Coming on the heels of our March 25 cover story on the Apple iPad is a new report from the Wall Street Journal detailing how media companies (some of which lack an iPad product) are experimenting with advertising rates.
But the [advertising] business model is unproven, and ad dollars will initially be a fraction of the industry's overall revenue. Hype over the iPad unveiling two months ago focused on selling subscriptions for the device, but no major magazines appear ready to do so yet, according to people familiar with the matter. That leaves titles like Time and People, Men's Health and Hearst Corp.'s Esquire to offer weekly or monthly iPad editions of their magazines, priced at or near the cover price of a print issue ...
By contrast, The Wall Street Journal and the New York Times are working with test iPads, according to people familiar with the matter. Six advertisers, including Coca-Cola and FedEx, have agreed to advertise with the Journal, and a four-month ad package costs $400,000, according to these people. Coke and FedEx declined to comment on terms. The Journal plans to charge subscribers $17.99 a month for iPad subscriptions, according to a person familiar with the matter.
This is all well and good, and understandable when forecasting an unknown product in an unproven market. One interesting note is the price point the WSJ is forecasting for itself: roughly $4.50 per week. It currently charges $2.29 per week for its print product, and its $1.99 per week for online.
Does anything the iPad offers justify a doubled price? The jury's still out, but one thing is for sure: Anytime you can quote "people familiar with the matter" and those people are you — well, you just gotta.