Content wants to be Digital

We live in a world in which content is increasingly digital. Consumers purchase music from Apple's ITunes and consume it on their IPods; they read and view the news on web sites like cnn.com, nytimes.com and slate.com; they read books on devices like the Amazon Kindle and Sony Reader and watch video on HuLu and YouTube. Yet articles abound with knowledgeable authors commenting on whether online will replace print. Most of these articles miss the point. It's not about online versus print, it's about content becoming digital. It's no longer a question of if, it's just a question of when...

The obvious content sources that consumers want to be digital and will eventually be digital include:

• Music
• Newspapers and Magazines
• Books (including textbooks)
• Photos and other Art
  
• Video, Movies and Television
• Games
  

Why do we want these content types to be digital?

• Digital content is portable.
• Digital content can be searchable. (it can be classified and categorized)
• Digital content is accessible.
  
• Digital content can be archived.

Portability
Some may argue that content in non-digital forms is also portable. The Sony Walkman existed for CDs long before the Apple IPod. Books, newspapers and magazines have been carried around for as long as they have existed. The difference is that digital content removes the size and weight limits that exist with traditional media. An MP3 player can carry 10,000 songs, while it would be physically impossible for someone to carry more than a few dozen CDs. A backpack can carry a dozen textbooks, but the size and weight of the books quickly becomes a limiting factor. An e-book on the other hand, can carry hundreds of books on a device that weighs only a few ounces. (A point that was driven home on a recent two week beach vacation when I no longer needed a separate duffel bag for books. The Kindle had all the reading I'd need for the trip.)

Searchability
It's relatively difficult to search and access content in non-digital form. Newspapers and magazines in non-digital form are almost impossible to "search" for a story of interest. Books in a physical library can at best be searched by category, author, title, etc. Books that have been digitized and stored only can be searched by any word or phrase in the book. Think of the vast wealth of human knowledge that can now be searched instantaneously due to digitization and internet search engines. Now imagine if every book, newspaper, television program or magazine ever created were available for searching and accessing online.

Accessibility
Content is more valuable when it can be accessed whenever and wherever it is needed. Physical encyclopedias were quickly replaced by internet encyclopedias because the information could be accessed and updated more efficiently and effectively in digital form. Sites like Hulu.com have demonstrated the easy with which television content can be accessed and viewed online (including commercials to pay for the content). Devices like the IPhone, Droid, Blackberry and IPad demonstrate how digital content can be accessed, stored and viewed from mobile devices anywhere and at any time. It's now possible to be sitting on a beach on a remote Greek Isle (due to cellular coverage) and search for content, purchase it and download it for instant viewing or reading.

Archiving
Physical content is difficult to archive and retrieve. How many of us have a favorite magazine subscription (e.g. Rolling Stone, Conde Nast Traveler, Cooking Light) that we store in boxes in our basement or attic? The expectation is that at some point in the future, we may want to refer to the content when we have a specific need. I've saved dozens of Conde Nast Traveler magazines with the hope that the next time I visit far away place, I will sort through them to find relevant articles (e.g. the coast of Spain). Of course, what really happens is that when planning the trip to Spain, I'll search a variety of online sites for content before I'd ever flip through years of physical magazines. The content online is searchable, has been categorized, can be printed or copied to my laptop or mobile phone for travel. It's also far easier to make copies of a digital archive for secure storage in multiple locations. A fire would destroy all my physical archives in minutes, while my digital archives would be secure in an offsite safe.

What's next?
It should be obvious that in many forms each of these content types are already digital. CD's have almost completely been replaced by music downloads, and an In-Stat forecast predicts that the e-book market will be more than $9 billion in 2013 (and that was before the 2009 holiday season and the January 2010 Ipad announcement). In addition, video game sales accounted for more than $19 billion in 2009 (source). It should be obvious that the future for content is digital.

If we can make the assumption that digital content delivery will replace physical content in the not too distant future, what should content generating companies and individuals be doing to prepare for it. In addition, what needs to happen to make the digital future a reality for each of these content types. The answers to these questions must include analysis of the hardware and software for displaying/using digital content as well as a look at how digital content will change the business models for publishers. We'll also look at the big question of when digital may replace physical content for each of the media types. These questions and the answers will be the subject of our next article...

Ipad: Is it the ultimate publishing tool?

Does the Apple Ipad change the game for newspaper and magazine publishers?

More than two years ago, when the Amazon Kindle first launched, I wrote an article about the evolution of e-readers that was necessary to make then great devices for newspaper and magazine publishers. The Kindle (and other similar "e-paper" e-readers) is a "good enough" device for reading books, but it has some severe limitations for newspaper and magazine readers. With the recent announcement about the Apple Ipad, now is a good time to revisit what is needed for publishers on an e-reader.

In the original article, we highlighted several limitations the then current generation of e-readers (e.g. Kindle, Sony Reader, etc.).

