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Stop the iPads! Papers Forced to Discount Tablet Editions by 60%

It’s certainly not new news that online adoption over the last decade has crushed newspaper circulation figures, collapsed the medium’s profit margins, and made classified advertisements obsolete. What’s news is how fast magazine-thin tablet computers may accelerate this already rapidly progressing trend.

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Media firms, on average, will be forced to offer discounts of at least 60 percent to their print subscriptions in order to lure tablet users to their direct-to-user, pay applications on the devices, according to analysis by Rich Greenfield of BTIG Research.

“Tablet newspapers offer a reading experience far more similar to flipping through a print newspaper compared to online-only editions on a PC,” said Greenfield, in a blog postto clients. “The big question, however, is what are consumers willing to pay for that access, particularly with so much free content available on these devices” like CNN, AP, Huffington Post, etc?

Greenfield found, so far, not much. Annual subscriptions for News Corp’s New York Post and Wall Street Journal tablet editions are 57 percent and 61 percent cheaper, respectively, than one-year print editions on your doorstep. And yesterday, just as Greenfield predicted, the New York Times came out with a $260 annual tablet subscription, a 57 percent discount to the print edition.

In the last decade, shares of the New York Times are down 77 percent, while shares of iPad- and iPad 2-maker, Apple , are up more than 3000 percent. Since the initial release of the iPad last year, which was the fastest selling consumer electronics product ever, shares of Apple are up more than 40 percent.

With Research In Motion and Hewlett Packard jumping into the tablet game this year with their own products, the market is set to explode. The initial estimates for growth in this relatively new market could be quite shocking to media execs.

The global tablet market will increase from almost nothing at the beginning off last year to $120 billion by 2015, estimates Credit Suisse. The firm sees tablet units reaching nearly 300 million or almost half of the total PC market, by that time.

But don’t close up shop yet Washington Post, one of the reasons Kulbinder Garcha, Credit Suisse IT hardware analyst, cites in his report this week for the rapid tablet growth is the “optimization for media consumption.” That means you.

If newspaper firms are going to take this kind of haircut on tablet edition subscriptions, they could make up some of the difference for it by creating such advanced multimedia applications that consumers pay more for the tailored experience than viewing it for even more cheaply (or free) through a web browser. Plus, advertisers could be willing to pay more for a multimedia ad in a tablet edition targeted at a specific market.

Ten years ago, print media let Google, Yahoo and others create more aesthetic and profitable portals for their content than themselves. Tablets could offer some sort of redemption by allowing them to cut out the browser middleman with a tailored application. The only problem is that they have just four years or less to figure it out.

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.


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Trader disclosure: On Mar. 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (VRTS), (C), (GS), (PNC), (USB), (JPM), (UPL), (CREE), (MS), (PBR), (BAX), (TEVA), (IBM), (BTU), (CNX), (POT), (FCX), (XOM), (DIS), (MCD), (CVE), (CVI), (CNQ), (RSX) and (SU). Steve Grasso Owns (ASTM), (BA), (BAC), (C), (CSCO), (D), (JPM), (LIT), (LPX), (MHY), (NDAQ), (PFE), (PRST) and (S). Jon Najarian Owns (AAPL), Is Short (AAPL) Calls. Jon Najarian Owns (BRK.B), Is Short (BRK.B) Calls. Jon Najarian Owns (CBOE), Is Short (CBOE) Calls. Jon Najarian Owns (CNW), Is Short (CNW) Calls. Jon Najarian Owns (CNX), Is Short (CNX) Calls. Jon Najarian Owns (BTU), Is Short (BTU) Calls. Jon Najarian Owns (JRCC), Is Short (JRCC) Calls. Jon Najarian Owns (CME), Is Short (CME) Calls. Jon Najarian Owns (NYX), Is Short (NYX) Calls. Jon Najarian Owns (FCX), Is Short (FCX) Calls. Jon Najarian Owns (HPQ), Is Short (HPQ) Calls. Jon Najarian Owns (KWK), Is Short (KWK) Calls. Jon Najarian Owns (NKE), Is Short (NKE) Calls. Jon Najarian Owns (CHS), Is Short (CHS) Calls. Jon Najarian Owns (MTW), Is Short (MTW) Calls. Jon Najarian Owns (WNR), Is Short (WNR) Calls. Jon Najarian Owns (PAAS), Is Short (PAAS) Calls. Jon Najarian Owns (SLV), Is Short (SLV) Calls. Jon Najarian Owns (HK), Is Short (HK) Calls. Jon Najarian Owns (CSTR), Is Short (CSTR) Calls. Jon Najarian Owns (CRM), Is Short (CRM) Calls.

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