Hewlett-Packard, Dell, Samsung and other companies following Apple into the
tablet and smartphone markets will want to take note of a Dec. 30 report from
the Pew Internet & American Life Project that
found that 65 percent of Internet users have paid for online content.
"Some observers have questioned whether Internet users are willing to
pay for online content, and many media sectors are struggling with the
disruption that digital networks have created for their businesses,"
states the report, authored by Jim Jansen. "The issue of people’s
willingness to pay for online material has enormous implications for media
companies, artistic creators and others who are hoping to sustain themselves—or
grow new businesses—by raising revenues through online purchases."
When Internet users were asked whether they had ever "paid to access or
to download any of the following types of online content," 33 said yes
regarding digital music; 33 percent had paid for software; 21 percent had paid
for applications for their mobile phone or tablet; 19 percent had paid for
games; 18 percent had paid for online newspapers, magazines, articles or
reports; 15 percent had paid for videos, movies or shows; 12 percent had paid
for digital photos; and 11 percent had paid for members-only, premium content
from a Website that also offers material free (also known as a
"freemium" business model).
Other content that 10 percent or fewer of those surveyed said they’d paid
for included e-books, podcasts, tools or materials for video or computer games,
"cheats or codes" for video games, access to Websites such as online
dating sites, and to access adult content.
The average expense for those who paid for content was $47, although the
average amount shelled out each month—a figure pulled up by a few high rollers,
notes Pew—was about $10 a month.
As for accessing and paying for the content, 23 percent of Internet users
said they pay for subscription services, versus downloading individual files
(which 16 percent do) or accessing streaming content (as 8 percent do). The
majority of users, or 66 percent, also rely on one method of access and payment
(24 percent rely on two methods, and 11 percent use three).
The data is relevant for the new crew of mobile makers, which are
discovering that to compete with Apple, or to just carve out a small portion of
the tablet market, they’ll
have to support not only hardware but ecosystems—an operating system,
applications, support for a developer community, etc. For a hint on how to
thrive in those mobile worlds, they should take a look at what thrives on the
Web, says Fred Wilson, a principal at Union Square Ventures, the venture
capital firm behind Twitter, Foursquare and Etsy, among other household names.
"I've been saying for a while now that I think mobile economics will
trend toward Web economics as the mobile Web goes mainstream. In other words,
the business models that work best on the Web will ultimately work best in
mobile," Wilson wrote in a Dec. 30 post on his
personal blog, avc.com.
Wilson went on to explain that
because there’s a limitless amount of content online, what’s valuable is
filtering and curation—though
not restriction. "Scarcity is not a viable business model on the
Internet," he writes, adding that though for a while, Apple provided
"something that has looked like exclusivity and scarcity."
With the mobile Web going mainstream in a major way in 2011, "other
devices and presentation layers will develop that will have different models
and transaction systems," wrote Wilson.
"I suspect that, like the Web, we will see a plethora of marketplaces and
transaction systems develop across multiple platforms and devices. Developers
who want to access users on those devices will have to use different
approaches."
While Apple’s model isn’t going anywhere, it will also no longer be the only
one. The mobile model is moving to the Web model, which means that a whole lot
of devices will soon be "accessing largely free content and applications
with advertising and freemium and commerce and virtual goods and many other business
models generating trillions of dollars for developers," Wilson
forecast. "Just like the Web, but even bigger and more exciting."
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