The current crop of magazines are missing these essential features and functionality. If I wanted to see a static content page, I would just buy the print magazine at a much cheaper rate than what I need to pay to get the same content on my iPad. I know that the iPad version of Wired’s June edition has outsold newstand sales, but this faddish short term result will not become a lasting success if further innovation is not brought to these digital properties.

I give credit to the magazine publishers for moving quickly to capitalize on this opportunity, but there are still gaping holes that need to be filled:

• Why can’t I get a reduced monthly price through a digital subscription?
• Where’s the interactive advertising to entertain me and help subsidize the price of the content?
• When will I be able to share and promote my favorite stories from these iPad apps to my social network?

I’m sure that the publishers are working hard to fix these and other challenges, and I’m crossing my fingers that the fully realized product will be delivered before the public loses interest in the “magazine” format on our tablet devices.

I am continuing to wait for cable and TV companies to understand the technological market forces that will revolutionize their industry, but I am still seeing signs that they will be caught by surprise when the inevitable consumer shift happens. The main theme of Epstein’s opinion piece in Gawker today is that Netflix is going to be hitting a brick wall in terms of growth prospects within a few years because its mail order DVD service is not profitable enough, and it does not have the digital distribution rights to the right content to attract subscribers. In summary:

HBO, a subsidiary of Time Warner, is the undisputed leviathan of Pay-TV. It has over 40 million subscribers, $4 billion in revenues, and a cash flow of $1.3 billion. And, unlike Netflix, it owns the digital rights to a large amount of exclusive material, much of which it produced.

What Epstein is missing is that Netflix is not trying to directly compete with HBO or other content producers. The goal of Netflix’s digital distribution business is to supplement content on cable in the short-term and supplant the cable industry in the long-term. In summary, Netflix is steadily building a ubiquitous digital video distribution platform.

Let’s look at the opportunity in the market. In 2008, the residential video market for the domestic cable industry was nearly $52 billion, and is estimated to have grown by 5% in 2009, not including ancillary services provided by cable companies such as digital phone or Internet services. By contrast, the TV industry is estimated to have realized $15.6 billion in revenue for 2009, a 22% drop from 2008.

Part of this gap is short-term, including the consideration that TV content producers are heavily reliant on advertising, which continued its slump throughout 2009 as advertisers cut their budgets in the face of the recession. However, most of the gap is structural. Cable providers make a huge profit margin through selling cable packages with hundreds of channels, of which most consumers never watch. In addition, the “triple play” (TV, phone, Internet) has become ever more popular among consumers in the last decade, with much of that revenue going straight to the bottom line. On the other hand, TV content producers, especially the big networks, have been facing increasingly diluted audiences in face of competition, and as a result, they have realized lower advertising rates and lower advertising revenue. As a result of their advertising revenue stream becoming increasingly softer, these content producers have become more reliant on the subscriber fees that they earn from cable and satellite companies that distribute their content.

In the face of this industry landscape and the opportunity in the market, Netflix’s strategy clearly becomes that to supplant the cable companies. Despite analyst assertions in 2008, I believe that Netflix shuttered its Red Envelope Entertainment division specifically because it wanted to send a clear message to the content creators that it is not in competition with them. Netflix is in competition with the cable companies.

It is only a matter of time before the cable companies lose their monopoly to distribute video content, and the shift will be led by consumers that demand to have the video content they want, where they want it, and when they want it. The cable companies have been developing various “TV Everywhere” digital distribution solutions for over a year, but meanwhile, Netflix has been putting its content into TVs, receivers, Blu-ray players, DVRs, and game consoles. Netflix has already built the infrastructure to deliver content they way that the audience wants to consume it, and when the tipping point occurs, content producers will be beating down the door to get onto Netflix’s platform.

This pricing strategy is partly to encourage users to buy video for the iPad. The other half of the strategy is to introduce more consumers to the iTunes store as another way to watch their favorite shows and convince them that iTunes is a viable alternative to their monthly cable bill.

It’s just a matter of time until the industry reaches a tipping point and enough people fire their cable company in favor of iTunes, Hulu, and other cable alternatives. Once this happens, content owners will be more empowered to negotiate a subscription plan with Apple.

I’m hoping that we will reach this tipping point in 12 – 18 months. My Apple TV is getting a little long in the tooth, and a subsciption plan is a great reason for Apple to update the device.

The iPad is a new class of device entirely and is not meant to replace the laptop (or netbook) and does not need the same functionality. The iPad is going to popular with consumers that are looking for an easier way to consume their content and are looking for a simpler overall computing experience.

Most of the online audience are consumers of content. They read blogs, watch YouTube, listen to music, use Facebook and Twitter. Forrester calls them “Spectators,” and in 2008, they were 70% of the online audience. Not only do Spectators spend most of their time on the Internet consuming content, but they are also online at the same time that they are watching TV. This trend is continuing, and consumer multitasking is creating more hours in the day.

In my house, the iPad is going to replace the laptop in front of the TV or my iPhone that I use to catch up on my RSS feeds at the end of the day. It’s also going to be a great way to consume video, and I think that a future iTunes subscription plan for video is going to make the iPad sell like gangbusters. No Flash support on a device like this is one of the limitations that does disappoint me a bit, but I can already get Netflix and Hulu on my HD television.

The iPad’s size and touchscreen is also going to make new types of media possible, including the Sports Illustrated tablet format that we saw late last year. Any media company that ignores the capabilities product is going to be missing out on an exciting new form of content distribution and another digital revenue stream.

The Apple TV is considered a “hobby device.”

Personally, I gave up my cable TV over a year ago in favor of iTunes. Now, I watch Jon Stewart and Stephen Colbert on the subway during my daily commute, and I catch up on LOST and The Office on my Apple TV at home. I watch about 10 shows on a consistent basis, which averages out to $50 a month in iTunes subscriptions. In short, the content I enjoy is available when I want it, where I want it, and how I want it. Plus, I don’t have to pay that $100 cable bill every month. Compared to most people, including even my most technophilic friends, I am definitely and edge case user, but I think that this experience is the future of television.

The much hyped and hoped for iTunes subscription model could bring this experience to the masses and really start to cause some headaches for the cable industry. Out of the big networks, CBS and ABC (Disney) are rumored to be in discussions with Apple. NBC is probably not going to be a part of this deal since it is being acquired by Comcast, but if the subscription model proves to be success, NBC and Fox will come on board as well.

With the upcoming Apple event on Jan 27 and rumored launch of Apple’s tablet, there is no clear consensus on why a normal user would buy it. In my opinion, the iTunes subscription would be the most compelling and game changing feature for the Apple tablet. We’ll see what happens on Wednesday. It could be the beginning of the end for Big Cable.

Because of my recent trials and tribulations with this little blog, a recent news item on Hacker News really struck a chord with me. JournalSpace was the newest member of the deadpool on Monday after all of its data mysteriously disappeared from their servers. Allegedly, a disgruntled employee wiped the server clean, but there are some gaps in the story from the company. Yes, management should have guaranteed that there were backups being completed and taken offsite, but I still have a soft spot in my heart for a group of people that have poured all of their energy into their startup, only to have it disappear overnight.

My lesson learned from my own experience (and this story) is to make sure that I am as rigorous with backups to my blog as I am with the rest of my data. My desktop at home has hardware level RAID 5 and syncs with my old desktop (8 years old and still running XP). For extra peace of mind, I also have all of my key data backed up to S3 with Jungle Disk. I haven’t refined my automated backup for the blog, but rest assured I am going to make sure that this does not happen again!