Daniel Eran Dilger
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Ten Myths of Apple’s iPad: 3. It’s ad-evil

Daniel Eran Dilger

Here’s segment three in my series taking on iPad myths: no the iPad isn’t an “insidious plan” to hurt content producers who use ad networks to monetize their mobile apps and web sites.

Ten Myth of Apple’s iPad: 1. It’s just a big iPod touch
Ten Myth of Apple’s iPad: 2. iPad needs Adobe Flash
Ten Myths of Apple’s iPad: 3. It’s ad-evil
Ten Myths of Apple’s iPad: 4. It was over-hyped and under-delivered
Ten Myths of Apple’s iPad: 5. It’s just a Tablet PC or Kindle
Ten Myths of Apple’s iPad: 6. It needs HDMI for HD video output
Ten Myths of Apple’s iPad: 7. It needs cameras
Ten Myths of Apple’s iPad: 8. It’s a curse for mobile developers
Ten Myths of Apple’s iPad: 9. It can’t multitask
Ten Myths of Apple’s iPad: 10. It needs Mac OS X

Dear SAI: 3. It’s a myth that the iPad is ad-evil.

Ian Schafer of Silicon Alley Insider revealed his great lack of understanding about Flash and how ad networks actually work by complaining that Apple’s lack of Flash support was an “insidious” plan to hurt media companies by forcing them to use Apple’s own ad network.

Speaking of insidious evil …

The truth is that Flash ads are spyware; shoot, most all online ad networks are spyware. Check your cookies folder: Google and its DoubleClick friends are tracking what you do online to serve you ads you’re more likely to respond to as a consumer. That makes Google a little evil, if you’re keeping track.

Nobody wants to believe this, so nobody says it, but Google’s business model is to make media company’s content and information worthless enough so that it can be supported by the meager revenues provided by ads. The Internet simply provides too much ad space, and that lack of scarcity means each ad isn’t worth much. Which means you need lots of ads and lots of views, and therefore can’t justify putting any effort into creating content worth anything around those ads. That’s why traditional media is dying: the advertising space that used to support it on paper is now infinitely large and therefore infinitely worthless. It’s a bubble popping as we speak.

Apple’s “insidious” plan, Schafer attempts to suggest, is that it is forcing media outlets to sell their content as iPhone/iPad apps rather than monetizing them with wonderful Flash spyware/adware. But that’s a lie: the iPhone and the iPad both support inline advertising in non-Flash formats (typically GIF), which is no less effective, no more work, and just as deliciously spyware/adware as Schafer’s beloved 1990’s anti-HTML proprietary runtime from Adobe. GIF ads have also been around long before the iPhone killed Flash.

Covering all the bases

What Apple is offering is a way for developers to also monetize their content directly without ads and spyware. When people pay for content directly in iTunes, you get a market that encourages the development of valuable content.

At the same time, Apple is also, via its Quattro acquisition, going to offer developers ways to monetize their apps via advertising. The difference is that Apple makes most of its money from hardware, not from ad sales like Google. Quattro will enable Apple to give developers a much larger cut of the ad revenues their apps generate, beating Google at its own game.

It you want to bet on whether Apple can make more money on mobile hardware than Google can make selling ad space on mobiles, I’m ready to place my wager. I’m also betting that Apple can do better selling ad services to its iPhone developers at near cost than Google can trying to sell hardware against Apple at any price.

Apple targets Google’s mobile ads market with Quattro acquisition

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  • broadbean

    So in a nutshell Dan, what do you think Google’s end game with the Nexus et al is now? Still just selling ad space?

  • http://www.metrokids.ca Conrad MacIntyre

    Video was removed for being too long! Cut it into two and re-upload OR I think with iMovie you can output directly into h.264 and upload that directly into WordPress. Maybe that would be better??

  • frankeee

    what did i just say last comment – go mobilecast man! just put up a h260 vid for quicktime! damn youtube as well.

