How Will the iPad Shape the Magazine Market?

JP Morgan estimates that 48 million tablets will be sold this year, and 80 million next year (with a value of $35 billion). The chances are that Apple will still be shipping a majority of the tablets sold next year (we still have not seen a credible competitor in the market), and certainly dominating the market this year and next. Apple has a very strong position.

Apple may not be the only game in town for much longer, but the lead is so significant and the tablet charge so powerful (denting the sales predicted for desktop, laptop and notebook PCs) that we predict that all major consumer magazine publishers will bury their concerns (real though they are) and succeed in offering most of their magazines as apps through iTunes. Since Apple’s iTunes will have an audience of perhaps 100 million tablet users, spending perhaps $5-20 per month on apps, by the end of 2012 they will be stupid not to do this. Since Apple’s dominance is unlikely to last (at some point competitive platforms will emerge for iTunes) many publishers will view their Apple embrace as strategic and temporary. But they will embrace, they will engage, and some features of the iTunes/iPad eco-system will shape the digital magazine market in significant and predictable ways:

  1. The market will be very global. iTunes is more global and more widely accepted internationally than most other digital marketplaces (Amazon, Netflix, Rhapsody, Spotify not to mention Hulu or Nook). In consequence magazines that appear as digital apps will find that they have a broader digital audience than they have been able to attract in print. This will be a particularly potent effect for strong niche titles (think: cycling, knitting, poetry, chess, mountaineering, green and music magazines).
  2. The globalisation of the market will also benefit magazines in all other major languages. Since iTunes with its 18 languages is already more multilingual than all the other digital marketplaces mentioned above.
  3. Price will matter. But the pricing situation in iTunes will be ameliorated by Apple’s introduction of a system of recurring subscription payments for digital content. iTunes has been hugely more successful at monetising apps at the level of 99c or $1.99 than at $5.99 or $9.99. It is much easier to sell an app in iTunes at 99c, than at $9.99. It has simply been unfeasible to sell annual magazine subscriptions through iTunes at ‘normal’ subscription prices, because iTunes customers do not like spending $19.99 that way. iTunes is frictionless and easy for users just so long as the prices keep their head down. The great advantage for a magazine or periodical publisher is that the Apple system will make it easy to sell weekly, monthly or quarterly subs at prices which are ‘bearable’ to the lightly gliding fingers on the iPad touch interface. By offering customers renewable subscriptions Apple is leveraging itself out of the rather cheap ‘sweet spot’ in which most app sales have been stuck.
  4. The frequency of magazines may also be subtly shaped by the way we interact with our iPads. Weekly magazines seem to work well with the iPad — is it because we tend to have device in our hands fairly regularly? Partly because of the pricing mechanism (weekly subs can be pitched lower than monthly subs), I suspect that weekly magazines will have a surprising comparative advantage over monthly magazines. The digital weekly on a tablet that you use intensively at weekends may be a stronger vehicle than the print weekly which arrives a day late and has in recent decades looked increasingly challenged as distribution and print costs rise.
  5. The extraordinary strength of magazine brands will play to the strengths of iTunes. Magazines are known by their titles (usually) and their brands are associated with their titles, their covers and their graphic style. All this can work well for magazine publishers and they will rapidly realise that the huge benefits that come from being securely branded and cherished in iTunes even compensates to some extent for the pain of the Apple 30% levy on all subscriptions sold through iTunes.
  6. Because magazine publishers are the guardian and creators of the brands associated with their magazines they will be especially sensitive and active in ensuring that their brands are well represented on tablet platforms, so whilst they will all embrace the iPad they will all be looking very anxiously in the direction of an alternative and complementary digital technology.
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