Apple has been quietly taking over the Internet. Just when we thought that nothing could stop Google, here comes Apple with a very credible strategy to become the Microsoft of the 2.0 era – at least in the consumer space. Apple has cleverly combined the appeal of their popular devices with the one thing people will continue to spend money on – content. As more and more things that can be digital are becoming digital, content is one valuable commodity. Apple or perhaps Steve Jobs understands this and continues coming up with ideas about what to make you want to spend your money on: music, movies, games, applications and now even e-books.
So, what’s next for Apple? What other types of content can Steve Jobs realistically make us want to pay for? Well, there are multiple content types that have been digitized without an apparent monetization model: newspapers, magazines, radio, maps, classified ads, etc. These are the candidates for Apple’s next move. However, Apple requires a couple of ingredients for the model to be successful: the content has to be valuable, protected by copyrights and threatened by piracy.
To monetize copyrighted digital content that is too easy to copy illegally, Apple has built a complete vertical stack based on a closed system. You want the cool device and you need content to use it. The content comes from Apple’s own iTunes store, it is managed by Apple’s iTunes application, and it is delivered in formats controlled by Apple (and not by Adobe). This is the only effective way to fight content piracy.
Many of the not yet monetized content types fit the bill. The newspapers and magazines have been fighting commoditization of their content for years with no success. The radio industry has been also in a continued decline, although the temporary success of Sirius radio suggests that people are willing to pay for good quality streamed content. And yet, the world will hardly become a place with no news, no magazine articles and no radio.
We can expect that as more newspapers, magazines, and radio stations go bust, the remaining, strongest content providers will accumulate enough negotiation power to change the rules. They will likely embrace the closed vertical stack and find a way to monetize their content in the same way Hollywood did (or was forced to do). In other words, Apple is likely to team up with outfits such as Bloomberg, Reuters, Associated Press, Newswire, Newscorp, Turner, and others to start selling their content – likely repackaged, personalized and with a dose of social interactions. High quality, personalized news and editorials delivered to your iPad for a fee - and you will pay it and think that it’s awesome.
This will not be the same as when Wall Street Journal tries to charge you for a subscription today. That’s a losing battle – offering the same content package to everyone when all that info is available for free anyway. Reading news on a laptop screen is boring compared to the pre-packaged apps available for the iPad. It will also not be the same as what AOL tried to do by purchasing Time Warner back in 2001 – that was an attempt to control the content creation which is not what Apple does. Apple will resell the content via content apps tailored to their devices and let the creators compete among themselves.
My prediction is that Apple will continue to eat away Google’s attempt to make all the information available to everyone for free (well, for giving up privacy). Apple’s strategy is to lock the information in a vertical stack and charge you for every bit. And news, editorial content, and streamed media are most likely their next move.