  • deardeveloper

    Imagine for a moment all the private information Google knows about everybody and uses for marketing purchases. If the US government had an opportunity to have such information on us, do you think it would interest them? Do you think they would turn it down? Would our interests, buying trends, financial data, health info, hard drive contents be any use to them? I bet it might.

    Just a thought.

  • deardeveloper

    Sorry. I meant “marketing purposes”, not “marketing purchases”.

  • frankeee

    i personally would add – that (yeah) ads are not necessarily Apple’s playground (eg “we don’t support – but also don’t say don’t do it”). I would really not like Apple to become the hostesses for BILD Zeitung (German) or HERALD Sun (Australia). I have no history in checking out boulevard press in other countries than that. But if we are talking mainstream press there WILL be a need for advertising space. And Apple will probably fulfil this on the plan of “if u so need, do it, but we won’t give you ad-APIs. Maybe Microsoft can fill that void, they’ve done a great job so far in making it possible for any spam hungry juvenile to proceed swiftly. Also we got with it is people deeming to be the spam police (antivirus, spam etc software) that use the same advertising channels as the guys they target. Hmmm … what’s wrong with the world these days – I mean I am a consumer and I don’t mind being told what cool shit is around I can buy – but don’t do this to me: http://news.com.au/ or this http://us.gizmodo.com/

    Nor give me a ‘super cyber link’ on every second word within a text that explains to me what I should buy – and please please please do not penetrate me with a ‘cyber’ video clip that just happens to pop up whilst i am reading some stuff i am interested in (usually in the fashion of a flash(!) ad going nuts on my user experience).

    The google way within search seems so far ok – i never click, funny that! but i can actually avoid it.

    The way ads used to be presented on the late 70s on Telly was damn awesome and actually made me like them: they came in color (when most programs were in b/w) – they came in stereo (when most actual programs were in mono) – they showed me either some cool new filming techniques or some hilarious humorous content.

    Well – I am still voting for the humour thing – which is rather rich these days provided youtube approves it. But I am missing this Advertisement Space Adventage in tech breakthrough – how about Apple let’s those fellas get really creative …………. I might click, who knows!

    Just a thought.

  • http://berendschotanus.com Berend Schotanus

    About the video:
    A site you might check is izzyvideo.com. I followed the free trailers for some time a thought it is giving a very practical and understandable explanation of video techniques. Maybe pay some attention to the issue of lighting.
    I thought the titles in your video work well. You may add in-between titles as well, that’s a great way to camouflage your edits and it can work like the headings in the main text.

    About the content:
    The idea that Apple is undermining Sony’s music revenues with iTunes and now trying to do the same with Google was new to me. From the perspective of Google this doesn’t look very nice. Maybe Apple is “ad-evil” after all ;-)

  • lmasanti

    “Apple targets Google’s mobile ads market with Quattro acquisition.”

    Although prima facie it appears that way (Apple going ads), I truly think that Apple just is covering its bases: if Apple pays hosting and downloading, and you give for free your app, but you earn money by means of ads… Apple wants and will offer you to give those ads.
    But I do not think that Apple would want to be everywhere in the ad space.

  • Per

    I see your making some progress in editing, which made this third part a lot nicer to watch. Using pictures and video really helps to keep the viewer focused. And, as usual, the arguements are very compelling. Great work.

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  • iLogic

    Dan I really enjoyed this video – when is Apple going to allow podcasts to be embedded on the web so I can watch & subscribe to your series onto my devices

  • dallasmay

    Here is what I’m worried about with the iPad. I kind of think the iPad shows a true philosophical shift in Apple’s business philosophies. I am worried that they are going to start to distance themselves from traditional computing, as we know it, and shift toward super-locked down devices, primarily used for content consumption. Sure the iPad has iWork, but content creation is obviously not it’s primary objective. Maybe Apple is frustrated with the old PC/Mac back and forth and is beginning to distance themselves from that and toward a new core competency of consumer electronics.

