At the Core: Anybody who can't make money off iPads or TUAW should get out of the money-making business<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p><a href='
http://www.imore.com/core-anybody-who-cant-make-money-ipads-or-tuaw-should-get-out-money-making-business' title="At the Core: Anybody who can't make money off iPads or TUAW should get out of the money-making business"><img src='
http://www.imore.com/sites/imore.com/files/styles/large_wm_brw/public/field/image/2015/02/atc-tuaw-ipad-hero.jpg?itok=TanGQt7S' />[/url]</p> <p>Like many in our industry, I'm deeply saddened to see
yet another fantastic Mac blog crumple as a result of big business decisions, putting several wonderful Mac writers out of work. This also, unfortunately, seems to have resurrected the always-fun topic: "There's no market for niche blogs anymore!"</p> <p>Now, I may be biased, writing for a niche blog and all, but I don't think our industry is dying. Quite the opposite: There are more excited Mac and iOS users out there than ever before, all internet-connected and ready to complain, learn, and chat about their problems and successes. But they're not your average blog reader, and that seems to throw big media businesses for a loop.</p> <p>They just can't seem to wrap their heads around this concept — that different products are going to have different markets, and there's no one-size-fits-all approach to selling them.</p> <p>Of course, while company after company stumbles, Apple has been applying these rules to its own product lines for years.</p> <!--break--> <h2>The stores sell the product, the bar sells loyalty</h2> <p>If Apple expected every product it released to have the same growth as its top-selling product and treated development and spending accordingly, we'd have missed out on a bunch of great products. And we definitely wouldn't have Apple Stores or their in-store programs.</p> <p>When the Apple Stores first launched in 2001, they weren't created with the intention that they'd be the
$4.5 billion profit juggernaut they are today. Revenue was a measly $19 million back in 2001, and Apple didn't even report profit for the stores until 2004 ($39 million). The company spent three years running extremely expensive stores in the red — but as a result, they got their devices into the hands of millions of people who wouldn't otherwise have ever touched an Apple product. 2013 saw 395 million people walk through the doors of an Apple Store. To put that in perspective: Disneyland saw just
16 million visitors in 2013. All the Disney World parks put together only saw 50.5 million visitors.</p> <p>The stores worked because they served a purpose other than flat money-making: They were advertisements: not just for the products, but the Apple ecosystem, software, and lifestyle. And as a bonus, when they sold users that experience, they just happened to also sell actual product.</p> <p>Apple's Genius Bar is probably the better example of the company investing money in services it never expected to be directly profitable. The Genius Bar has been free to visit since its inception in 2001, and it has undoubtedly helped millions of people understand and fix their devices. Free customer support — even if that doesn't always result in a free repair — is a huge draw, and a large part of Apple's community-building. You get to buy an Apple product knowing that you have the peace of mind to come in and ask about a problem if you're confused or if your device breaks. The Genius Bar may not sell anything directly to the consumer, but it gets people to purchase Apple products all the same.</p> <h2>And the iPad sells the experience</h2> <p>What I find especially ironic about this whole matter is that Apple — after the most successful quarter
in the history of worldwide business — is currently being hammered over the iPad's lack of sales. The company just made more money and
sold enough of its flagship product to overtake Samsung, but let's ignore that for a moment and call it a "problem child".</p> <p>"Nobody knows what an iPad is good for anymore,"
says Wired. I've got an alternate theory: maybe the iPad is
still rolling. Who cares if it's not as profitable as the iPhone? There are very few things on earth as profitable as the iPhone — it'd be a hell of a hat trick if Apple made two of them. And the company has
repeatedly said that it's happy with iPad sales, and that the devices still boast tremendous growth opportunities when it comes to first-time buyers. Here's Apple CEO Tim Cook's own words on the matter, from
Apple's most recent financial call:</p>
<p>When I look at the customer sat[
