Behind the Numbers: New Tablet World Order

Will the iPad change things as much as you think?

While the reviews are mixed for Apple's new iPad, one thing is certain - the device and its tablet brethren have sent the publishing business into a fast scramble. Everyone from book to magazine to newspaper publishers has been trying to figure out how to participate in the new tablet world order. Specifically, they want to know whether a subscription or ad model will work best on these handheld devices.

The answer: Consumer buying habits won't change much.

According to a recent report from eMarketer, the availability of tablets is unlikely to influence our inclination to pay for content. Consumers have already demonstrated their willingness to spend only on online subscriptions for targeted publications like The Wall Street Journal, The Economist and The Financial Times.

But a regional paper? A general interest magazine? They'll have a tougher road on tablets, and their path to success, if they pave it, will likely be lined with ads. Yep. Here we are again back at the same spot - advertising as the business model for most types of content.

That's because most consumers still just don't want to pay for online news, eMarketer found in a recent report. So they probably aren't looking for a new way to view magazines or newspapers - they either just want them to be free or they want the content to be targeted like it is in the publications that have done well with subscription models.

While consumers do say they value news content, they've also become accustomed to getting most news for free. "When it comes to paying out-of-pocket for that content, most U.S. consumers would take a pass," says Paul Verna, the author of the eMarketer report.

Citing a recent Nielsen study, he points out that only 36 percent of consumers surveyed said they had paid for or would pay for an Internet-only news source. Other studies have placed the number even lower, with a Harris Poll saying only 23 percent of Internet users would pay for online news.

Tablets - no matter how pretty they are - are unlikely to be saviors of the print business.

These figures - along with the relative success of online subscriptions for targeted national and international publications and the relative failure of online subscriptions for general interest publications - also seem to indicate that most magazines and newspapers will need to make their money on tablets the old-fashioned way: ads.

Of course, the point is all moot if manufacturers can't sell the devices. But that doesn't seem to be a problem. In the first week alone, Apple sold about 450,000 iPads, a strong early showing.

The Yankee Group predicts the ereader market in the United States will reach 6 million units in 2010, rising to 19.2 million units in 2013.

Who'll reap the biggest benefits?

Book publishers will enjoy some of the gravy. eMarketer says ebook sales hit $16 million last year, up from $26 million in 2006, and growth is forecast to continue.

But the device makers will be the ones rolling in the dough, including Google, which is rumored to be developing a tablet too. Credit Suisse predicts Amazon's share of the ebook market will drop from its current 90 percent to 35 percent over the next five years,with the market splitting evenly between those three giants.
Indeed, those Internet giants are winning everything these days.

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