what the publishing industry has been clamoring for, subscriptions, in exchange for a whopping 30% cut. Clearly, paid subscriptions are a part of the future of all online media, whether tied to a print version or not. That’s what The Daily is all about and even AOL might one day go down that path (Tim Armstrong admitted as much on CNN). It’s part of the shift to the Subscription Economy that’s happening across not just media, but software, cloud computing, communications, consumer services, entertainment, you name it. In just the past year, as one example, my company, Zuora, has signed over $1 billion in contracted subscription revenue.

But something very dangerous is happening. Apple is now calling the shots for the entire publishing industry’s digital strategy. Think about that for a minute. While Apple is prescient and makes great products, it’s hardly a publishing expert. Yet, Apple is setting up new rules that could bring the publishing industry to its knees. As if it weren’t already in that position.

It’s not that Apple can’t save publishers—which I don’t think it will with these financial terms. It’s that its model completely ignores the realities of the publishing business:

■The App Store and iTunes only offers one subscription pricing model. Will a single model work for the San Jose Mercury News, the Wichita Eagle and Runners World? The reality is that it’s likely going to be very different for different titles and subscribers.
■Apple has no way to bundle physical and digital goods. Do you want to give up home delivery forever? Or would you still like to get a Sunday paper every week or monthly glossy magazine along with your digital version? I bet most consumers would like some combination of both.
■With the Apple model, there’s not enough adequate ad revenue from tablet editions of magazines and newspapers. In particular, eliminating the Sunday delivery also means that local papers lose a huge advertising vehicle.
■Consumers won’t stand for one subscription through one device. People want to consume their news on whatever device they have at hand—whether it’s a Blackberry, an iPad or an Android phone. Amazon is showing us all the way with their “Kindle reader everywhere” strategy (with syncing bookmarks to boot), and Google has set a strong standard in its deal with Time Inc around Sports Illustrated subscriptions. Publishers also know that content ubiquity requires platform independence.
■As last week’s article from John Squires, former EVP for Time Inc, so rightly points out, access to customer data is truly the lifeblood of the publisher’s business model. In the Apple world, Apple is the one controlling this data.
To quote Steve Jobs himself, “A functioning media is vital to a functioning democracy.” I agree, and I think there’s a better way to use the genius of the iPad and other devices that enables publishers to control more of their destiny—and benefits everyone financially.

So what’s a publisher to do?

Take Matters Into Your Own Hands: Don’t be tempted by that juicy red apple called the iPad. You need to build your own online subscription commerce strategy, one that allows for lots of different ways to package up your content and sell it.

Not Your Father’s Subscriptions: The industry continues to see “subscriptions” in terms that are far too simplistic. Yes, consumers will never agree to switch to a full “subscription only” paywall, so you need to have flexible billing that can slice, dice and package content by the month, the article, by home delivery days, by online, and the list goes on.

Make It Easy: Provide customers single click convenience while providing a PCI-compliant payment and billing process. You need to be able to bundle, cross-sell and rapidly deploy promotions to capture more readers than you ever could through a call center.

And as for Apple? Can you redeem yourself?

Customers with Benefits: If you want that 30% cut you have to let the publishers own the subscriber relationship. Share that data and you both win. Simply giving subscribers “the option” won’t cut it.

Freedom of Choice: You know consumers want both print and digital. This isn’t music. There’s no love lost for the CD. Most consumers want to keep home delivery, and publishers want to be free to work across platforms and devices. “Control” and “closed” are completely counter to the anti-Big Brother brand.

Help Them Help You: Selling publications is not the same as marketing the latest Black Eyed Peas song. Newspapers and magazine titles will get lost in the iTunes model. Just being part of the App Store isn’t enough. You need to deliver more merchandise value for a 30% cut.

The bottom line? The Subscription Economy is here, and Apple should be applauded for offering content via subscription. Unfortunately its model just scratches the surface. In the end, publishers should think twice before taking a bite of the Apple. This current plan will do more to hurt publishers then to help them make the shift to the online world.

