Friday, February 11, 2011

Publishing groups, Sony, and other content companies tend to talk big about Apple, but carry very small sticks

Sony chief executive officer Michael Ephraim was not shy in speaking for publishers of content worldwide: "Publishers are being held to ransom by Apple and they are looking for other delivery systems, and we are waiting to see what the next three to five years will hold," he told The Age today.

Ephraim, of course, is not the only one speaking, and warning, Apple that "I'm mad as hell, and I'm not going to take this anymore." But screaming out the window and banging some pots and pans may be all these executives will able to do for quite some time as the balance of power certainly does not lie with newspaper and magazine publishers.

As for Sony, well, Sony is not the player it once was. Even Sony's CEO knows this as he talks about trying to launch a new music service themselves, while acknowledging that his company must still distribute content through Apple's iTunes.

Reading the statement from the European Newspaper Publishers’ Association, or the head of the Flemish Newspaper Association, one is tempted to ask "who are you kidding?" If you don't want to play the game take your ball and find another place to play...if you can."

As someone who has been a publisher in both the newspaper and magazine industries, I sympathize with their positions. But fighting Apple head-on will be as much of a winning strategy as fighting the USPS -- the track record of such efforts does not bode well.

But while income from publishers and even companies like Sony are but a small portion of the revenue and (especially) profits Apple generates (when compared to hardware), it really doesn't make sense for Apple to continue to pick these fights. Yes, it has the power dictate its own terms, but it is content that makes Apple's iPad and iPhone a device worth having.

If the events of the past few weeks should teach companies anything, it is that consumers will pursue the content. If Comcast doesn't want to offer Al Jazeera, then consumers will find the channel online. If you want to buy an artist that records for Sony, then you will find it somewhere.

But it would be a mistake to continue to overstate the power of content providers. When the developer of Angry Birds can make millions developing games, the few thousand subscribers a magazine can produce simply pales in comparison. At some point here, Apple and their content 'partners' need to get some adults in the same room to work out the issues of data, pricing and subscription models. Those who are currently willing to boast of their own power probably shouldn't be invited to attend the meeting.