Imagine you’re publishing a magazine in a fictional island where there’s a chain of shops but just one chain of shops that sells magazines. Now you’re up against it there really because you’ve only got that one provider to sell your magazine and they’ll drive a hard bargain with you in getting a rate to distribute your product. Now suppose another dozen chains of stores open selling magazines, well then you’re laughing, right, because you’ve got lots of choice and competition, you can play them off against each other and you’ll get a good rate which is good for you as a magazine publisher.
Now, imagine you’re a magazine publisher selling magazines through the shops in a non-fictional island and suddenly along comes a lot of new technology that allow you to sell your magazine online, through mobile phones, all sorts of different ways. Is that good for you? Well you’d think it’s like opening up a whole load of new shops, you’d think it’s going to make it much easier for you to sell your magazine which makes it good for people who have magazines to sell, right? But it doesn’t feel that way to the magazine publishers. They’re terrified of iPads and internet and mobile phone distribution of their products. And it’s worth asking yourself why are they scared of something that apparently makes their product so much more available?
Well there are several answers. One is, of course, it does make their product more available but it makes everyone else’s product more available too, and it makes it much easier in fact for other people to produce competing product. So it opens up the competitive landscape enormously and suddenly magazine publishers don’t know where they are. That’s problem one. Problem two is piracy. That the new technologies just makes it harder to levy a price than it was in the old technology where there was a magazine sitting on a rack and consequently you might not get any money for your product even though you’d like to be able to charge for it.
And then there’s a third problem. It’s what one might call the iTunes problem. It’s that if people choose to buy your product via a single supplier in all these new forms of technology, if there is an equivalent of iTunes for selling magazines, well that really takes the magazine publisher back to that fictional world of there being one distributor to sell the product. Suddenly they’re in a world where they don’t get a very good price, where that one distributor, the magazine iTunes, well where it can say ‘Look, we’re going to give you money for selling your magazine but we’re going to keep half the money we make from it.’ And then suddenly your product isn’t as profitable as you thought.
And potentially what might worry the magazines and publishers is that, well the internet has a tendency towards tipping towards one dominant provider in a lot of these kinds of areas, one payment system, one big auction website, one big bookselling website. It just often turns out that way. If it does then, even though the technology promises a lot for magazine publishers, it does provide a very genuine threat to them.
That’s my opinion, you can join the debate with the Open University.