• Lack of touch screen navigation
• Lack of advertising in publications (e.g. Amazon Kindle)
• Lack of color and multi-media for advertising (e.g. Flash or video)
• Control of the subscriber
  
• Battery life when wireless is on

The recently announced Ipad appears to address each of these items in some way.

The first question that I'm sometimes asked is "Why is touch screen navigation so important for newspaper and magazine reading on an e-reader?" Reading a book is a very linear process. The reader starts on Page 1, then reads Page 2, Page 3, Page 4, etc. The process of reading a newspaper or magazine tends to be very non-linear. The reader may read an article from the front page or cover that catches their eye, then jump to another section (e.g. Comics, Gossip, Advice column, Business, etc.), then they will jump back to the front section and so on... Touch screen navigation works very well for publications in which the reader is jumping around from section to section or article to article. This is a capability that next generation e-readers like the Sony Reader and Apple Ipad provide with touch screen navigation.

Advertising is the lifeblood of traditional newspaper and magazine publishing. In some cases, advertising accounts for 80% of revenue, with subscriptions and single-copy purchases providing the remainder. For this reason, the Amazon Kindle model with no advertising simply doesn't work long-term for publishers. It appears that this will not be a limitation of the Ipad. This will be key for publisher's success with e-readers and may ultimately force Amazon to change their model for publishers. Advertising on e-readers may also be a mixed blessing for publishers in that it will deliver the enhanced tracking (e.g. click-thru and click to purchase) that advertisers increasingly expect and demand, but may mirror online advertising results that show lower than desired click-thru rates that ultimately result in lower ad revenue for publishers.

The first generation e-readers have used "e-paper" technology that is limited to fairly low resolution black and white text and images. E-paper has a relatively slow refresh rate that precludes multi-media and video. Advertisers are accustomed to color in traditional print media and multi-media (e.g. Flash, animated GIFs) in online advertising. A e-reader that has color ads, multi-media ads and the ability to click on an ad and be delivered to the advertiser's web site is considerably more valuable for advertisers and ultimately for publishers. The Ipad has a high resolution color screen that is capable of displaying multi-media and can link to web sites either through Wi-Fi or the optional 3G cellular. (Unfortunately, the 3G model and associated costs may ultimately be a problem for publishers. More on that later...)

Apple's decision to restrict Adobe Flash on the Ipad seems like a short sighted one that has more to do with corporate animosity between Apple and Adobe than it does with technology. Adobe like to tout the statistic that Flash is available on 99% of Internet enabled desktops and increasingly on mobile devices as well, including Blackberries, Google Android and Windows Mobile. It is ultimately in the best interest of publishers and advertisers for Adobe Flash to be supported on the Ipad and similar devices.

The first generation Kindle had very poor battery life when the wireless capability was turned on. My first generation Kindle battery lasted less than two hours (even after a battery replacement) when the wireless was turned on and in use. Amazon made firmware improvements in November 2009 that was designed to almost double (to 7 days) the battery life of the Kindle 2 and Kindle DX (but not the original Kindle). In order for publishers to deliver advertising with clickable links to live web sites, the e-reader devices must be able to leave wireless turned on without unreasonably draining the battery. The Apple announcement indicates that the Ipad will have a 10 hour battery life. Of course, device manufacturers have a history of inflating battery life claims, so we'll have to wait and see real world results.

One significant downside of the Amazon Kindle model for publishers is that Amazon completely controls the subscriber. While Amazon now provides subscriber information to publishers, Amazon has had a very restrictive agreement about what publishers can do with the information. Amazon has also takes approximately 70% of the revenue publishers receive from subscriptions on the Kindle. While this sounds ridiculous on the surface, it might actually be a viable model if publisher could advertise on the Kindle and retained all the profits from the advertising in their publications. In the absence of advertising revenue, the Kindle model simply isn't a long-term viable one for newspaper and magazine publishers. It's interesting to note that Apple's App Store model is exactly the opposite of Amazon, in that Apple receives 30% of the revenue from the sale of an application, while the publisher receives 70%. This has proved to be a highly successful model for both Apple and application developers.

The bottom line is that the Ipad has great potential for newspaper and magazine publishers. It's a device that delivers many of the capabilities that were missing in the first generation e-readers. If newspaper and magazine publishers are ahead of the curve, they will all be developing Ipad applications that leverage the capabilities of the device to deliver their content to consumers with a good navigation interface, and rich media advertising. Paper is ultimately a very inefficient content delivery mechanism for publishers that will be replaced with digital delivery. The only question is when...

Unfortunately, there are some problems with the Ipad for publishers that are likely prevent a widespread adoption. Most of these are related to the wireless capabilities (e.g. Wi-Fi and 3G) for content delivery. In one of our future posts, we'll talk about what these problems are and what publishers should be doing now to address them.