  • airmanchairman

    Oh, my golly wow!

    This analysis puts a lot of the developing aggression between two behemoths into clear, exciting, nay frightening perspective….

    This is no superficial act for the public EYE, or to forestall the on-going American anti-trust investigation into their inter-relationship. What has inevitably led to the resignation of Eric Schmidt from Apple’s board IMHO is the looming battle for control of the future centre-ground of computing, media delivery, e-commerce and advertising. In short, the whole future caboodle… whoa!

    This explains the Google Nexus One strategy (in addition to the acquisition of AdMob) as more than a desire to stay in the centre of the mobile ad business; Steve Jobs’ alleged remarks about the intention of Google to “kill the iPhone” with a deluge of generic Android and “Google Android” handsets start to make less nonsense (i.e. more sense, get it?).

    What I mean here that this is no whim on Google’s part – in fact, ever since they incurred the displeasure of their erstwhile partner with the purchase, development & strategic deployment of Android (remember Steve Jobs’ comments on this a few years ago?), they may have (consciously or unwittingly) set in motion a series of grandmaster chess moves originating from Cupertino that they have no choice but to defend against.

    The acquisition of Quattro and their plans for it, the wildly successful establishment of the iPhone/iPod mobile platform, and now the emergence of the latest, potentially most-relevant chess piece of all to date (the Queen piece, no less) in the iPad, constitutes in my view a frighteningly awesome “creeping power-play” that Google has no choice but to commit itself to counter very carefully but deliberately, with no room for error or failure. The die is cast, and what is done cannot be undone….

    As we sit here applauding from front-row seats with cushions (and 3-D glasses) embroidered with the “Roughly-Drafted” logo, I’m saying to myself breathlessly (hell no, I’m screaming excitedly) “BRING ON THE WIN-WIN FUTURE ALREADY, DAMN!!!”

  • airmanchairman

    … I forgot to mention Lala and the Cloud (sounds like a new power-pop band or cartoon movie – I like it!) – no less important pieces in the grand panoply of Apple Inc’s big picture (Bishop and Castle?)

  • ChuckO

    Dallasmay, I think it’s pretty common sensical. Apple will continue to build “real” computers as long as they can do so profitably. Apple had to become bigger to survive. They need to offer products across the entire price spectrum so that would-be customers can afford something by them. I know you disagree in the case of the iPad but they don’t just throw junk out there for people to buy. Here’s an Apple netbook, here’s an iPhone Nano.

    Silicon Alley Insider and Techcrunch, the two top examples of the truth in the old joke “those that can’t do teach”.

    I don’t get what’s evil about Apple getting into the ad business. They have to start monetizing the iTunes media and app store and helping app devs make money for themselves and Apple makes perfect sense.

  • gus2000

    What I find most disturbing is that the people who enthusiastically cheer for the proprietary Flash are the same that decry Apple’s “closed” ecosystem. “How dare you close your product to our closed product!” lol

    Cognitive dissonance much?

  • ChuckO

    Like a lot o f “reporting” these days there’s a weird need to be “unbiased” even if that means distorting aspects of the argument or ignoring obviously illogical arguments to remain unbiased. Most news sources have figured out the easiest way to remain unbiased is to hire people who don’t know anything about anything.

    I saw an episode of HBO’s Real Time with Bill Maher during the start of the financial crises where Erin Burnett (I think she’s a CNBC money honey?) was talking about how financial crises bring about important innovations. Here example. Chocolate Chips! And she was reading off of notes throughout the episode.

  • John E

    This may come up later in this series, but as Dan notes on-line ad revenue from today’s Google “free aggregation” model is inherently too small to support professional news and literature gathering – newspapers, magazines, etc. – and its necessary large scale and high overhead to do the complete job 365 days a year. blogs and topical web sites can just cherry pick the hit-maxing hot topics, and so stay small and cheap to operate, surviving on click revenues. but they do not generate all the daily content society needs or values, and their typical lack of journalistic standards reduces the worth of what they do.

