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Capsule:  Apple took another bite out of the competition last week with its sleek AT&T 3G-powered iPad for newspapers, magazines, e-mails, movies and TV.  While Steve Jobs' iPad demo showcased free clips from The New York Times, National Geographic, Time magazine and Google's YouTube, Apple debuted pricing requirements with the major TV networks: hit TV shows sold in the iTunes store were asked to drop their per-episode a la carte retail prices by half to $1 each.  In other media news, Eric Schmidt opened a new front in the Chinese American war of search words with his World Economic Forum remarks criticizing Sino-censorship in terms reminiscent of Secretary of State Clinton's January freedom-of-speech speech.  If Google and Apple team up, who in the media will be left standing?


The Financial Times
Gizmodo
WSJ.com
The Street.com


It's 2010.  And, while it's not yet Spring again, it's grand to be in a New Year somewhat disassociated from the recession of 2008-09. Sure, the markets are dodgy and the government is fighting with itself. The weather outside may be frightful, but the confidence fanning the cool fire in the media den is so delightful. Comcast and NBCU are in each other's arms. Time Warner and Time Warner Cable are reporting steady results. AT&T, Verizon, DirecTV and the rest of the usual suspects are still standing, including feisty Sprint, Qwest and Cablevision Systems.  


Cable networks had a comparative banner 2009 versus traditional TV. Cisco, IBM and HP continue to produce and, at times, excel in support of the media. The strongest of the major newspapers and magazines remain in business, thrashing against the schadenfreude headlines of online aggregators.


And, just when Wall Street might have thought it safe to go back into the media waters without fear of a recession-based engulf-and-devour story looking for them, Apple the dis-intermediator has risen (yet again) as the unconquerable Steve Jobs tells the tale.  


This week, the iPad debuted in a press-and-friendlies demo in San Francisco.  Mr. Jobs with his typical laconic intensity described the iPad media tablet as a device that could put out the stars if it wanted to. Many audacious critics--fueled as critics generally are by too-high expectations--ripped the iPad and stripped Apple's pre-pumped stock price for the features the new device didn't have, which Apple promised hastily to add. Appropriately, we've been left to imagine the iPad--which won't be sold in its introductory version until March and in its incarnate ultimate fighting form until at least July--as it seems right to us.


What could a light resolute highly-defined portable full-color screen with demonstrably beautiful commercial internet navigation do for us? Powered by an effective wireless data plan from AT&T--the new whispernet provider to Amazon's Kindle following Sprint--the iPad should bring us infinite entertainments, utilities and distractions.  


Recognizing this, Apple has chosen its moment to become the digital WalMart.  Apple wants to set the prices and the procurement infrastructure for media in the 21st century. Like the pioneer cable operators of the 1970's and 80's, Apple has invented a new utility. Following cable's reinvention of television content and distribution for the home, Apple has reinvented content and distribution for you and me. Cable created a new market structure and a new product design for TV networks and, again, for internet connectivity and, again, for efficient wired voice service. Apple is creating a new market structure and a new product design for the same three things--TV, broadband and voice--annexed to both wired and wireless partner systems.


There is a crucial fly in Apple's ointment when looked at from the grand historic perspective of the magically successful and always under-sung cable industry.  Cable dis-intermediated broadcast television by allying with Hollywood and regional sports to create a new syndication generation. Before cable, broadcast TV followed theaters and airlines and international outlets by months and years with commercial-filled movies and TV. After cable, new pay and basic networks slid into the syndication schedule and created a new money path, with commercials and without, that traveled back to content and distribution outlets.  


Apple will dis-intermediate broadcast, cable, satellite and telco TV by sliding an entirely new syndication structure into the mix with its own discrete pricing and a new customer relationship. This time, customers will relate to a highly regarded tech brand--rather than to a franchised cable media company tasked with creating its own brand while building its pay-for-service business--represented by an international device purchased from a seemingly competitive CES marketplace with a supporting distribution and service architecture of its own.  


Of course, there would be no Apple iPad without AT&T or a wireless distribution connection to a cable broadband service. But evolution dictates that all of these distribution providers will be somewhat eclipsed by the beautiful Apple device that magically manages customers through the myriad content selections of the internet and its commerce partners.  (Of course, when the bill arrives, everyone will remember the utility brands of the distribution companies.)


What if Apple takes its opportunities one step farther and partners with Google?  The two companies have shared board representation and advisors over the last few years, until a recent move to drive an apparent wedge between the management teams. Maybe the virtual break-up of Apple and Google was just that--corporate warriors fighting over the iPhone and Android mobile devices and their software. Or, maybe each management team is really in a competitive mind-set when it comes to its past partner--which, more than likely, will draw them toward one another if only for a deeper and winning market comprehension.


Google CEO Eric Schmidt called out China's internet regulation in Davos last week. Schmidt's resistance, as well as the resistance of the US government, has been to China's disintermediation of our western commercial internet structure.  The West defines web interaction as a series of roads to be crossed only by government-sanctioned market forces. Accordingly, US search portals, websites and internet service providers stand between western internet users and their personal, institutional and commercial interactions. Internet users know that their navigation, their engagement and their interaction is monitored privately and publicly; but in a peculiarly western compromise, we accept the presence of business and government in partnership in a way that we wouldn't accept business or government individually.


In contrast, China's regulation is centralized and obvious in its resistance to contrary views.  It opposes all those that differ with the state. Since the US is perpetually in opposition to China on trade and monetary policy, military influence and government controls, US internet policy is a perfect place for international war games. The internet represents virtually every brand of infrastructure; and, as the most prolific universal gateway to the Internet, Google stands in the middle of conversations that will determine the future as a set of apportioned losses and gains.  


As President Obama might say, understanding all of the possible international permutations of the internet requires a higher pay grade than most of us enjoy.  But we can understand the justifiably high brand esteem and related productivity that companies like Google and Apple--the GM of their service generations--enjoy.


It's also safe to say that most media content brands should be careful before ceding pricing control to any new distributor, even when it's wearing fashionable clothes. Unlike cable, satellite and telco TV, both Apple and Google slice the media into marketable fragments more valuable than the media bundle as a whole and keep the lion's share of a la carte advertising, equipment and download profits for their highly efficient, low-cost digital businesses.  


On the plus side, like cable, satellite and telco TV, both Apple and Google provide a brilliant product context for other people's ideas. They make content slices more valuable--down to every search phrase, product, service, channel, VOD, network, movie, TV show, music download, article, essay, report or blog--than they would otherwise be.  


But these new content values come about only within the context of each distributor's brand. For now, the extraordinary brand constellations of Google and Apple are still too new to create enhanced value for the media they absorb and replace. Too often, once competitive media gets pulled into these constellations, they lose their independent value: witness print and TV advertising's fall and the resulting parasitic destruction of much of the print, broadcast radio and broadcast TV landscape over the last three years.


It's hard to search for a proper historical reference that defines today's media position facing the pure commercial power of Apple and Google. It's probably somewhere in a transportation analogy between the train, the truck, the bus, the car and our own walking stride being complemented and somewhat overtaken by the airplane. 


Of course, there's always the more primitive idea of the motor-coach replacing the horse. But nobody wants to be the horse.