Richard Martin Blog: The Coming Tablet Media Revolution

Hard on the heels of the news that online video site Hulu, which is planning an IPO for next year, projects its 2010 revenue at north of $240 million (according to GigaOm), come reports that The Wall Street Journal has released a new mobile app optimized for Android-based tablet computers – and unavailable on the iPad. These two items are related in that, while old media executives are busy trying to accommodate themselves to the realities of new digital vehicles, nothing compares to the wave that’s set to hit them once the dozens of new tablets in the works reach the market over the next 12 months.

I’m in some ways a prime target customer for the next wave of tablet computers. While I carry a company-supplied BlackBerry (unfortunately), I do not suffer from iPhone envy, and I’m nowhere near leaving my laptop at home when I travel: Taking interview notes and filing stories from the road demands a full-size screen and keyboard. I do, however, plan to buy a tablet computer in the next year, less to use as a primary communications/social networking device than to manage my media – books, music, magazines and video.

Earlier this week I took the three-and-a-half-hour, Denver-Washington D.C. flight, twice – there and back in less than 36 hours. On the way out, on Sunday, I enjoyed a live NFL game thanks to the DirecTV seat-back service (which, because Virgo Publishing had bought a full-fare ticket, was free), which along with the novel I was reading, made the flight zip past. On the way back I caught the first half of Monday Night Football. If I were traveling on a “discounted" ticket, the service would have cost $6 for each leg.

Not so costly, you say. But consider, for a moment, what I’ll do in a year or two. Let’s say my wife, my 11-year-old son and I are traveling from Denver to Tokyo. I will stock my Android-based tablet, in advance, with a couple of movies suitable for viewing by all three of us. I’ll already have a selection of books on there, plus that week’s issues of The New Yorker and The Economist, plus that month’s issue of Wired. I will also have virtually my entire music library (which, I might add, by that time will no longer be tied to the closed universe of iTunes/iPod). All of which I will enjoy for a nominal price based on digital subscription fees that will no doubt be subsidized either by the device-maker or my Internet service provider, or both. If there’s an NBA playoff series going on that I can’t bear to miss, then I’ll pay the extra six or 12 bucks for live, in-flight TV. But for the most part, my viewing and reading experiences for a 14-hour flight will be taken care of on a single, high-definition, relatively large-screen device – assuming the plane has power outlets, which I expect to be standard within the next couple of years. (Actually, knowing my family, we’ll need more than one tablet for that trip, but that’s another subject.)

Access, Not Ownership

In other words, while I’m a decidedly low-power user of smartphone technology (e-mail and voice and texts, for the most part), I will almost certainly be a high-power user of tablet-based media – largely because of the larger screen, better connectivity and more capacious storage. And I think I’m likely to be typical.

Writing on Monday Note, Frédéric Filloux outlined a digital-access rights system (as opposed to the present ownership system), wherein the consumer can easily and inexpensively adjust her access, and the fees she pays, based on her expected usage of the media – magazines, video, books, music, etc. “Buying a right of use instead of an actual file," states Filloux, “will profoundly change the landscape and the role of the different players."

Telcos are uniquely positioned at the center of these types of transactions, Filloux points out, because they already employ sophisticated mechanisms for subscriber identification and management, and billing.

Slowly, old media executives are waking up to the disruptive new reality represented by digital media on portable, powerful new tablet devices. Much of the discussion at this week’s Digital Hollywood conference centered, according to The Economist, on “how to turn the current threat to their livelihoods into a solution for at least survival, if not runaway success." The moguls have belatedly realized that “apart from getting their content online in the best shape possible, they need to move much further downstream in marketing terms. In short, they should start offering services – beyond content – that add to their audience’s experience and satisfaction."

Thwarting audience experience and satisfaction – by, say, blocking access to your programming and your content on innovative vehicles like Google TV – is not exactly the way to survival and success in this new era. As Google TV chief Rishi Chandra remarked at this week’s NewTeeVee Live conference, traditional programmers and new-media distributors are not necessarily natural enemies.

“Our point of view is that cord-cutting is not happening," Chandra said. “We think the cable industry does a pretty good job of delivering content to users … so we don’t think that all of a sudden users are going to shut off all that content."

To be sure, Chandra wants to pass the peace pipe in order to allay the concerns of established, deep-pocketed corporations that could delay the spread of new media, like Google TV, by years. The book publishing industry is to a large degree in the same boat as the cablecos and networks: It’s watching its conventional revenue streams (from selling hard-cover doorstoppers) dry up even as readers seek new ways to engage with the content they produce. Filloux imagines a mutual beneficially ecosystem built around the forthcoming Google Editions, from which publishing houses, traditional booksellers, and readers all benefit. Personally, I can’t wait for the digitally enhanced version of The Decline of the West.

It’s key to note here that Apple, with its closed-loop mindset and business model, is not necessarily going to be the chief beneficiary of the tablet media revolution. Like the new Wall Street Journal app, Next Issue Media, billed as the “Hulu for magazines," will not be available on iPads, at least initially. Recent comments from big-media bigwigs make it clear that magazine and book publishers place greater faith in an open, Android-based universe than they do in the Apple galaxy.

All of this will be enabled, and accelerated, by the advent of tablet computers. Old media companies have done a terrible job, so far, of anticipating digital-media transformations. The future of high-quality, affordable movies, books, and magazines, depends on them catching this next wave.