Top 10 Reasons The Apple iPad Will Put Amazon’s Kindle Out of Business

This article originally appeared as a guest post on Techcrunch

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.

Brightcove “TV Everywhere” Is A Road To Nowhere

Video technology company Brightcove has now proposed the latest idea to monetize network TV content online:  creating paywalls on each major TV network’s own site.  Building on the cable industry’s TV Everywhere idea, they’ve tilted it toward “TV Here” at the content owners’ websites — all, of course, powered by Brightcove technology.set my tv free

This is a crafty move, as it appeals to the TV content owners’ goals of increasing their relationship with the consumer. And on the surface it might make sense to the networks since Brightcove is in a behind-the-scenes technology role, solving a real potential problem for the content providers — authentication — real quickly.

But this idea probably won’t go anywhere.

The reason is clear:  This is a case where the business proposition for the content owner is strong, but there’s not enough in it for the consumer. Let’s face it – consumers don’t have a relationship with the content owners. They don’t have accounts and passwords; they don’t have email subscriptions; and they don’t have affinity to the network.

What do consumers like in TV? They like their shows, and they like lots and lots of choice — as demonstrated by the more than 153 hours per month that the average American watches; and the 14 to 15 pages YouTube viewers look at on a daily basis in their browser. Consumers like to consume – and they like to consume a lot of variety.

But it’s just a small number of consumers that wants to establish a deep relationship with the networks — and that means this TV Here strategy won’t get the masses registering.

Here at Wetpaint, we run some of the largest and most successful communities for a variety of network shows, with many of these sites sponsored by major networks, such as Fox, HBO, and Showtime. On many of these sites, tens of thousands of registered users have signed up for accounts so they can chat with each other, receive email updates, and comment on and create content about the show they love. And while that is significant, these tens of thousands pale in comparison to the hundreds of thousands who come each month to passively consume the content that is there — without registering.

The irony is that that just a couple percent of any given audience are interested enough to give their email address to a typical show online, while an impressive half of all households are willing to reach into their wallets to pay a cable TV bill each month.

The difference is the experience. That cable subscription fee is a direct enabler one of the most important entertainment experiences we have: sitting on the sofa with the remote control. But individual network-driven access portals to particular shows? That’s the opposite of the control experience that consumers crave — it would be the online equivalent of asking consumers to buy a different remote control for every channel they want to watch. What a hassle.

That’s why this would be the wrong model for the networks: it doesn’t serve the experience that consumers want. And further, it undermines the whole promise of what TV Everywhere could do to create a destination with the access and choice that consumers want.

In this new product offering, it’s clear see what Brightcove gets out of it: it’s an appealing and opportunistic move for the technology provider to win some stopgap business by playing to every content owner’s dream of being a destination. It’s an easy seduction for the networks to imagine building that relationship directly right on their own sites.

But it is fraught. By ignoring the consumer experience, they’re bound to be creating a destination that nobody comes to — a “TV Nowhere” in the end.

There’s More Than One Way To Monetize Journalism

Charles Pelton, the former GM of Conferences and Events at the Washington Post, wrote a piece for PaidContent this week raising opportunities for journalists to create new revenue streams beyond traditional advertising.  His message is important, and gives hope to journalists by reframing our opportunity to redefine the publishing industry.Number of jobs in newspaper sector (Silicon Alley Insider)

Journalists are understandably fearful of the shakiness of the industry right now:  15,000 employees in the newspaper sector lost their jobs last year, and Silicon Alley Insider just published this dramatic chart of the day showing the steep cliff we are on.

But while Pelton mourns the loss of jobs, he also offers solutions, and they align with where the industry needs to head:

The point is to take the journalist’s knowledge, and package and present analysis in new, interesting and useful ways for paying audiences. In this case, there’s a subset of readers (IT vendors, for instance) who would pay a premium for insight about technology use by government….  Could a film critic or arts editor moderate a readers’ discussion—live or virtual, about a new movie—something actually sponsored by AMC Theaters? You bet!

Indeed, product development should be part of a journalist’s job. Journalists should be working side by side with their business-side colleagues to create and monetize products—and should be evaluated, in part, on their ability to do just that.

These are great examples.  Underneath them, they illustrate three things that need to happen for the media world to rise again to a new, profitable model:

  • Beyond just content. To draw audiences and create new revenues, publishers need to go beyond just creating traditional content.  The idea of creating events, research insights, forums, and more is a great way to get outside the box.
  • Role. Instead of looking at themselves as a cost center — just a journalist on the payroll — to build a new model, we need everyone to align themselves with the goals of financial success — which is vital to long-term success of both the art and the commerce of journalism.
  • Premium experiences. What is notable about these vehicles are that they create exclusive, premium experiences for their audiences — instead of just more words in the same old vehicles.  Those premium experiences can drive premium revenues.

These are not new themes.   Top journalists like Kara Swisher and Walt Mossberg have been incredibly successful extending their skills and brands from journalism to a broader role in industry, running the Wall Street Journal’s D: All Things Digital conference since 2003.   Another role model, Thomas Friedman of the New York Times has leveraged his journalism role into multiple books that have had a huge commercial impact.  These journalists demonstrate that it can be done – while preserving top-tier journalistic integrity.

