Publishers: Sorry, but the iPad won't save you

Book, magazine and newspaper publishers are looking at the iPad as akin to the Second Coming, but it may actually accelerate rather than slow their declines. Here's why:

The Kindle has increased the number of eBooks purchased by heavy readers, but my belief is that it's due primarily to the low prices of Amazon's eBooks relative to their print versions. Heavy readers can buy a lot more eBooks than print books for the same amount of money. Those heavy readers, while important, are a small minority of the overall book-buying market. Prices for eBooks on the iPad are going to be a little bit higher than what Amazon has been charging, but because of the shift to the Agency model with Apple's 30% commission and pricing limits, the publishers will actually end up making less on each sale than they currently do with Amazon, even with higher price tags.

If the iPad becomes wildly successful, as it has a good chance of doing, it will put eBook readers into the hands of millions of people who would never consider buying a Kindle or nook. That's a good thing, but is it going to stimulate moderate and light book buyers to buy more eBooks? I don't think so. Instead, those buyers will substitute eBooks for print books at a 1:1 ratio, and the publishers will end up making less on each sale. As it decreases the sales of print books, print runs will get smaller, and physical manufacturing and distribution will become less efficient and more expensive. After an initial burst of sales activity, it's likely that book publishers will see their revenues go down, not up.

Magazines and newspaper publishers will end up with the same result, but for slightly different reasons. Existing print subscribers aren't going to subscribe to more magazines and newspapers because of the iPad; they'll switch from reading on paper to reading on screen, and eventually drop their print subscriptions. Readers who don't already subscribe are unlikely to pay to read magazines and newspapers on the iPad, especially if they can find free substitutes on the web. As print circulation numbers decline, the marginal cost of running printing presses and distributing magazines and newspapers will go up, making print publishing even more costly.

In short, if the iPad and similar devices are wildly successful, they could end up turning print publications into the equivalent of vinyl records--high-cost specialty items purchased only by collectors.