Matthijs Leendertse, Leo Pennings

Centralized Content PortalsiTunes & the Publishing Industry

Purpose

• FLEET project; Flemish E-Publishing Trends

• Raise questions / awareness for media policy makers and publishers around the rise of centralized content portals in the e-publishing domain.

Centralized Content Portals

Characteristics

• Portals that facilitate finding, selecting, purchasing and distributing of (third party) digital content.

• Typically not designed by and around the requirements of content suppliers.

• Often combining hardware, software and network connectivity.

• Once consumers subscribe to a centralized content portal, they tend to be excluded from rival services

The Highlander Theory

Media have a natural tendency towardsconcentration

The Highlander Theory

For (most) consumers that are locked-in to a centralized content portal, there is only one provider of premium digital content.

• PC based: iTunes for music, MySpace for social networks

• Digital TV: infrastructure provider• Game consoles (Microsoft, Nintendo, Sony)• Mobile platforms (Vodafone, Drei)

So what?

Several questions can be raised as a result of the rise of centralized content portals.

• Access (e.g. legal challenge posed in European countries against iTunes) for (a) consumers, (b) suppliers and (c) advertisers.

• Diversity of content (e.g. news provision) to protect democracy, rights of minority groups etc.

Centralized content have de facto become a market for a locked-in consumers, and perhaps has to be treated as such by law makers.

iTunes

Wii Channels

Scenario Exercise

Learning scenarios to raise media policy issues:

Hypothesize effects of different configurations of content portals on strategies of publishers, and resulting market performance.

5 year time frame

Pitch 3 models:1. One dominant centralized content portal (a

Highlanderesque situation)2. Several interoperable open content portals3. A web full of wiki’s

Scenario 1: the iPub

The Apple iPub

• 2008: Apple launched the iPub, its e-reader device

• In 4 years time, the iTunes bookstore overtook Amazon, Bol.com

• Copyright protected content that can only be read on the iPub.

• Pricing is fixed: in Germany: €5, €10, €15 or €20

• Apple takes 20% of all sales.

Scenario 1: the iPub

The Apple iPub

• Large publishers have a preferred partner status, and dominate sales in the iTunes Book Store.

• Smaller publisher pay higher royalties and get less promotional perks.

• As a result: niche products find it difficult to get attention from iPub users.

Scenario 1: the iPub

• A repeat of iTunes Music Store dynamics:

“iTunes does sell a reasonable volume of niche music, but as a mainstream music retailer, it markets to and mostly attracts mainstream music fans” (The Guardian, 2007)

• Diversity from a supply side, but not from a usage perspective.

• Access restricted to iPub owners.• Financial access is less well guaranteed.• Access for large publishers is good, and

relatively high prices for their products, serves as an incentive.

Scenario 2: Interoperable Content Portals

• Dominant content portals? What dominant content portals? In 2012 open content portals reign.

• Open content portals that are interoperable using open source standards, and standardized metadata sets to improve retrievability.

• Network of marketplaces form a large content market.• Drivers: search engines, software providers, technology

companies

Scenario 2: Interoperable Content Portals

• Larger publishers also have a significant online presence (around 40% of turnover achieved there)

Scenario 2: Interoperable Content Portals

• Small content creators bypass publishers and sell directly using open interoperable content portals and payment / advertising solutions.

Scenario 2: Interoperable Content Portals

• Non-profit organizations enter the market, and drive down prices.

• Access is high for consumers (‘open’ access, low prices)

• Access is high for suppliers• Access is high for advertisers

• Diversity is high, as so many suppliers compete• Increased dependency on advertising revenues might

threaten this, as revenues flow to products with the largest and / or most attractive audiences.

Scenario 3: iWiki-Publishing

• Birth of a new publication model, based on peer based production (Benkler).

Scenario 3: iWiki-Publishing

“i-wi-ki-pub-lish-ing Pronunciation [ai-wee-kee-publ-ish-ing] derived from a verb. Meaning: an e-publishing product that has been created on or for an open platform and is continuously subject to changes from visitors.

• iWiki-publishing now added to Wiktionary

Scenario 3: iWiki-Publishing

• Official declaration on January 4th 2012 that iWiki-publishing has become dominant method of e-publishing.

• No business models, non-profit concept• No payment, no advertisements (revenue sharing would

be near impossible).• Specialized & professional content owned by commercial

publishers hidden behind walled gardens.

Scenario 3: iWiki-Publishing

• Traditional publishers that struggle online, increase prices of printed materials, especially in educational sector.

• Advertisers have difficulties finding audiences using e-publishing products, and migrate their advertising euros to other media (e.g. TV).

• Innovation is dependent on end-users, which could undermine incentives to produce more expensive content.

• Diversity appears high, except for specialized / professional content.

• Financial accessibility of content is either high (free on Wikis) or low (high prices for access to content on walled gardens).

Conclusions & Limitations

• Desirable scenari? • Need more empirical validation of hypothesized

effects of content portals, especially on strategic behaviour on publishers.

• Access becoming increasingly important policy issue.

• Innovation could should be added as market performance criteria, entire discussion on intellectual property rights.

The End

Thank you for your attention!

Questions?

Matthijs Leendertsematthijs.leendertse@tno.nl