The iPad: No Miracle Worker

In April, Rupert Murdoch said Apple's (Nasdaq: AAPL  ) iPad could save the newspaper industry, implying that it would become a platform for selling digital subscriptions and ads, while cutting newsprint expenses in the process.

He's dead wrong. The iPad isn't the Messiah the newspaper industry is looking for.

This week, the Newspaper Association of America's newly released figures showed that print advertising revenue declined 7.6% in the second quarter. Worse, while digital advertising revenue grew 14%, digital accounted for just 11.6% of all newspaper ad revenue in Q2. That's down from 12.2% during the first quarter.

Where's your Messiah now, Rupert?
To be fair, we've seen data that suggests the iPad could be a game-changer. Owners of the device are more likely to use it to read newspapers and magazines than are owners of Amazon.com's (Nasdaq: AMZN  ) Kindle or Barnes & Noble's (NYSE: BKS  ) Nook, which have proven popular with bookworms and few others.

But if the iPad really were the savior of the newspaper industry, we'd see more digital ads on the device, and correspondingly a rise in digital ad revenue as a percentage of overall advertising revenue. Instead, we have print dying a slow death as digital claws its way into the mix.

In the process, newspaper companies continue to suffer lower revenue and earnings. New York Times Co. (NYSE: NYT  ) reported a small revenue increase as net income declined more than 18% in the quarter ended June 30. Media General (NYSE: MEG  ) turned a net gain into a net loss over the same period, despite a 2% revenue improvement.

Perhaps a forthcoming crop of interactive e-readers will help digital to catch on more than it has. Clearly, the iPad can't do the job all by itself.

Now it's your turn to weigh in. What will it take for digital advertising to replace print advertising as a revenue source for newspapers? Or is that asking too much? Let the debate begin in the comments box below.

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  • Report this Comment On September 09, 2010, at 11:45 AM, TabletsGalore wrote:

    The iPad isn't the savior that Murdoch and others hoped it will be - as of now. But I think it's important to note the trend that has been started, arguably, by the iPad and it's forthcoming competitors. The tendancy of the industry is to move toward technology that's in the hands of the people. It may not happen tomorrow, or next year, but tablets and similar devices will be the money making platforms for newspapers and magazines in the not too distant future as more and more people come "online". http://iPadLot.com will be covering this story closely as new technology and business standards emerge.

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