    Apple may offer the solution. which is micro-payments for content directly to the content creators – the newspapers, magazines, etc. if it cost me 10 cents to read a newspaper article or 25 cents for a major magazine piece – billed via my iTunes account – i’d just do it routinely without thinking about the cost. i might wind up spending a dollar a day. but that adds up to $365 per year, and for every 10 million iPhone/iPad users that did the same that would generate $3.65 BILLION in revenue – 70% to content creators and 30% to Apple. with an installed base of 70 million iPhone/touch users already, there is the potential for real money here, and the iPad’s optimal design for print/web media will improve on that that by an order of magnitude.

    the key is to keep the price per article very low. if it cost a dollar each, i’d go look for free stuff instead, because $10 a day – $3,000+ per year – is obviously too much.

    surely no one can claim that such original content creators should not be paid anything for their work. they can’t survive that way and will disappear. but that is today’s Google model, re-packaging their work and taking a big cut off the top, leaving too little website ad value for them to live on. this isn’t “evil”?

    likewise, with some exceptions of specialized trade/business publications (WSJ, Business Times, et al), a web site subscription approach to generating revenues has not worked either. because the prices are too high and/or their dedicated fan base of regular readers is too small.

    DRM’ing the apps is not really important. Goggle et al can’t break copyright restrictions on content distributed through apps and then aggregate/repackage it. yes, the free content media on websites will be scaled back to just loss-leader content so we will all miss getting something for nothing as we do today. but ultimately in the end you do get just what you pay for. the current situation is unsustainable. there ain’t no free lunch forever.

  • http://www.metrokids.ca Conrad MacIntyre

    Dallasmay, you are wrong. Here’s why:

    Steve Jobs came out to talk to the people about iPad. He said that the iPhone is doing very well. He said that the MacBook line is doing very well and he talked of a third product category. A whole new product category, not a netbook because, as he points out, a netbook is simply an inferior laptop.

    They have geeks, they have pro customers, they have people like you and I, who want a Finder and an open, accessible filesystem that we can manipulate as we see fit.

    The iPad is more like Nintendo’s Wii. It’s not geared at hardcore gamers (like Sony’s Playstation) or gamers with money to burn (like Microsoft’s Xbox), it is geared at the average consumer who doesn’t play video games (Pre Gen X adults) or never has (Children). And they were successful. Will Wii-style play ever replace tradition gaming? No for me! And that is also why Sony and Microsoft’s attempts to rip-off the Wii have and will continue to fail. These two products are for two different category of people and fill two different sets of needs.

    Much like the iPad and traditional desktop-style computers two different products geared at two different users types.

  • ChuckO

    I’ve got an idea. I kind of like both ideas where you either do micropayments or I buy a subscription to a newspaper online. I think I read NYT online is $12 a year? That sounds like a bargain but is limited to just NYT. I like micropayments except if I have to constantly click on something to pay and my credit card is filled with micropayments.

    How about if there is some kind of clearing house that manages a web news subscription where we pay $10 a year and get some kind of cookie like mechanism that gives us access to all news online and the clearinghouse pays content providers based on hits to those pages. That’s a rough outline but seems pretty managable.

  • ChuckO

    Actually maybe it would be easier for the browser companies to build that functionality into the browsers. You pay and get some sort of certificate for a year for $10 or $20 that the browser knows about and let’s you look at news stories on properly coded pages. No certificate – no news.

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  • bartfat

    Loved the pictures at the beginning of the video Dan :) Also the video seems to contain extra analysis that you didn’t put into the article… guess you didn’t want to type long winded statements out. Anyway, back to the article. Most analysts clearly are full of BS whenever they pronounce this stuff, trying to linkbait others so then they can generate more ad revenue ;) How ironic, then, that they decry what Apple is doing, which is raising the value of ads for content. So entirely with you here.

