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.”