Wetpaint CEO Ben Elowitz on the Future of Digital Media
Microsoft unveiled its first preview of the Windows 8 user interface at the All Things D D9 conference last week. It was a thrill to see it. And my first reaction was that it looks more like media than software.
But upon further reflection, it’s more than just Microsoft. It’s been the theme of the recent wave of operating system overhauls on mobile devices, which are now taking root on the desktop, too. It’s happened on the iPad, on Palm/HP’s WebOS, and now finally on Windows’ mainstream interface. User experiences are showing more design heritage from print and media, and less from software roots.
It’s an important marker. Going back decades to the beginning of the personal computing revolution, software was written by programmers, who were doing their best to make machine instructions controllable by end users. It was an inside-out approach: starting with the microprocessor’s constraints and translating them into displays that were at least interpretable by end-users.
Now, programmers have the luxury of fast processors, sophisticated graphics systems, and advanced libraries – not to mention the development of the new field of user experience. So, instead of starting with microprocessors and asking users to adapt, we are seeing design go the other way: we are starting with real people (consumers) and making the software conform to them.
When we do that, the “a-ha” to me is that the consumer-first approach is a media approach, not a software approach. It doesn’t start with the machine; it starts with the audience. And that’s exactly what the expertise of media is. The result culminated in Steve Sinofsky’s demo of a complete overhaul of Windows 8’s interface, that looks so much like a media property, and not so much like any desktop software interface that we are used to. Indeed, the “desktop” metaphor of previous generations of Mac, PC, and Unix interfaces is blown up entirely, replaced by a start screen with so many content tiles, each formatted richly and compellingly in a glossy, high-production-values sort of way
The future of software is looking a lot like media.
There are plenty of naysayers who point out that Rupert Murdoch’s new initiative The Daily — the first major-media publication created expressly for tablet computers like the iPad — is an expensive and risky bet.
But here are four reasons why Rupert is right:
1) Rupert knows the ad model of publishing is doomed. Print and broadcast command the heftiest premiums, and both are at risk of price and volume erosion as consumers cut their ties to offline media. In the digital environment, online advertising is highly commoditized: the explosion of content publishers is outpacing the shift in demand, while technologies target audience ever more efficiently. Advertisers have plentiful ways to reach a consumer.
For his part, Rupert knows that his offline publications are at risk from decreasing ad revenues, and web-advertising models are hardly an adequate solution. Whether it’s out of desperation or vision, Rupert is willing to break through — and lose money in the short term — in pursuit of a better model.
2) Rupert can afford a long-shot bet — and can’t afford not to make one. He’s leveraging his considerable influence by putting something out there that can be truly cutting-edge. A $30 million investment may seem ridiculous for a new publication — and it is. But even with that hefty price tag, this is an insignificant bet relative to the industry and consumer behavior Rupert is trying to move. Throwing money at this is OK, because the possibilities are so great; if The Daily succeeds — or even provides the key insights so his next venture can succeed — it will be worth billions.
3) Rupert has influence to change consumer and industry behavior. He beat his drum loudly last year to get paywalls on the agendas of other publishers’ boardrooms. And it’s worked; just look at The New York Times’ pending move to a metered system. This is what I love about Rupert: Unlike other leaders in publishing, he uses his voice — and his treasury — to influence the industry and consumer behavior. He’s all about trying to get to a more successful model.
4) Rupert has a friend in Steve. Steve Jobs has a lot riding on this, too. Is Apple (NSDQ: AAPL) in the device business or the media business? To date, the lion’s share of its revenue and growth has come from the sales of ever-more-advanced devices. But as device categories mature, Jobs knows growth will get harder to come by: iPod sales grew at just 2% for Apple in 2010, as the venerable device line nears saturation.
In a world where mobile devices are ubiquitous and fiercely competitive, the fat margins of media revenue-share arrangements can powerfully fuel profits. But even more attractive is the tremendous expanse of the pool: Apple’s media revenues are currently around $5 billion — a paltry sum compared to the global media and entertainment market that PricewaterhouseCoopers pegs at $1.3 trillion.
