eXtensions - Sunday 31 March 2019
Cassandra - Weekend Review: Distribution is not a Charity (Amended)
By Graham K. Rogers
This week Apple announced its anticipated TV and News services that will have a limited rollout later in the year. Although 100 countries are cited for Apple TV (Irish Independent), I am not expecting that users here will see massive changes. An update to the Apple TV app on my iPad this week showed no change to what was already being offered. As for News, this has been so slow to appear with only a couple of countries able to use the app currently. Canada was added recently. A few news organisations are know to have signed up, but the larger ones may prefer to go it alone for now, with many objecting to Apple's fees for joining the dots.
Since the 1970s, commentators like Alvin Toffler (Future Shock, The Third Wave) have argued that the new power is not just from money, land, guns (Ho-Chi Minh), but also from ownership of content. That ownership has seen some weakening by the very system that should have strengthened it: the Internet.
While almost open distribution allowed a fast and wide spread of information, the organizations that had been the gatekeepers: newspapers, television were under attack. First print sales fell and advertising revenue dropped. Effective monetization of this type of news output has yet to stabilize, except perhaps with the almost total control of Bloomberg, and the Financial Times: both creating essential intelligence for a relatively small but important number of consumers; and controlling the distribution tightly.
Television, long regarded as a license to print money, also found itself in a weakening position as viewer numbers began to drop. This was due in part to the availability of online sources, such as YouTube (random viewing); but later as direct feeds via the internet grew in number and strength, viewers tended to sign up for them rather than for traditional cable or satellite services. This is in part because the viewer can control the time and duration of delivery.
Some of the sources now online had been available through earlier, more traditional subscription services (e.g. Disney, HBO) so these seem less affected. They own the content and have adapted to new means of distribution and may be available either by direct links or through other services, depending on the country.
In London, the wholesalers' vans would take newspapers from the printers to the depots where they would be sorted and then delivered in bulk to retail outlets. With both the road and the rail/road systems, hundreds of people were employed both in sorting and administratively, and the wholesalers would provide warehouses and delivery vans. None of this was free.
Wholesalers would charge title owners a percentage of the cover price for handling distribution. Thousands of retail outlets were likewise signed up to the various wholesalers throughout the country, but the relationships were not set in concrete and retailers would change. A normal fee to the newspapers and other publishers for the distribution (and the infrastructure) was 25%, although this might vary. The retailers would likewise be charged a fee of something like 10% of the cover price plus some administration costs. Apple charges an end-to-end 30%.
With the iTunes Store and the Mac App Store, a sophisticated infrastructure was created both to allow developers to sell their products to users; and to build in protections for the users. Instead of roads, cars and railways, the internet and computers are now the distribution infrastructure. The owners of the railway lines and the stations always had the upper hand, but would have invested much in the development. While there are alternatives, these may be considerably less attractive than the more direct line to the user. When Apple can provide a direct conduit to millions of end users that have bought its products, that in itself has a value that may be difficult to calculate when using a 99c app as comparison.
Image link to Fortune
Unfortunately, Apple is too often US-centric, but the worldwide (or near-worldwide) audience is the only one worth considering if the job is going to be done properly. This is not likely to be a story of overnight success. Apple can afford to take its time and has the luxury of several billion dollars in the bank, but a look at some examples - like the newspapers, traditional television companies, and perhaps United Artists, killed by a single movie (Heavens Gate) - might suggest that this is not a bottomless pit.
iMac Pro - Image courtesy of Apple
iPad Pro - Image courtesy of Apple
I will be writing more on this as belatedly I discovered that there is now an Apple TV app - that makes all the difference.
Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs. After 3 years writing a column in the Life supplement, he is now no longer associated with the Bangkok Post. He can be followed on Twitter (@extensions_th)
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