CEO Guide: Steve Jobs & The Future of the Media Industry
The launch of the Apple iPad was tad underwhelming for a lot of analysts. Nevertheless, for anyone who’s interested in the continuing saga of the disruption of the media industry, this was an important chapter in the evolution of what the new media industry will look like. Nobody is better fit to be the principle protagonist of this new chapter than Steve Jobs, successful CEO of a digital electronics (aka, computer) firm and former CEO of a media firm (Pixar).
Apple has all the freedom it wants in creating interesting new devices and software. Nevertheless, when it comes to dealing with book publishers, studios and the like, things can seem a bit, shall we say, confining. These companies are scared to death of a further squeeze on margins and having their valuable content swimming around on the Internet for free.
With the iPad, Jobs has launched yet another device for viewing all types of content including, now, books. As more and more millions of users consume media on one or more of these devices, Jobs is creating a gated distribution system where he can experiment with different pricing schemes. As more and more publishers, studios and music companies come on board and accept this state of affairs, it becomes harder for the remaining companies to hold out.
I’m sure some of these hold outs correctly understand the incredible power that could potential be in the hands of one company (Apple) and shudder. However, as Jobs continues to add more consumers and more devices, these companies will find it more and more difficult to stay away from his massive distribution system. The Apple media consumption ecosystem will only become more compelling as it’s pace of digital innovation accelerates.
It certainly is an amazing thing to watch. While many executives understand from a theoretical level that things are changing (particularly in the media industry), Jobs understands what he needs to do to take advantage of what’s happening. While many focus on specific nuances of each beautifully designed gadget that he launches, they risk losing the forest from the trees.
A major transformation is taking place before our eyes. Content creation in the form of books, newspapers, movies, and music as a business has been bound to specific distribution businesses for many years. Sometimes they reside in the same legal entity (e.g., newspapers) and sometimes have ties to well-established distribution partners and Jobs is accelerating the transformation of these distribution channels (in many cases physical channels) into one digital bit stream.
In the process, the actual content will certainly be transformed. Just as music companies are able to provide added content through iTunes; book publishers, newspapers and others will be able to provide added value through these new channels. There will be many players vying for a role in this new ecosystem, but Steve Jobs, with a growing minion of subscribers to his media consumption platform (e.g., iTunes, iBook, Apps, etc.) will be a difficult force for the any media company to ignore.
I agree that the Ipad is Apples attempt to add more channels to its content distribution platform. But I do not agree that Apple has been the visionary changing the way we consume written content and especially books. This trend has been set by Amazon with its Kindle, including a closed book distribution platform. It has to be seen if consumers are willing to accept the Ipad as an ebook reader. In the end the Ipad tries to do everything but in its current shape does not do anything great. For every task you are able to accomplish on an Ipad there are better specialized solutions. The kindle is the better ebook reader for instance. In the first revision I can see many people looking at the ipad in the shelf wondering “what the h*** do I do with that thing?”. It's too clumsy to carried around and too limited to replace a small laptop. Maybe I am wrong but I do not see a market for it in the first revision.
I believe that Apple was surprised by Amazon's success and they had to react. Amazon is Apple's toughest competitor in distributing and controlling content online. They might have been afraid that Amazon starts to build on the success of the Kindle to enter new markets. Don't forget that Amazon has its own MP3 store. Amazon will soon publish a “multimedia” Kindle. So what did Apple do to react fast? They built a big ipod touch with all its limitations, just to have a competing product fast. I feel the ipad has been rushed to market and is not a well thought product.
Excellent comments, Thomas. Amazingly, eventhough I agree with almost every point you make (although in some points I might cut Apple a little more of a break), I think that Apple's content strategy (including eBooks) is stronger in the mid to long term. To me it's reminscint of Netflix's strategy where they started with physically sending DVDs through the mail (and still do) in order to amass the users for the time when they could flip the switch on their online video service (which they did).
I agree that this initial device is clunky and the reading experience isn't as polished as the Kindle, but that piece of the puzzle gets solved over time. As that product is itterated, a thiner more flexible iPAD with an excellent reading experience can arrive that offers all types of content. You make a great point about hte MP3 store, but that part of the equation, in my opinion, is much more firmly established in Apple's case with the exception of eBook which was just launched. All this makes it more possible that Apple will be the first one to strike deals with big Media companies, which is no easy matter. Even some book publishers are investing in developing for the iPad though that platform just came out.
I'll place my bet on the following: in two or three years time, I'd bet that the iPad is a lot less clumsy and has a much wider selection of all types of content (including games). If that comes to pass, I'd rather lug something that offers me all that an individual device for just books.