Apple has already proven that in its remarkably successful closed media ecosystem, the company’s store can earn an estimated 30% of the top-line for media sales — without having to produce any media. This happens when Apple creates compelling devices, exciting user-experience platforms, and fresh marketplaces. For Steve, the upside here is huge. And so he should be happy to tie that upside with anyone who is as crazy-aggressive as he is about getting legions of consumers in the habit of paying for media. And that list has just one name on it: Rupert Murdoch.
A fresh start and a new division — with a new concept and a new design for a new platform — is the only way someone like Rupert can have the freedom he needs to reinvent media for a new age. And only Rupert can do this — without falling into the ruts of compatibility with existing businesses or holdover assumptions from old models.
Kudos to Mr. Murdoch for summoning up the courage, and putting up the money.
1) The multi-functional capability. Buy a Kindle and you get… a reader. Another dedicated device to carry. Buy an iPad, and you get a whole new companion that can do pretty much anything. Games, movies, browsing, documents, and more—all in one. And zillions of iPhone apps. It’s sooooo much more than a reader, it’s a whole-life device.
2) The screen. Full color, multi-touch screen, gestures, and more. It’s a pleasure to look at it – and we all can rely on Steve Jobs’ aesthetics to know that it’s a pleasure to hold as well.
3) The compatibility. iPad supports ePub out of the box, overcoming publishers’ resistance to having to support a proprietary format such as Kindle’s; and creating compatibility with books sold through a leading standard format through any channel. (Something tells me Amazon will be making an announcement about ePub support real soon…)
4) The iBooks store. Apple has captured the magic of shopping. Once again, whereas Amazon does great with the functional needs of buying a book, Apple goes beyond to create an experience.
5) The experience. The Kindle provides a good functional experience for readers—in a very Bezosian way, it meets all our needs. But Apple’s creation goes beyond, to make the experience fun and cool. You can swipe through pages on an iPad. On the Kindle, you have to dutifully click a button.
6) The economics. Publishers have been deeply concerned about price erosion with Amazon’s $9.99 pricing—and have been up in arms over Amazon’s 70% revenue share take. Though Amazon has reversed the revenue share (to match Apple’s reported offer at 30%), it would require publishers to cut prices and offer deep discounts. Considering the threat the publishing industry is under, the last thing that publishers want in a time of transition is to have their revenues crammed down further by Jeff Bezos.
7) The apps. In a digital age, a book is (finally!) becoming more than just words on a page. But the Kindle has been slow to recognize this. With the iPad, out of the gate publishers can create whole experiences. Want to create something unique in the market to draw consumers? Publishers can go beyond e-books, and create an app using one of the world’s most popular SDK platforms.
8) The marketplace. Apple’s iBook and App Store marketplaces will instantly be a must-attend venue for publishers. The anticipated sales of the iPad will mean exposure to so many more consumers than Kindle; and Apple already has 125 million consumer store accounts with 12 billion products already downloaded. Amazon won’t even release the number of Kindles sold, because the number of consumers buying its device pales next to Apple’s reach.
9) The price. For $10 more than a Kindle DX, consumers get an incredible ebook reader, and so much more: a device that they can use for, well, pretty much anything. The options, consumer experience, and flexibility for that $10 are a no-brainer.
10) The Apple factor (a.k.a. “sexy”). Let’s face it, Apple is a brand people want to be affiliated with. It has a cool factor. Even those of us who are smart enough to know better still fall in love with Apple products, and carry them with pride. Amazon just doesn’t have that. As Jason Kottke says, “the iPad makes the Kindle look like it’s from the 1980’s”.
Apple has upped the game for Amazon. Jeff Bezos and his team better start a clean sheet of design if they want Kindle to catch up again and play as a leader with consumers.
It’s clear that Amazon is already scared: witness their recent moves in the last few days running up to Apple’s announcement. Just this month, they’ve announced an app frameworkand a new royalty structure to be more attractive to publishers – and both moves are clearly defensive catch-up plays to respond to the threat of the iPad. Amazon is even trying to win love by giving away free Kindles to their best customers.
But the best plan for Amazon isn’t to try to buy customers or try to match Apple’s approach. Rather, they’ll need to re-think their consumer experience from start to finish. They’ve done a great job so far of digitizing books, but now if they want to compete with Steve Jobs’ inventiveness, they’ll have to step up to be a must-have device in consumers’ digital lives. Of course, they can also just surrender and continue to sell books through their existing iPhone app, which should be compatible with the iPad like all the other apps in the App Store.