isfaction] on iPad, it's literally off the charts — in some cases 100 percent, which is unheard of in surveys to get these kinds of customer sat ratings.</p> <p>When I look at the usage, the usage is six times our nearest competitor. The usage as defined, as measured in Web browsing is like 71 percent of total tablets, as I think Luca covered earlier. Also the commerce taking place across the iPad is enormous. Essentially, over 80 percent of the commerce on tablets are taking place on iPad.</p> <p>And so when I back up and look at all of these, and I believe that over the long arc of time, that the iPad is a great business. I also have visibility obviously to what's in the pipeline and feel very, very good about that. That said, I'm not projecting — to be clear with everyone — I'm not projecting something very different next quarter or the next. I'm thinking over the long run.</p> <p>The iPad may never look like the iPhone, but that doesn't mean it's a failure. Heck, the Mac's never going to look like the iPhone, but you don't see Apple abandoning their desktop and laptop base and consolidating that R&D into iOS. Just because the product serves a smaller market doesn't mean it's any less important or vital to the company's business.</p> <h2>What does the blog sell?</h2> <p>And thus, we wrap back around to AOL and TUAW. Unlike Apple, AOL isn't exactly a money-making titan: In Q3 of 2014, the company walked away with just $28.5 million dollars in net profit, and it's been rumored that TUAW is being shuttered along with a host of other enthusiast blogs to consolidate and conserve costs. I can't claim to know AOL's inner workings, but I certainly wouldn't be surprised if these cuts were the result of overspending elsewhere — root issues which wilted and finally destroyed its saplings — and
hacking a small site's budget in half after 40 percent year-over-year page growth sadly seems to hint at such things.</p> <p>I don't doubt that AOL could have found a way to make its smaller blogs help its other properties, but not by trying to treat thousands of different readers identically. Shoving TUAW and Joystiq's beats into Engadget isn't going to instantly make those readers Engadget followers, because they didn't go to those blogs to simply check the news — they went for the opinions and banter of the community. Those communities are dead; they may rebuild in parts and pieces elsewhere, but they no longer exist.</p> <p>But just because AOL can't make money off a niche blog, that doesn't mean the niche blog is dead: It just needs to evolve. We might be looking at a future where niche blogs stay far away from multi-million dollar corporations, and find different forms of money-making apart from blanket advertising. Ben Thompson wrote a fantastic piece this morning on
blogging's bright future that follows those lines:</p>
<p>No, it's not scale that is the problem, but rather reach.</p> <p>I am, of course, acutely aware that there is a tradeoff when it comes to the subscription business model: by making something scarce, and worth paying for, you are by definition limiting your number of readers. Stratechery, though, serves a niche, and niches are best served by making more from customers who really care than from milking pennies from everyone.</p>
<p>And he's absolutely right: Whether you're a big business that owns a small property or a single writer operating a piece of Internet space, you can't expect to woo a smaller audience with blanket big blog tactics. To build a good niche blog, you need to know your audience and work for
them, not a void of unnamed blank-faced consumers. Look at something like
Tidbits: The average Buzzfeeder may never have heard of the blog and book service, but it's been successful and profitable for more than 20 years by appealing to the very niche it wants to serve: Mac and iOS enthusiasts.</p> <p>A loyal audience will follow you, trust your recommendations, and help you build something special. But they can only treat you well if you do the same in turn. Autoplay videos that grab meaningless eyeballs in an attempt to gain video marketshare isn't respecting your blog or your audience. And shuttering a fantastic blog and trying to shove it into a bigger property will likely lose your company that loyal following, not transfer it.</p> <p>It all comes down to knowing your audience, and working with them accordingly. Apple knows its audience. I don't think AOL does, anymore. And that's a pity for them — but it's not the end of niche blogging as we know it.</p> </div></div></div><div id="comment-wrapper-nid-29738"></div><img width='1' height='1' src='
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At the Core: Anybody who can't make money off iPads or TUAW should get out of the money-making business
