iPad to rescue media from penny-pinching Web surfers?

New York periodical publishers see iPad, the iPhone and other portable devices as a new source of revenue

Magazines and newspapers seeing their revenue imperiled by the Web's freewheeling ways may be finding hope in the iPad, the iPhone and other new media-friendly mobile devices, to judge by a number of panels at the TechCrunch Disrupt conference, held this week in New York.

"A lot of people have suggested that the iPad is a new and significant inflection point for the publishing industry," said David Carr, a New York Times columnist who moderated one panel on the subject. "I think it's a case of when you are a drowning man, everything looks like a lifesaver."

Whether the optimism is warranted has been hotly debated at the conference. During another panel, Michael Wolf, the founder and managing director of consulting firm Activate, put the iPad in perspective: Apple is expected to sell 5 million of these handheld devices this year, but the Web has an audience of more than 3 billion.

Still, the iPad looks to be only the first in what will be a tsunami of portable media-consumption devices, angel investor Ron Conway noted during Carr's panel. He said we may see "tens of millions" of such devices, if not more, in the years to come.

"This is a device that has a fantastic user interface and publishers will adapt the content for it, just like the music industry gravitated to iTunes. This delivers a lot better user model than 'free,'" Conway said, referring to the perception of many Web surfers that content online should be free.

In other words, selling apps for iPads, the iPhone and other devices may prove to be more profitable than selling ads around free content and shore up declining print sales.

One company that's bullish on the iPad is the New York-based media empire Condé Nast. On Thursday, the company released an iPad-ready app version of its Wired digital culture magazine. The company claims it has sold 24,000 copies of the app, which goes for US$5 per issue, in the first day.

"We're eight weeks into the iPad experience, so it is admittedly very early, but what we're seeing is exciting," said Sarah Chubb, president of Condé Nast Digital, during one of the panels. "Sales of the iPad were faster and bigger than we expected."

Condé Nast owns a wide array of magazines, such as Vanity Fair, the New Yorker and GQ, but has also dipped into electronic media as well, by purchasing the popular recipe-sharing site Epicurious and ReddIt. The company is attempting to cross-pollinate the best of the online world with the best of print, Chubb said.

The Web, however, has its limits for the publication empire. There, online ads provide the major source of income, but online ad rates do not come close to matching those in print. "It's much harder to make serious money without enormous scale online," Chubb said.

For Condé Nast, the iPad opens the possibility of luring in new readers as well as further serving the already loyal readership.

Chubb described the iPad as an addictive device, noting that the GQ app has had about 250,000 sessions, or the number of times someone ran the app on a device. About 60 percent of those sessions were on the iPad, and the remaining 40 percent were on iPhones. With the Vanity Fair app, released earlier this month, the company reports about 35,000 sessions, about 90 percent of which were from the iPad.

"What we are seeing is young guys who never bought GQ [buying] the iPad [app] and experiencing and enjoying it," she said.

Others point to a number of limitations to the app approach to selling digital magazines and newspapers, particularly the way it fragments the large audience that the Web brings together.

Avner Ronen, CEO of Internet television producer Boxee, pointed out that social-networking sites such as Facebook and Twitter allow users to post Web links that others can easily click on, but no such mechanism exists for sharing content in apps. "Even as you gain more control over the experience, you risk losing the most lucrative connection with the audience, with the social Web," he said.

This fractured audience will also prove to be a challenge for media company developers as well, given all the different platforms that will proliferate, especially when iPad competitors hit the market.

"If you are a small business, can you still be a competitor in this environment? You'll have to be developing for all these different platforms, whereas a couple of years ago you were developing for the Web," said Eric Hippeau, CEO of online news provider The Huffington Post.

Another issue that needs to be worked out is the relationship between the device makers, such as Apple, and the media companies.

Carr noted that for media companies, the relationships they build with customers are the core of their businesses. That they have an understanding of customer preferences, not to mention their credit card numbers, allows them to sell additional products to these constituencies.

As things are currently set up, Apple stands between the media company and the customer. With iPad purchases, Apple does provide some customer information, "but not as much as I have on the Web," Hippeau said, speaking about Huffington Post's own iPad app.

"If Apple wants to be a big partner to media organizations, [it] will have to learn that media organizations live off this data, and will have to open up a lot more," Hippeau said.

New York Mayor Michael Bloomberg, who is also the founder and an owner of the Bloomberg financial news service, made a surprise appearance at the conference, in part to pitch New York City as a place to start a business. But he also talked a bit about the media's current financial problems, and warned against the idea that new devices like the iPad alone will save media companies.

"I'd argue a lot of media has gone a long way from what the public wants to receive," he said. As an example of a publication that has kept in touch with its readership and thrived, he pointed to the continued success of The Economist. "The magazines that are in trouble are in trouble because they are writing the same stuff that everybody else is," he said.

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