Apple's strategy: active curation creates value...

Apple's strategy: active curation creates value...

Summary: Apple is creating value through active curation...a different approach compared with Google and its hands-off policy...

TOPICS: Apple, CXO, Google, iPad, Mobility

Over the past three years Apple adopted a strategy that exerts ever greater control over the content/apps on its hardware.

It has always had control over its hardware and operating system but it now has control over the apps that run on its latest devices.

The iPhone launched the AppStore and this strategy continues with the iPad, with every application requiring Apple approval.

Although many have criticized Apple for becoming an ever greater control freak, it might be better to look at Apple as if its platforms, especially the iPad, were a newspaper or magazine--and Apple is the editor, or curator. of that content.

For example, every newspaper editor wants to ensure a high quality experience by employing or contracting with the best writers it can get. In this regard Apple is not much different:

- Apple produces a lot of its own content (apps) for its iPad/iPhone platforms and it controls the publication of third-party applications in the same way a newspaper editor controls which freelance content to publish.

- Apple pays iPad app developers based on what it earns. It's not much different from Demand Media, or Associated Content, which pays writers a share based on the online earnings of the content they produce.

[Please see: Interview With Patrick Keane - Associated Content . . . And The True Value Of Online Content - SVW]

In the Apple world, the New York Times, Financial Times, Wall Street Journal, USA Today, and all the other newspapers and magazines that publish on the iPad or iPhone... they are all essentially contributors, freelance writers that get paid by Apple based on their sales, with Apple retaining 30%.

Google's approach...

Google has a different model -- it's not interested in editing or curating content -- yet like Apple, it also makes money from other people's content.

About 31% of Google's revenues come from third-party web sites. The money is collected through placing ads on non-Google sites through its AdSense network.

Google's cut is about 20% compared with Apple's 30% but Google does far less work than Apple, it does very little to edit or curate the web sites that feature its ads. That's why there are a lot of link farms and sites that scrape content illegally in the Google AdSense network.

Comparing the two companies' strategies, it can be seen that the Apple approach requires more work but earns Apple 50% more in revenue share. It also results in an excellent customer experience because Apple actively curates iPad/iPhone content.

Google doesn't care if the Internet user comes across a spammy site carrying Google ads, it doesn't care if an Android app is great or bad. That hands-off policy can also be seen with YouTube and the trouble it got into in Italy, where an Italian court convicted Google execs of publishing a video showing the abuse of a handicapped child.

Google has chosen a hands-off approach in terms of editing or curating anything. But is this the better strategy?

The Apple approach is based on the belief that greater control, active curation, will generate more value than a hands-off approach.

The Apple approach can be seen elsewhere, such as on Facebook, where people choose which content to share, what to publish on their pages; it can be seen in Twitter where the content is hand selected by humans (mostly); it can be seen in people's blogs; it can be seen on Techmeme where 6 editors choose the content.

Active curation creates value.

And Apple's approach has created tremendous value for its shareholders. If you bought AAPL stock on the same day Google went public you would be far richer today than buying GOOG. AAPL recently passed MSFT in terms of market capitalization.

Apple is creating more shareholder value than Google because of its active curation of its platforms.

Active curation creates value.

Topics: Apple, CXO, Google, iPad, Mobility

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  • Control can have positive results

    that the end user can live with.

    If Apple can't make a secure operating environment (we'll say for the iPad) then by limiting users from surfing to potential exploit sites (porn?), Apple could in sense create a more secure surfing environmemt that the end user is willing to live with.

    And if it cost less to stop people from going to these sites then it is to secure the OS, then that would be a savings to the bottom line, and good for shareholders.

    I'm not saying that's what happening, just a hypothetical example.
    John Zern
    • RE: Apple's strategy: active curation creates value...

      @John Zern

      I want them!! <a href="">chanel bags</a>
  • I won't live in a "walled garden"

    I want to be allowed to freely roam the jungle. If you remove my freedom of choice in the name of "improved experience" I am still a prisoner. I want the freedom to use my device as I see fit. To go where I want. To view what I want. To use any application/software I choose.