Canadian newspapers still generate big profits

Those death-defying newspapers

By David Olive | Sun Feb 13 2011


Newspapers are proving so resilient that the term “dying newspaper industry” will be retired in the next year or two.

Newspapers are still profitable, even in the midst of the most punishing ad drought in memory. Readership is at record levels, despite price hikes imposed by publishers. And web interlopers haven’t laid a glove on the industry’s status as society’s dominant news-gatherer.

In the latest sign of the industry’s strength, Statscan reported this week that the pretax profit margin for Canadian newspapers averaged 9.9 per cent last year. That’s down markedly from the halcyon pre-Internet, pre-ad-slump of 12.3 per cent in 2008. But it’s a long way from the extinction forecast for the industry by the most exuberant heralds of a purely digital world, a brave new world devoid of household names like the New York Times, Le Monde and metro dailies like The Toronto Star.

As recently as last year, the industry was shuddering from 2009’s stomach-churning plunge in advertising revenues, which cratered after the onset of the global financial crisis. Sam Zell, the real estate mogul who had just bought newspaper conglomerate Tribune Co., moaned that the industry was “looking at some of the worst advertising numbers in the history of the world.”

In the darkest hours, the venerable Seattle Post-Intelligencer and Denver’s Rocky Mountain News closed. Tribune and CanWest Global Communications Corp., the largest newspaper owners in the U.S. and Canada, respectively, filed for bankruptcy protection.

Yet newspapers appear poised for a bright future. To be sure, ad-revenue growth remains anaemic. And the industry has likely lost forever its lucrative franchise in classified ads, to Craigslist and other online upstarts.

But the widely anticipated “hollowing out” of newspaper readership hasn’t happened. Quite the opposite. The newspaper habit is stronger than ever, with more than three-quarters of Canadian adults, or 77 per cent, reading the print or online edition of a paper at least once a week.

Over the past five years, readership of Canada’s 95 dailies has actually increased, albeit by a modest 3.7 per cent. More than 14.7 million Canadians read a paper each week. That’s a “reach,” or portion of potential audience, that no non-traditional medium comes close to matching.

As important, Canadians are spending more time with newspapers. According to the latest, 2009-10, readership survey by NADbank, the industry group, in Canada’s top 10 markets readers are spending more than 3.8 hours a week with newspaper print editions. That’s up 2.1 per cent over the past three years.

And that at a time when publishers were raising the price of their product, enabling the industry to post a 12.9 per cent increase in circulation revenue between 2007 and 2009 to cushion a 4.9 per cent drop in ad revenues.

Meanwhile, readers are not spending close to two hours a week with the online editions of newspapers. Traditional papers are winning out in cyberspace. Retaining their status as the most trusted of news sources, with brand names dating back to 1778 in the case of the Montreal Gazette, newspapers have been able to build huge online audiences from scratch. The New York Times now claims a staggering 55 million online readers, against a weekday print circulation of less than 900,000. Online now accounts for 26 per cent of the New York Times’ total ad revenue.

Newspapers have benefited enormously from the rapid fragmentation of cyberspace.

The online world now is populated by social-networking sites, including Facebook with its 555 million members. There are some 200 million “blogs,” or personal web logs of writers on every topic from orchids to T-bill investing. There are tens of thousands of specialized newsletters, some published by the usual financial-services industry suspects, others independent, but none differing in content from their non-pixel predecessors. Not to overlook the so-called “aggregators” that merely repackage the online content of traditional media sources.

In that hyper-crowded arena, the advantage has gone to the most familiar tribunes. That would include the 164-year-old Chicago Tribune, which like almost every daily in North America has continued to earn profits through the industry’s worst hours. Indeed, industry warhorses the New York Times, Rupert Murdoch’s Wall Street Journal and even Tribune have reported profit gains in the past year.

Having not endured a crisis of this order since Gutenberg, the industry took on the appearance of a man with his hair on fire and trying to put it out with a hammer. Yet the demise of the Seattle P-I and the “Rocky” were simply a long-delayed capitulation to the one-newspaper monopoly that has characterized U.S. cities since the 1970s. And Tribune and CanWest succumbed to unsustainable, acquisition-related debt.

