Though Slate is (in)famous for their whole contrary ‘tude, scribe-maven Jack Shafer is pretty astute about the beat that he covers. In a recent column where he tried to tackle the problem that’s driving the news industry nuts (‘how do you get online users to pay for content?’), as he looked for some answers, citing some places that had good models for it. One of them was Apple, who’s now the numero uno music retailer. I took issue with using that as an example that the news trade could follow and had this e-mail conversation with him.
JG: “Interesting column but you leave out a few things about Apple. Jobs and company make their real money off of selling iPods and not the music, where they get razor-thin profits after the record companies take out their cut. The iPods are the important component because they’re a sleek, sexy device that has status, which is why the Zune couldn’t beat it out, even if they were making a superior product. If an enterprising publication wanted to follow that model, they’d have to come up with their own hot digital toy that captivates consumers and that might not be the most productive use of their time right now.”
JS: “How much do you think they’ve made off the 6 billion tunes they’ve sold through the store?”
JG: “I’ve seen pie-charts which detail how much goes to labels, publishers and Apple (which say that Apple gets the short end) but doing a quick search, this is what I came up with :http://forums.appleinsider.com/showthread.php?threadid=73926”
JS: “I’ll take 10 percent of $6 billion any time. That seems like a great profit!”
JG: “Right but the point isn’t the amount but the percentage. Newspapers can’t hope to get that kind of total profit and thus, they’d get pretty skimpy money from a similar model, assuming that it would work for them.”
JS: “10 percent is an excellent margin for just selling something somebody else manufactured. Grocery stores get like 1 percent of sales.”
JG: “There’s this too from Business Week: ‘But the iTunes metaphor cannot be extended to news. Music fans have long paid for small chunks of artists’ workthink singles or ringtones. There is no such analogue for news or print products. And for over 10 years companies that have tried to set up online micropayment services for content sites have gone bust.’”
Later, I also found this column by the Washington Post’s Howard Kurtz who sounded like he agreed with me that iTunes isn’t a good model for newspapers, even if former Time editor Walter Isaacson seemed to think so:
“People keep songs for a lifetime; news stories are ephemeral. And why would readers pay anything for, say, a Los Angeles Times piece on Hollywood when they can read Tinseltown news on Yahoo, Google, AOL, Huffington Post, Drudge and a thousand other Web sites? (Yes, most of these sites recycle and pontificate on the original reporting done by newspapers, but that distinction is lost on many folks.)”
So who’s right? Shafer and Isaacson or Kurtz/Business Week?