Why ‘paid for’ content models won’t work on tablets

By December 31, 2010Apple, Mobile

Fred Wilson has a great post up today arguing that the mobile web is really just like the wired web and that the economics of both are rapidly converging.  I particularly liked this passage where he talks about the inevitable failure of iPad magazine sales:

There is some discussion in the tech blogs today about why iPad magazine sales have been disappointing. I don’t understand why anyone would ever think that adding a presentation layer on top of web based content would make it something people would want to purchase when they are not willing to purchase the same content directly on the web.

A central issue with the Internet, no matter what device and presentation layer you use to access it, is that there is an unlimited amount of content available. Evan Williams calls it "a web of infinite information" in this chat with Om Malik. What is valuable is filtering and curation. Restricting access to content doesn’t work. Someone else’s content will get filtered and curated instead of yours. Scarcity is not a viable business model on the Internet.

Apple’s success over the past couple of years with a very different business model has raised hopes amongst publishers that somehow the mobile will be different from the web.  I can’t see it myself.  Moreover – betting against the Apple view of the world will be a smart thing to do over the next year or two.

Enhanced by Zemanta
  • Hi David,

    I think that Apple’s stranglehold on the smartphone and tablet worlds will weaken/end and with it will go their closed ecosystem model. Hardware and OS will increasingly be provided by different vendors and the model if approved 3rd party software only combined with a 30% house take will come to be seen as a limitation/anachronism.

  • Anonymous

    I think you’re right that Apple’s stranglehold will weaken in that they will lose overall market share in the mobile space, but I’m not so sure this will result in the closed ecosystem going just yet. In part what Apple offer is exactly the curation that Fred Wilson mentions in his quote. Sure the Apple model won’t scale as well as a community-curated model a la Android, but I’m not sure Apple are hell-bent on holding the whole of the market. I suspect they’ll be happy to take the top end of the market and let the other players battle over the lower margin remains.

    I think the overall sentiment is definitely correct re mobile and wired ultimately delivering the same content, though of course mobile may well deliver it in much more useful context.

  • The timing of the shift is definitely hard to call – which is a big part of the fun/challenge of being a VC! It will be interesting to see if third party software developers are happy to support Apple and their big house take as their market share declines – if not Apple may have to open up their ecosystem in order to maintain their dominance of the top end of the market (which I agree is what they are probably aiming for).

  • While I agree with both assertions; 1) the mobile web will ultimately dominate native mobile apps 2) the current breed of iPad magazine apps are selling poorly because they have focused on eye candy over adding value. But I reach slightly different conclusions about how quickly we will see the shift to a the mobile web and publishers longer term monetization prospects based their experiences to date.

    From a technical perspective the fully fledged mobile browsers on the latest smartphones are still relatively immature (standards and implementations are still evolving fast) and implementations are inconstant, often in subtle ways (across android handsets and other platforms). This has a knock on effect of currently making development of very rich, consistent apps more of an art than a science.

    Tooling and frameworks will help address these issues but are still relatively immature. Companies like Stripe, Sprout Core and Treesaver are all pioneering this space and are all emphasising an open sourcing their frameworks which will help improve adoption.

    Finally anouther big issue holding back mass adoption is the current developer mindshare and momentum still seems to be behind native mobile platforms. The different skillsets and patterns needed to build this new breed of sophisticated apps are quite different to the page based systems mainstream web developers are used to. This will make it hard for the mass of PHP/jQuery developers to make the jump without a big jump in skillset.

    Addressing the second point. I think savvy publishers will be looking to put the iPad in the wider context of a rich mobile ecosystem, an increasingly social web and low cost on-demand cloud computing. Combining technologies would enable them to offer a connected, personal experience across readers devices (as the Kindle does for books or iTunes does for music). Which in turn should enable them to meter content enough to reduce their dependency on adverting and physical print sales to pay for the content generation.

    Unfortunately for many publishers this would involve investing heavily in the currently immature mobile web and letting go of a static edition based publishing model. Going down that route would also not be in Apple or Adobe’s interest who appear to be their biggest allies currently.

  • Thanks Markus. Very insightful comment.

    It could be that the change in mindset is driven by hot new publishers going down the mobile site route, and then others copying them. It could happen more quickly that way. E.g. Quora doesn’t have a mobile app.

    Fragmentation is an issue, but then it is also an issue for native apps.