Of Tea Leaves and Tablets

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When tablet-sized rumors take hold, the wondering and speculation begin. While others ponder the physical characteristics of such a slice of Apple magic, my mind wanders to intriguing ideas of What It May All Mean. Those ideas include:

True or false: iPod is to music industry as Tablet is to publishing

You don't need to work in my business to know that publishing is in a world of hurt. Newspapers and magazines are cutting staff or closing down due to declining readerships and the loss of advertisers. Book publishers, also losing readers, bank on high-priced blockbusters, franchise publications, and dashed-off tell-all books, and take fewer risks with unknown authors.

It doesn't take a lot of imagination to see parallels between the music industry pre-iPod and publishing today. Before the iPod, the music industry was in disarray--CD sales plummeting due to piracy (and lack of interest in the artists of the day) and executives who thought prosecution of peer-to-peer sites would cram the genie back in the bottle.

Publishers are looking for a way forward and a device that handles e-publication smartly--from discovery to subscription to delivery to presentation--and makes reading cool again may be that way. The Kindle and Nook aren't it. Like MP3 players that existed before the iPod, they're only an indication that it can be done. One of The Tablet's goals may be to demonstrate how it's done.

How desirous is Apple for control?

Our own Jason Snell admirably addressed this question in Does Apple Really Want to Sell Magazines? In it he sees two scenarios. In the first, Apple offers printed matter directly from the iTunes Store, just as it now offers music, movies, TV shows, audiobooks, and iPhone apps. In the second, Apple sells the devices necessary to run third-party apps that read (and possibly obtain) that printed matter.

He hopes for the latter, and perhaps publishers do as well. But, from Apple's perspective, there's a lot to be said for the former, particularly when you consider advertising's influence on the model.

As revealed by the Wall Street Journal's Kara Swisher, Apple has bought Quattro Wireless, a mobile advertising company. What does Apple need with a company that pushes online ads? Suppose Apple representatives waltz into the offices of A Major Metropolitan Newspaper and offer this deal:

"We'd like to make an arrangement where we publish a version of your fine newspaper on an unspecified number of devices, which may or may not exist. Give it to us in a particular format and we'll take care of the conversion. For that we'll take a small percentage of the subscription price.

"You're welcome to place your own ads but, as you know, your advertising isn't so hot these days. You might consider having us place ads for you. We have a couple of advantages in this regard. That Genius thing we do with music and movies? That's scalable to other areas--app purchases and a financial thing we can't talk about--and would allow us to nicely target the ads placed in your pages.

"Also, some of our devices know where they are--in downtown Chicago next to a couple of dozen retailers who would love to reach your readers, for example. No promises, of course, but we think you can understand the power of location, targeted advertising, and the ability for mobile devices to make purchases."

Up to this point Apple has proffered the idea that it takes it profits from hardware--iPods and iPhones--and that the iTunes and App Stores exist simply to feed its devices. Given the amount of media and the number of applications purchased from Apple's Stores (3 billion app downloads), one has to think that the Stores are also a serious profit center. With the addition of advertising revenue, Apple moves beyond a company that looks to hardware for the bulk of its earnings.

How controlling can Apple be?

Apple has taken some heat over the App Store's approval process. Its point of view seems to be that it's the company's store, it's the company's iPhone and iPod touch, and Apple can do what it likes with them. Over on the iTunes side of the Store things are far looser. Other than banning porn, the iTunes Store has it all (or, at least, as much as it's allowed to have).

Which path would published content take? Were Apple devices to become a significant way to obtain printed material, how deeply does Apple want to get involved in content? Can it be the arbiter of reading matter--allowing Publication X but not Publication Y because of political, religious, or social points of view? (Or even ban the next unauthorized Steve Jobs biography?) Or does it straddle the App and iTunes Stores' philosophies and state that it's just another store and carries the best material for its customers, thus skirting the content issue?

And what effect will Apple's involvement have on publishers and editors? There's the obvious issue of creating for the format--designing stories and art that will look good (and be manageable from the reader's perspective) on the device. There's also the smaller issue of how publications write about Apple. Suppose a portion of that unflattering Steve Jobs biography is considered for an upcoming issue of Vanity Fair.

Questions, questions...

I'm as anxious as the next person to see the tablet that Apple unveils. But once the initial buzz of discovering how it operates and interacts wears off, I look forward to seeing how the world changes because of it.

This story, "Of Tea Leaves and Tablets" was originally published by Macworld.

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