    I will NEVER buy any Apple product as long as I live.
    • so keep pulling weeds

      NEVER?... not even if apple up eventually produces the most perfect
      system at the world's lowest price?..... your choice - your face won't
      mind if you cut off your nose.
  • Cannot wait for the day Aapl crumbles

    ... to see what you will say about creating value for stock holders.

    Apple's whole business is counting on mindless fella Americans to keep borrowing and spending beyond their means to buy a new iPod, iPhone, iPad, iWhatever every year as if they never had to pay back the debt.

    That spending behavior is going to stop, and those who model their business over it will have a rude awakening down the road. This depression is not over, it has barely started.
    • Believe it or not

      "Apple's whole business is counting on mindless fella Americans to keep
      borrowing and spending beyond their means to buy a new iPod, iPhone,
      iPad, iWhatever every year as if they never had to pay back the debt."

      Many of us (I'm not American though) can afford to buy this stuff without
      getting into any debt.
      Richard Flude
      • The situation in US

        Here people have been way deep in debt before iPad even came out.
  • The situaition in the rest of the world...

    was caused as a result of this irresponsible lending--after all, the USA where the large majority of all the toxic loans and mortgages originated*. Are you suggesting that Apple are the root cause? What an utterly ridiculous, [i]infantile[/i] proposition. It's just "Won't you think of the children" type bovine feces. The same inane logic can be levied at car makers, airlines, food retailers, clothing retailers and even all the other tech manufacturers; Sony, Dell, HP, Microsoft et al. or is it only Apple that are an evil empire hell bent on world domination? The sad thing is that they are all just business trying to make as much profit as they can. Nothing morally wrong with that at all. If you don't like it, go form a communist colony somewhere--we all know how well they work...

    What, exactly, have Apple ever done to you? They make green tech. They make products that many people enjoy, whether you like it or not! They are controlling of [i]their[/i] IP--as are many other businesses, including but not exclusively, Google, Microsoft, Adobe et al. Is because of "smug fanbois"--reading these boards, [b]every[/b] company has those and you're sounding like a particularly bitter one right now...

    If it [i]is[/i] the beginning of another massive depression, then we are [b]all[/b] screwed, so your malicious opines are irrelevant anyway.

    *I know that it's actually a lot more complicated than that--the whole global economy is responsible.
    • Global Econ

      Eh, quit talking 'logical' to people :)
  • RE: Apple's strategy: active curation creates value...

    Thanks for this framing - it's quite illuminating and provides a good way of understanding why Apple's approach is ultimately a fail.

    The issue is that the correct analogy wouldn't be the creative editorial function that makes The Economist or Scientific American a great info *channel*, it would be the self-interested censorship that makes the Chinese web or 1984-world a lousy info *marketplace*.

    Your device or computer isn't a publication, it's an arena. Active curation of the entire arena is never going to be a value-add for the consumer.
  • RE: Apple's strategy: active curation creates value...

    It also promotes censorship and a bad corporate citizen.

    Nobody wants to see that past all the money.
  • RE: Apple's strategy: active curation creates value...

    Sorry dudes, I don't have TIME to clear all the
    garbage content on my PC, I don't CARE. I want
    censorship, I want the best applications, I want a
    clean smooth connection to the internet. I don't want
    to buy a new pc upgrade every other month...I just
    want a fantastic MEDIA experience that Apple provides.
    I like to watch TV. Each Channel is like an app. each
    channel controls it's content etc. I like and
    appreciate the fact that Apple does this FOR ME. I AM
    LAZY and WANT as trouble free MEDIA experience as
    possible. I am tired of my PC. I am NOT a business
    person and just purchased an Imac after listening to
    all your bellyaching about Apple. Sorry dudes Ipad is
    next for me.
  • RE: Apple's strategy: active curation creates value... simple, and so easy. Ensure a "feeling" of benign security, fill the environment with comfortable prettiness, seduce with pleasant words. The gilded cage would close and...

    ..."And if all others accepted the lie which the Party imposed ? if all records told the same tale ? then the lie passed into history and became truth. 'Who controls the past' ran the Party slogan, 'controls the future: who controls the present controls the past.'"
    - George Orwell, 1984, Book 1, Chapter 3