    That’s why I don’t watch TV news sources anymore, because they’re full of crap. Even CNN is crap. Maybe only the BBC is okay, but they’re in Britain and given money by the UK. Actually that could be the reason why news sources feel they should be “unbiased” is because they actually can’t afford to hire REAL reporters anymore, since their ad revenue has dried up. Heh, there’s another need for Apple to come solve the problem ;) But seriously, what the US needs to do is similar to the UK and establish a government sponsored BBC-like channel that adheres to the truth, no matter how much the public rages about the facts. Sure, this will be proclaimed to be similar to communists or socialists, but who gives a flying crap about where the money comes from so long as the reporting is accurate. Something we can all count on to provide a true report, not feeding drivel. Maybe the lowering of advertising values has something to do with no sustainable private TV news industry as well?

  • ChuckO

    I’m not sure I’m buying Apple doesn’t want part of the ad money in iPhone/Touch/iPad apps. Don’t they have the 30/70 split for in app purchases? I would think the ad biz would go the same way. 30/70.

  • ChuckO

    bartfat, They should be unbiased but that doesn’t mean you let outright lying go unchallenged. The Erin Burnett’s of the world aren’t up to the challenge, intellectually. Obama did a great job in that meeting with the republicans in having an intelligent debate over the issues (do they know they didn’t win the election?). Especially on the last question from some knucklehead named Jeb from Texas who tried to get a bunch of BS out there for his next campaign and Obama layed it out chapter and verse for him on what he inherited from the republicans after eight years with two unfunded tax cuts, two wars that are off the books and the unfunded Medicare prescription drug benefit. You can be a conservative or you can be a republican but you can’t be both.

  • http://themacadvocate.com TheMacAdvocate

    @John E
    Excellent summary of what I think is the most understated downsides of Google’s dominance. Web ad models reward pageviews, pageviews get generated by clickbait and clickbait and journalistic integrity are almost 100% mutually exclusive.

    We are a society whose bodies and minds are being destroyed by sustenance with no substance. Google is the catalyst of the web’s partially hydrogenated vegetable oil.

  • ulicar

    Actually I am not quite sure you have thought this one through. iPhone, iPod and a big iPod, they all have GPS. Apple has an option to follow every of those devices. If you like, you can pay them to do it for you using Find My iPhone. They recently purchased mobile advertising company. Do you follow? What will happen, and I am sure of it, you will start getting geographically targeted emails/sms messages. It depends how much Apple will ask for “beacons” to receive those adverts, but it is quite possible, and I am sure that will happen. So you will walk down the street and you will receive the SMS “turn left and purchase a kilo of minced meat at Joe’s for unbelievable low price of $XX”, or maybe a robot-call. Lucky me, we have do not call register, and antispam law that stops this sort of advertising. Still…

  • ChuckO

    ulicar, That doesn’t sound like Apple to me. They absolutely will put that ad in your ad supported game or app. Apple spamming you with emails and texts, nah, not going to happen.

  • http://mrbitch.tumblr.com/ mrBitch

    @ ulicar, RE: “.. It depends how much Apple will ask for “beacons” to receive those adverts, but it is quite possible, and I am sure that will happen. So you will walk down the street and you will receive the SMS “turn left and purchase a kilo of minced meat at Joe’s for unbelievable low price of $XX ” ..

    What if you registered your interests? What if you were walking down the street and got a text beep on your phone : “On the next street turn right for a classic sci-fi book store two shops down.”

    That actually sounds pretty neat…

  • miloh

    Yeah, so long as it’s an opt-in situation, I don’t see a problem.

  • ulicar

    opt-in is great :) Actually, i would not mind opt-out either as long as i do have opt :)

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  • asolomon15

    Let us know when you have a few of the videos back up