News publishers remain obsessed with the question: what will be the main distribution platform for their contents, and what will be the subsequent business models? For clues, let’s zoom in the iPhone’s recent performances as well as its immediate prospects.
The smartphone introduced a year ago by Apple has become the tool of choice for news-hungry Internet mobile users. According to M:Metrics, a survey company that tracks the use of mobile devices, a stunning 85% of iPhone owners report using it to access news and information contents. That compares to 58% of the overall smartphones users and only 13% of basic mobile phone owners. By the same token, iSuppli, another research firm, found out that iPhone users spent 12% of their time surfing the web versus 2.5% for the regular cellphone users. On the top of this, data shows that iPhone users spent more time, by a factor of 12 accessing a social network (another future important delivery platform for news content).
What does that means for the publishing sector? First : interface is key. Try accessing a newspaper (or even the Monday Note) on a Blackberry : it’s 1985’s teletext! Do it on an iPhone, it works fine. The added development is negligible compared to the costs of the average Content Management System (CMS) and can be accomplished internally as shown by many sites (The New York Times, Condé Nast’s Portfolio magazine).
Second, we see applications beyond the made-for-iPhone sites that could benefit the publishing industry. In the coming months, we’ll see a first batch of true applications created for the iPhone. For example, how about a powerful caching system for publishers? With it, the user stores dozens of pages of favorite sites — or hundreds of book pages — on an iPhone or iPod Touch for a quiet reading off-line. (I still wonder why a publishing company isnt developing such an application itself and giving it away with pre-loaded content. Small development cost — count less than $100k for a first version — add a nice viral demo on You Tube and you get significant PR impact).
What about the business model? Well, the most obvious one is advertising. On the Internet, scarcity of pixels doesn’t imply little revenue. Quite the contrary, actually. For most sites, the bulk of their revenue comes from very few top slots on their homepage, the remaining inventory being sold at bargain basement prices. (On the French market, discounts between rate cards and net prices average 80%). Translating: a single banner ad on an iPhone-optimized minisite can be sold at a high premium CPM. Plus there are other revenue sharing systems to explore: the monthly bill of iPhone users is 24% higher than the average mobile user’s. That’s $228 extra per year.
News providers should devote small, highly focused set of resources (a developer + a couple of junior editors would be fine) to develop content optimized for the iPhone and related micro applications. This applies also to advertising agencies and media buyers who should get into this emerging piece of digital real estate.
Can such a move prevent the possible extinction (as the Economist puts it) of parts of traditional media? Certainly not. But it is better to be in the race than on the bench.