It’s not a brand new idea, but what we need now is to see it become a widespread idea.  It’s time for those who write to go beyond the creation of words to the creation of results.

Yahoo Bets on Video

Last week, Yahoo announced that it will be working with Ben Silverman and his new firm Electus to develop original video content.  Notably, this video content will be designed from the get go to appeal to advertisers.

For Yahoo, this is a smart move that demonstrates they are willing to double down on the short-form video programming category.  And with good reason:

  • Video is the fastest growing segment of advertising demand. Many publishers are finding more demand for video than supply, and more importantly, for Yahoo to have a full package to meet advertisers’ needs and secure the best premium campaign opportunities, they’ll need plenty of video inventory.
  • The CPMs are high – although pricing for video ads depends on the format and placing, the average CPM is over 10x that of normal banners.
  • Because premium programmed video is still a relatively immature category, Yahoo (or others) may be able to stake a claim with various short-form video programs.  (The major networks and Hulu are covering their traditional broadcast long-form shows; while YouTube is great the great unwashed of 100,000,000 videos — a small pecentage of which are valuable.  But the middle is open territory.)
  • Yahoo is reporting success with programs like Prime Time in No Time (which Yahoo claims to be the most watched original internet program in history) and Yahoo Sports Minute.  Great to see them build on successful experiments with more.

Yahoo is smart to leave the reservation for a new effort like this:  after all, the key to the success of any new program will be establishing them as destinations with consumers.

If these are just another node in the Yahoo network, promoted from the home page, they will fail to provide any strategic value.  To succeed, Yahoo will need to temporarily ignore the pulls of the various existing Yahoo content properties in order to create a new one with its own audience.

And if freedom is the requirement, what better way to embrace it than to turn to an outside agency, which won’t have any of the overt or subtle pressures that an internal group will.  Plus, it lets Yahoo be more bold and risk-share with a partner, again a plus to advance Yahoo’s strategy.

The big watchout to Yahoo:  they had better do as well appealing to consumers as to advertisers.  To be a financial viable initiative, they’ll not only need the big dollars of brand sponsorships, but to build and sustain an audience.  Otherwise, it will end up looking great in the design and business reviews, but never really getting traction, like Google Video which failed with its premium content while YouTube flourished; and MySpace’s initial efforts to create premium sponsorable content channels in 2007.

Gawker Gets It: Aligned Incentives

Gawker Media has for years frustrated the stalwarts of journalism by paying its writers (gasp!) for the results theycreate.  Now, founder Nick Denton is going one step further to move his staff toward economic success.

With a new compensation program rolled out this week, as described in a memo from Nick published by The Awl, Gawker is updating its compensation to pay for audience growth, not just pageviews.

Why is he doing it?  Because another unique visitor is worth so much more than another pageview from someone you’ve seen before.  While this is true for all publishers, it’s especially true in Gawker’s case:

About a year ago, Gawker ditched ad networks in favor of displaying “Gawker Artists” in unsold inventory.  Chris Batty, head of sales at Gawker, explained that the program was “for the purpose of better engaging their readers, helping artists and maybe even themselves in the process — by draining the network swamp and getting hard to work on creating online marketing experiences valuable enough to cover the cost of original content creation.”

So Gawker’s price umbrella is standing tall; but without remnant, they are running short on fill.  Samples over various days in the last few weeks indicate that four out of five page views on Gawker properties are unmonetized, either with Gawker artist banners or no ads at all — a much lower fill rate than most publishers target.  (In research, we were hard pressed to hit a frequency over 2, no matter how much we clicked around the Gawker family of sites.)

The problem, of course, is the frequency cap.  And Nick has the right workaround:  he is focusing on growing his audience, not just his intensity of usage.

That will pay off.  Already, by focusing on premium advertisers like Blackberry and Cisco, Batty and his team are still able to make several times more money than a model where every impression is given to a network.  And the more he grows his audience – and gives his writers the right incentives to do so – the more premium advertisers he can attract.  So Gawker now has aligned incentives, motivating writers to draw in unique visitors creates an inventory pool that lends itself perfectly to high-dollar, frequency capped deals with top advertisers.

And as a second factor, it indicates real smarts about building the Gawker business to be stronger.  While it’s easy to game extra pageviews with flashy content features that draw clicks and layout changes that split content onto multiple pages, these often make the user experience worse rather than better.  By focusing on high value ad buys and featuring artists in unsold spaces, Gawker encourages behaviors that build great customer experience – which not only attract new audience members, but create an impression that draws them back time after time.

Contrast Gawker’s focus and reporting with old media:  where those who write the content scarcely hear a word about how it performed.

I have one friend who contributes to the New York Times from time to time.  I asked her what kind of performance data they provide to help her tune her writing.  Her answer:  “None at all.”  Shame!

In an industry whose executives are always complaining about the failing economics, what’s so bad about increasing the economic incentives?