Life holds two guarantees - death and taxes.

And economics holds another - prices rise, especially when there's an increase in demand.

Except, of course, at Apple Inc., where they're holding the price - and even handing out rebates in some cases - to spur demand, or buy market share, for its iPad2.

The folks at Apple know something that escapes many a newspaper executive: A consumer product not being purchased isn't doing the company any good.

If the latest iPad predictions, as provided by the technology trackers at Gartner are true, nearly 48 million iPads will be sold worldwide this year and nearly 70 million will be sold next year.

Android tablet sellers must be overwhelmed by their competitor's success.

Because, as Gartner sees it, they're only selling just under 14 million this year and about twice as many in 2012, which means the ‘Droid device will be eating iPad's dust.

If Android tablets challenge Apple, it won't be until 2015 - an eternity from now in the tech world - when more than 113 million will be sold globally, says Gartner.

But don't worry, Apple fans.

Gartner expects the Cupertino, Calif.-based firm to hold its first-place position by selling nearly 140 million iPads in '15.

Phew!

Cost of doing business

What does this mean for the newspaper industry?

Apple is charging content providers a 30 percent fee to market their iPad apps on iTunes, which, as any math student knows, means that if an annual newspaper iPad app costs $50, Big Red (or maybe it's Big Green if it's a Granny Smith) gets $15.

That's the cost of doing business on the iPad, one expert says.

Or rent, as I see it.

Because newspapers, similar to their magazine brethren, are like sharecroppers, laboring on Apple's land to sell subscriptions. And Apple is doing what any good landowner does with its tenant farmers - taking a share of its renter's harvest.

The question any clued-in newspaper publisher needs to ask is when will Apple demand an increase in its share of the app price.

As one very smart analyst who tracks the mobile industry sees it, that won't happen, at least not anytime soon.

"If Apple increases the amount they take for any app subscription on the iPad, it will clearly have a negative effect on the business and a ripple effect on newspapers," said San Antonio-based-Frost & Sullivan mobile analyst Brent Iadarola.

"I do not believe you will see the 30 percent cut raised or lowered anytime soon," he said. "Any deviation would disturb the ecosystem and have negative effects on Apple's business model."

Don't be surprised

Still, doesn't Apple's overwhelming iPad success allow it the ability to increase its take of any medium's app price?

Not so much, Iadarola said in an email exchange.

"Although Apple has first-mover advantages with the iPad and their storefront, Google, Research in Motion, Hewlett-Packard, Microsoft and others are or will be aggressively entering the tablet space and many have already launched virtual storefronts with more attractive revenue share terms, generally in the 20 percent range," he said.

"Of course they don't yet have the user base of Apple, but Google (with the Android marketplace) and Research in Motion (with the Playbook/BlackBerry App World), in particular, are likely to emerge as formidable competitors, which should keep Apple revenue share terms in check," Iadarola added.

Still, should newspapers just lie down and accept these revenue terms?

Other option?

"What is the alternative? Collectively, do newspapers have a better option for distribution?" Iadarola asks.

"Tablet growth is staggering. The best tactic is to embrace the technology and accept the 30 percent as a ‘cost of business.' (That) may sound harsh but Apple is offering a compelling distribution channel which ultimately will create larger sales channels and cost efficiencies for most media outlets," he added.

Brent Iadarola knows his stuff, so far be it for me to take issue with his views on Apple's revenue share model.

But, with all due respect to Brent, I worry.

Because if Apple's overwhelming success continues - and all you need to do is drop by one of its stores to see that they're filled with people buying iPads - I wonder how soon the day will come when the Cupertino-based gadget seller will increase its share of the app price.

It may not happen next year, but if Apple continues to trounce the competition in the tablet space, my bet is that it's going to happen.

And how are newspapers going to respond when Apple raises its share of the app price?

See Brent's earlier answer.

And why will Apple raise its share of the app price?

Because, as the economists tell us, with few exceptions, price always equals demand.

 

Doug Page can be reached at dpagenewsandtech@gmail.com.

 

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