article

How the iPad Could Kill Newspapers

Apple's latest device has been heralded as a savior for print journalism. But if it drives readers even further away from old-fashioned newsprint, it could inadvertently send revenues into freefall.

02.13.10 6:47 PM ET

Publishers of newspapers and magazines who see potential for great reading experiences in Apple’s forthcoming iPad should be careful what they wish for. The device, if sufficiently successful, could be the next major blow to print publishing—possibly a fatal blow.

To be sure, the potential gain from the iPad is, no doubt, real. Take The New York Times, the publisher of the most-viewed newspaper or magazine Web site anywhere. Today, the Times offers a site that is comprehensive, creative, rich, and deep, constantly updated, and taking great advantage of many of the new tools and techniques the Web offers. But the Times site, however well executed, remains a Web site—a “sit forward” experience, highly imperfect for narrative reading, and nearly impossible to use in a manner that yields a sense of completion, a feeling of having read it all the way through, that can be a critical attribute of something to which you “subscribe.”

Online advertising revenue lags so far behind print revenue that it seems destined to never catch up.

The folks at the Times recognize this, of course, and have responded with at least two interesting and innovative products. The first of these is Times Reader, a downloadable software application that takes the notion of a computer-delivered edition of the daily newspaper to new heights. It is beautifully and intuitively laid out, easy on the eyes, and fairly comprehensive in its rendering of the contents of the print publication. (The important exceptions here come in the absence of the statistical packages in business and sports and the listings in arts and culture.) On days when the print paper fails to be delivered on time, Times Reader is a passable substitute. But it remains a “sit forward” experience as well, and is no more portable than a laptop. Times Reader does have a few advertising positions, but at least as I receive it, all are used for house advertising.

The big limitation of Times Reader, of course, is that the heart of its content is updated just once a day. That brings us to Times Skimmer, a new Web-based product. Its display and organization is similar to Times Reader, but it is updated in nearly real time and includes not just the print sections but also Times blogs, many of them quite valuable. (The statistics and listings remain missing.) There is a bit more advertising than on Times Reader. But Times Skimmer is offered as part of the Web site, in effect an alternative interface. In fact, when you click on an article, you are taken to the Web site itself, with the Skimmer becoming just a frame, eliminating many of the design advantages introduced with Times Reader. The “sit forward” and portability issues remain.

Which brings us to the potential of the iPad. It solves the portability problem (at least in places with connectivity, which is, increasingly, everywhere). And it solves the “sit forward” problem by offering a reading experience that it far more variable, natural, and comfortable. Times Skimmer on an iPad, particularly with the content displayed in Times Reader rather than Web site format, would be an excellent substitute for the print paper.

And therein lies the problem. Some have noted that it could make sense, from the perspective of circulation economics, to induce newspaper readers to switch from print to iPad. That well may be true: The savings on circulation marketing, printing, and delivery costs would be significant. Such inducements could take the form of discounts on iPad purchases. The Times has actually experimented with an analogous program using Times Reader and a Samsung netbook, offering $100 off the hardware to new non-print subscribers to the software.

But newspaper economics are not limited to circulation economics. In fact, most newspaper revenue comes from advertising. And one of the most important realities about the state of newspapering these days is that online advertising revenue, on a per reader or per impression or any other relevant basis, lags so far behind print revenue that it seems destined to never catch up—never to come even close.

Thus, it has been clear, for perhaps three to five years, that any sudden conversion of all print readers to Web readers, while greatly reducing costs, would reduce revenue even more, deepening losses at unprofitable papers and throwing those that remain profitable into losses—losses that would likely be impossible to reverse except through huge further expense cuts, especially in newsrooms. The downward spiral in product quality would be accelerated, likely leading to fewer readers and more cuts.

Unfortunately, nothing about the iPad, as wonderful as it looks and feels, holds out the promise of avoiding this problem. It is hard to imagine how ads delivered on an iPad could garner a price three, four, or five times that for today’s online ads. But that is what would be required for a profitable transition.

On the circulation side, things look better, but not better enough. iPhone apps, the analogy on which charging for content on an iPad will likely be based, are amazingly inexpensive; many powerful apps are free, and $10 a year buys robust services—with Apple keeping a big cut for itself. It may be easier to charge iPad subscribers than it has been on the Web, but charging them even a decent fraction of what the Times, for instance, charges print subscribers—more than $600 per year after introductory discounts have expired—seems like a pipe dream.

One report from The New York Times earnings call this week noted that expectations for the iPad as a new platform for its content among analysts seem muted. But it could be far worse than that. Having early adopters of the iPad look at your content seems like a dream come true. But having them like it enough to substitute it for your print product would be a nightmare.

Richard J. Tofel is the general manager of ProPublica and the author of Restless Genius: Barney Kilgore, The Wall Street Journal, and the Invention of Modern Journalism.