Rupe Was Robbed. Tales From The Front Lines of the iPad App Economy

Posted on February 12, 2011 by Tony Uphoff

If you were launching a daily newspaper today $30m would not be an outrageous sum of money to be spending. What would be outrageous is that you were launching a daily newsPAPER. Spending $30m to create an iPad newspaper application is ludicrous. With substantial fanfare, Rupert Murdoch recently launched The Daily an iPad and tablet based newspaper. He has also spent a ton of dough, a reported $30m and counting. Heck even with the house ad rates a sister division at News Corp might enjoy, the Super Bowl ads had to run some $5m. Frankly they were kinda weak too....but I digress. Simply put Rupe was robbed. While clearly a true media visionary and uniquely successful businessman, Rupert Murdoch's approach to the iPad and application based media revolution reflects an old media approach to what is now a new and very different media world.

The Application Economy is being driven by the fusion of information design and mobility. At the risk of alienating my open source and Android pals, the core manifestation of this is the iPad. What is unique about the Application Economy is that from it's inception it was designed and built on an ongoing service business model. In other words you download or buy an application and part of the value is that the application will be updated on an ongoing basis. In developing applications you need to consider that user engagement and interaction dictate how you evolve and update the application. While perhaps a simple concept, this is still a huge cultural shift for broadcast media companies like News Corp. They are used to the "build it and they will come" methodology, where you pour huge money into a launch, creating a massive barrier to entry and hope to realize a profitable return years down the road. Movies, daily newspapers and television make up the vast majority of revenues and profits of News Corp so this approach has served them well. The application economy operates very differently however and requires the ability to manage an Application as a Service.

Will Rupe realize a return on his investment? Hard to say. I certainly wouldn't bet against him or News Corp. His first foray with the iPad however would indicate that he doesn't yet understand the model and still thinks massive investments will create audience value and a competitive barrier to entry. No matter what your point of view the build out of the iPad App Economy will be exciting and fascinating to watch play out.,

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