Posted by The iPad had a good week.
No, I’m not talking about the swirling rumors of the iPad 2. Apple let the world know that beyond posting a record profit of six billion dollars in the last three months of 2010 (that’s $26.74 billion in revenue for those keeping score at home), they also shipped 7.33 million iPads. This brings them close to 15 million iPads sold in 2010 (which blew away many industry analysts estimated). IDC (the research firm) says that approximately 17 million tablets were shipped in 2010 and that the iPad represented nearly ninety percent of tablets shipped in the third quarter of 2010 (more on that here: Apple Posts Record Profit; iPad Sales Surpass Projections).
When something becomes mass, it begins to act like mass media.
Many people see modern technology and the content that plays on it, and think that it will all look and act like Social Media. It may… it may not. Some will act this way, while others many not. There’s no doubt that in its current format, the iPad is a device driven by consumption. In it’s current form and function, creating content (beyond simple text) is not that easy. That being said, reading (Blogs, newspapers, books, magazines), general Web surfing, watching movies, looking at pictures and listening to audio content is pure joy. Heavy consumption like this coupled with the number of tablets being gobbled up by consumers is creating an entirely new kind of mass media consumption.
The iPad is also driven by advertising.
As much as I would (personally) like to see a new form of Marketing emerge as these new media channels get created, it seems like old habits do, indeed, die hard (as the saying goes). On Monday, MediaPost had a news item titled, iPad Owners Prefer Ad-Supported Content To Paid. Here’s the gist of it:
"A large majority of iPad owners would prefer free, ad-supported media to content they have to pay for, according to a new survey by Knowledge Networks, first reported on the Ad Age Web site. But by the same token, they’re not exactly happy about advertising. Specifically, Knowledge Networks found that 86% of iPad owners would be willing to see an ad in return for free access to content, including TV shows and articles from magazines and newspapers. That compares with just 13% who said they would be willing to pay for this type of content, if they already have access to it elsewhere. At the same time, 78% said advertising ‘takes away from their enjoyment of their iPad.’ Assuming this group includes all 13% who said they prefer paid content, this would seem to suggest that about 65% of iPad owners would grudgingly accept advertising – even though they don’t actually like it – rather than reach for their wallets."
So, we hate advertising, but we hate paying for content more?
Things have to change. Marketers often talk about mobile as the "third screen" (the first being TV and the second being the computer screen)… and it turns out they (and I include myself in this bunch) got it all wrong. The iPad (and tablets like it) are the new mass media because it makes everything one screen. While we currently get different kinds of enjoyment out of out sixty-inch plasma TVs than we do from our smartphone screens, it’s not a far stretch to see how the iPad can quickly become the hub for all of our screen activity. The size, the weight, the clarity, the portability and the connectivity. Much like you flick to see the next picture on your iPad today, you’ll probably be making a similar gesture to flick a movie or TV show on to some other kind of screen on your home wall in the not-to-distant future. All of this innovation, portability and content-on-demand will need to find a new kind of revenue model.
It’s not going to be free… and it can’t only be ad-supported. I don’t know what the answer will be, but I’m willing to hack away at this with you in the hopes of figuring it out.
Never another podcast episode or article 
Nice article! As far as I’m concerned, I agree with this sentence: «we hate advertising, but we hate paying for content more?»
Finding free stuff on internet has become so easy nowadays that people think everything should be free, even if we all know that this is impossible.
Apple did a smart move by introducing the iAd concept in the App Store. But even if consumers are overwhelmed by advertising on mobiles, how many of us click on the links?
I believe «a large majority of iPad owners would prefer free, ad-supported media to content they have to pay for»…since they still have access to the content…freely!
Therefore, Jason Fried’s concept of «Freemium» takes all its meaning.
Hacking is (y)our business……and business is good!
Thanks for sharing your thoughts on this Mitch. Often its this style of your post that sticks with me for weeks. So appreciate that.
Maybe we’ll see the day when TV shows, movies etc. become the commercial. I don’t mean simple product placement in a shot but something completely organic within the art itself. Or maybe with all the TiVo commercial skipping will see broadcaster forced to deleiver the messages like they do in soccer while the show story unfolds.
Regardless of how there going to do it, it will be interesting I’m sure.
I see it now. You get how and a Kinect type system detects your enterance and the selling begins. TV turns on if it’s dad, computer if it’s mom and before anything starts up a few commercial from our friends at the cable company who have been supply your with FREE cable so they can deliver the messages to you with your blessing.
You never know.
Thanks for the post Mitch
I pay for content on my iPad: Kindle app, iTunes music/movies/tv shows, and even Zinio, although their content still leaves a bit to desired. (National Geographic is pretty cool though.)
There are ways to sell content, I’m not sure why content providers aren’t experimenting more. There are alternatives to a pay wall on your web site.
