Meanwhile, Apple’s new operating system (OS 4) for iPhones and iPads, whose release is expected sometime this summer, will include the new iAd mobile advertising platform, which news outlets and other developers can use to embed personalized ads directly into their apps. It works just like Google’s AdMob service for standard Web sites, but has the same limitation as AdMob insofar as Apple, rather than publishers, retains control over ad sales and strategy. Apple plans to take a 40 percent cut of the ad revenue. And like Google, Apple will probably go after the largest, national advertising campaigns rather the locally oriented, small- and medium-sized ones that have been periodicals’ bread and butter.
It is unclear how Skiff and Next Issue Media’s advertising services will compare to iAd and AdMob. Both will surely feature some kind of revenue-sharing agreement with publishers, but again, Next Issue says the publishers will control ad sales and pricing, which is a step in the right direction for the news business. Once the infrastructure is in place, many media executives believe that paying mobile subscribers will present an attractive, captive audience to advertisers, especially given some of the hyper-targeted advertising possibilities that the devices will allow.
4 From subscription structure to advertising, there is a lot we don’t know about how the e-reader market will take shape for the news business. The answers will come only through aggressive experimentation, through trial and error. That process is well under way in Europe, and the efforts there have some lessons for the U.S. market. A Flemish paper that handed out 200 e-readers to subscribers in 2006 and measured their response found that most of them likened the experience to reading the paper product rather than the Web site, and 45 percent said they would consider buying an e-reader. NRC Handelsblad, the Dutch newspaper, expanded delivery of its digital edition to a variety of devices after an exclusive launch on the iRex iLiad reader in 2008 drew “substantial sales.” In other words, people like these things and will pay to get news on them.
Next Issue Media has also done consumer research and found a high level of interest in e-readers and digital news, especially once people have seen a demonstration. Nonetheless, in the U.S., most media companies have so far proceeded with caution. “What I see is a lot of watching, waiting, and one-off initiatives,” says Forrester’s Sarah Rotman Epps.
There are signs—beyond Next Issue, Skiff, and Plastic Logic—that this may be changing. MediaNews Group, which owns fifty-four small- to large-sized papers across the country (plus over 200 niche magazines), is, like Next Issue Media, trying to create the back-end infrastructure so that its properties can distribute content across the range of digital platforms (it also has deals with both Skiff and Que). And three years ago, the Reynolds Institute at the University of Missouri launched the Digital Publishing Alliance, comprised of more than thirty news outlets, technology companies, and media organizations, which is researching the mobile market and developing best practices and standards for e-readers and other mobile devices. (For an interview with DPA’s Roger Fidler, go to www.cjr.org/behind_the_news/fidler_q_and_a.php.)
But given the state of the economy and the general beaten-down mood in the American news business, it would be naïve to suggest that a full-blown e-reader revolution is at hand. Some four months before an Audit Bureau of Circulations survey*—which found a high level of interest in e-reader editions among media executives—for instance, in March 2009, the Digital Advisory Committee of the Newspaper Association of America—a body that includes senior digital media executives from member outlets—held a first-of-its-kind meeting with e-reader manufacturers in order to acquaint participants with some of the emerging products.