The “barriers to entry,” in econospeak, for launching an online publication are exceedingly minimal. Anyone with a Facebook, Blogger or Flickr account can become a publisher. Volatility is the norm, as underfunded websites are routinely abandoned.

By contrast, Star owner Torstar Corp., with close to $1.5 billion in 2009 revenues, has the resources to launch a portfolio of websites, host dozens of bloggers, and maintain a costly IT crew to run a complex digital enterprise.

Which explains why top-flight U.S. bloggers Andrew Sullivan, Felix Salmon and Eric Alterman have given up their garrets to bunk in with the venerable Atlantic, Reuters and The Nation, respectively. And why aggregators Huffington Post and The Daily Beast have sought shelter in larger and more familiar enterprises, AOL Inc. and the 77-year-old Newsweek, respectively.

In the past 12 months, shares in North America’s top10 publicly traded newspaper firms have gained an average of 20.8 per cent. And that’s before any meaningful recovery in ad revenues, or significant migration of print advertisers to online. And ahead of the New York Times’ second experiment, later this year, with trying to charge for selected online content. That’s a feat the Wall Street Journal and Financial Times have pulled off, and that Murdoch’s general-interest papers are now attempting.

Not long into the Internet’s brief history, users were complaining that “trying to get a drink from the Web is like sipping from a fire hydrant.” That growing flood of information is a boon to traditional newspapers. They alone have the expertise to quickly collect and verify staggering amounts of data and present it in reader-friendly formats.

We’ll hear soon enough about the phoenix-like rebirth of newspapers. It will be a crock, since there were no ashes to rise from. But editors will enjoy handling those reports far more than the industry obits they’ve edited these past few years.

Lennerton, Cameron Clyde

July 3, 1950 – December 14, 2010

Cam Lennerton

LENNERTON, Cameron Clyde July 3, 1950 December 14, 2010 It is with heavy hearts we announce the passing of Cam Lennerton at Royal Jubilee Hospital in the early morning hours of December 14, 2010. Cam was predeceased by his mother, Tillie; and father, Clyde. Cam leaves to mourn his loving wife, Maureen; his beloved daughters, Joanne, Dianne, and Christine; and their mother, Terry; stepsons, Nick, and Mike (Chelsea); and two grandsons, David, and Cooper. Cam spent his childhood in Winnipeg. He started working as a paperboy for the Winnipeg Free Press, eventually moving on to an apprentice stereotyper. As a young man, he started adventuring on his motorcycle, travelling across the country and as far south as the Yucatan Peninsula, where he spent many months enjoying the warm sun and surf. In later years he entertained friends and family with great stories of his many adventures travelling on his motorcycle, and in his bus. He eventually moved to Victoria and worked in the Mail Room at the Times Colonist until his early retirement due to ill health. He enjoyed sailing the Gulf Islands for the last few years in his dream sailboat, and particularly enjoyed the voyages to Princess Louisa Inlet and Desolation Sound, a lifelong dream of his. Many, many thanks to the paramedics for their heroic efforts. A Celebration of Life will be held Monday, December 20, 2:00 p.m. at First Memorial Funeral Chapel, 4725 Falaise Drive, Victoria. 612840 

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The Future of Media Gradually Coming Into Focus


by: Larry Kramer

Suddenly there are a lot of moving parts on the media landscape. And what’s really interesting is that they all seem to be moving in the same direction. 

We have old media coming toward new media: Rupert Murdoch and Steve Jobs building an IPad-only newspaper.

We have new media moving toward old media: Gawker’s Nick Denton, Newser’s Michael Wolff, Talking Points Memo and Digg all changing their look to add curation and perspective to their pages, and make them behave more like traditional media, editors and all.

We have a huge example of old and new media merging to create, well, newer media: Tina Brown riding her Daily Beast up a steep slope to take over and merge with Newsweek………………  click to read entre story