With all the buzz about the iPad, some are saying Apple’s latest device is yet another nail in the coffin for the newspaper industry, taking away a viable marketing channel. However, I believe we will see a newspaper industry that evolves with the times and will continue to provide us a means to reach customers.
It’s true, some newspapers will disappear that has to do more with business models than distribution. The iPad changes the distribution model, but here’s the catch: their are large demographics that won’t be using an iPad (or similar device) to get their news.
Catching a subway in New York City? See that guy selling The Daily News for 25 cents? The Daily News doesn’t make any money on that sale. I’ve seen days where they are giving it away for free. The cost of getting the news is extremely cheap relative to the iPad. Even when Apple eventually lowers the price of the iPad, months or years from now, for some the cost of entry will be too high. Or it just doesn’t fit their lifestyle. What demographic does this pertain to? Actually quite a few. Hourly workers paid at or near minimum wage, the elderly, people who are living on a fixed income, in fact anyone who doesn’t fit what Forrest Research calls “the elite upper class of smartphone customers”. This is obviously a study that focuses on iPhone users, but it’s hard to imagine the demographics being largely different than the iPad’s.
Getting back to newspapers, businesses will still need to reach an audience. There are very few businesses that cater to the elite upper class exclusively. The other businesses will need to reach a very large demographic where they spend their time.
With this large group of consumers not using the iPad, or the iPhone and other smart devices, there is still room for newspapers that have the right combination of efficient distribution (ie. free weekly at the coffee shop) and advertising rates that are attractive, yet profitable.