Is there honestly no electronic edition of FastCompany? When I search Zinio for “Entrepreneur” I get the December 2010 Philippines edition? Really?
Hi Mitch,
Yet another great post! Keep writing, as your posts are the best way to start my day 🙂 I usually don’t leave a comment, but as I was reading yesterday an article about a study that you and your audience might be interesting (it also relates to this post and more!), I figured I have to do something in return.
The Global ‘Digital Life’ research project is done by TNS. The largest ever global research project into people’s online activities and behaviour. They build a website demonstrating some of the research results, which are already interesting enough to pay the website a visit. I have e-mailed the UK PR lady, but I’m not sure yet whether they would share the full report with me as a professional and student.
http://www.discoverdigitallife.com
Let me know if you guys thought this was interesting!
Cheerio, Sacha.
Mitch
You once again nailed it.
So, we hate advertising, but we hate paying for content more?
Yes.
Ads are the lesser of two evils. How many of use are willing to pony up to avoid annoying ads?
No easy answer to this conundrum. People will often pay – witness the amount spent in the Apple app store.
The issue is often perceived value or scarcity. If we can get something similar for free, we might pay if there is a better, simpler, faster, easier alternative. Take magazines on the iPad for example. Wired sold huge volumes of their initial editions, but the numbers are falling. IMHO its because while we want it, we want it at the same or a lower price than a subcription for the dead tree edition.
Its not as simple as ad vs paid. The traditional model for magazines, newspapers and TV is ad based. Part of the equation is how intrusive the ads are, how interesting and entertaining the ads are, and how easy it is to overlook the ads. And lets face it, if someone doesn’t want to see your ad or is not interested in your product – its a wasted view anyway other than for the fleeting brand recognition.
Hi Mitch,
I’d read these figures slightly different.
1. while the numbers seem impressive at first, compared to the global sales of PCs, smartphones, laptops etc, it’s pretty modest.
so we need to keep this in perspective…
2. the market demographic (affluent, professionals etc) that buy the iPad are not representative of all user groups. Actually, it’s a little ‘exclusive’ when you consider the price tag.
though other tablets may change this…
which means that these customers MAY prefer to buy content as they have more disposable income compared to say, college students, who are big into the free model.
It’s a big early to say but if Apple holds the same price point, I don’t see it gaining critical mass in the way that say PCs have.
Who knows? Maybe it will…
Regards,
Ivan
Why is payment related to the device? Different payment models co-exist on television, why not on the tablet?
I completely agree with the statement we hate ads, but hate paying for content more. I can be “bothered” by a 15-second ad here and there. I love content, I really do, but would I pay for it online? I know we do this with newspapers (we subscribe to them), with TV shows (we pay cable), with books (we buy them), but something about paying for content on an as-you-go basis online (well, we do pay Internet fees, but that’s another story) that doesn’t sit well with many. Why? Because we can find it elsewhere for free, or we can find something similar for free. Case in point: bloggers. If bloggers started asking for subscriptions, some readers would pay, and many others would find another blogger with similar views.
Awesome post Mitch!
because TV is ubiquitous whereas iPads are limited to a much smaller segment.
I believe as you do that new technologies like the iPad really need a new way of advertising over them, but I also see how standard ways still work strong anyway.
It’s not common for a new piece of technology to be the driving force of such an innovation movement, but this has happened in the past as well with the iPhone back in 2007. See how that changed the mobile market and what the iPad and similar products are doing in this very moment.
About paid content, there’s to say that the AppStore model changed this game as well, with micro-transactions and specialized applications tailored for a user’s specific needs, opposed to titanic suites of programs, and not just for mobile devices (for example I wouldn’t be surprised if Adobe changed their business model too in the near future).
So, we hate advertising, but we hate paying for content more?
You’ve said it for me Mitch! Thank You!
I’m not sure we hate paying for content. Netflix is THE content distribution model for the three (or four) screens future. The geniun in the model, I think, that it kind of tricks you into thinking it’s free. I’m paying Netflix a small monthly fee for the right to rent two DVDs at any one time. But the tremendous value I get from Netflix is the ability to stream their library on my computer, iPad, iPhone and Xbox. And if feels like I’m getting a major freebie! Their streaming content is in its infancy so there isn’t that much choice in good content right now- but I’m hoping that all changes very soon (and their prices stay the same).
… meant “genius” not “genium.”
Great post. I agree that the iPad represents all of the elements of the problem space that MSM needs to address. But that doesn’t mean that iPad is THE solution: it just happens to represent a platform on which all of the problems available are represented well. You can “solve” the iPad and still not address the problem space as a whole on other platforms. The Second Web is the confluence of all media on all platforms on all networks in all formats in all languages in all time delivery time-frames using all human senses and all extra-human sensors. The iPad is a great place to get your hands around The Second Web but it’s far from synonymous with the space as a whole.