News & Tech

By Marc Wilson Special to News & Tech

I have a near-60-year-old friend who says he now spends more time with his iPhone and less time watching television and reading his local newspaper. He’s not alone. After years of anticipation, mobile technology is taking the nation – and the world – by storm.

I’ve been going to press association conventions for years and attended many sessions on the coming “Mobile Revolution.” Most of those shows in the 1990s proved to be less than prescient. That’s to say, the Mobile Revolution didn’t take off – until the advent of 3G (third generation) cell networks that increased throughput six times over 2G networks.

Next up: 4G networks, which will increase speeds by another three to five times. They’ll be in place by 2011.

Smart phone usage

All of this comes as Forrester Research estimates that of the some 277 million mobile phones currently in use in the United States, 17 percent are smart phones, defined as “a mobile phone or Internet-connected handheld device that uses a high-level operating system such as iPhone OS, BlackBerry OS, Windows Mobile, Palm OS, Web OS, Symbian, and any flavor of Linux including Android.” And the number is growing, with Nielsen reporting that 25 percent of all new cell phones sold are now smart phones.

Strikingly, Morgan Stanley has projected that by the year 2013, total shipments of smart phones will surpass the shipment of both personal computers and notebook PCs.

Pew Research shows that smart phone users are heavy news consumers, with 62 percent getting news daily from at least three different online news sources. Another 25 percent of smart phone users report using at least six different sources of news on a daily basis.

Nielsen reported in 2008 that more publishers are producing content in mobile format, and those who do so see about a 13 percent audience gain. As smart phones become more widely used, that number should increase.

Social impact

Early adapters of smart phones were largely business professionals – especially those who traveled extensively – who used the gadgets to keep up with their e-mails. Today, the advent of social networking is changing that dynamic, according to Nielsen.

To that end, more and more smart phone users are using their gadgets to stay connected on Facebook, Twitter and other social sites. Nielsen said accessing social networking via smart phones increased by 187 percent from July 2008 to July 2009. Search, by contrast, grew by 113 percent.

The Ball State Media Center recently completed research that indicated that last month’s introduction of Apple’s iPad may actually reduce the number of smart phone users, at least temporarily. The iPad needs a 3G wireless plan to be effective, and the Media Center said some users may buy an iPad and then downgrade to a basic cell phone. Additionally, some publishers hope the iPad might help traditional newspapers and magazine distribution, while easing Amazon’s Kindle from its near monopoly on e-readers.

“We think there could be some unforeseen ripple effects in the marketplace,” Jennifer Milks, a project manager at the Center for Media Design, told Media Post.

Looking for money

While smart phone usage and content continue to increase, publishers have yet to see any great advertising opportunities from the Mobile Revolution. Other than SMS text messaging ads, mobile advertising is challenged, with mobile advertising attracting only $1 billion in revenues in 2008. Of that total, the majority, 80 percent, is national advertising, with local advertising generating only a modest $4.7 million, according to Borrell Associates. The consultancy adds, however, that it expects local advertising to grow significantly (see related story, page 1).

The advent of 4G networks will make it easier for consumers to view videos and even movies on their smart phones. Borrell predicts search, display and coupon advertising will also expand. Until then, most of the revenues supporting smart phones come from users purchasing apps from online stores managed by Amazon, Sony and, of course, Apple.

I’ve been at several meetings where this question is asked: How do newspapers make money on mobile? The most common answer is a “bundled sale” where mobile is included in packages that include display, search, print and other products.

Two of the three legs of the stool exist. There is clearly growing consumer demand for mobile content. Technology is available to help publishers. The third leg – advertising revenue – is still largely missing.

Most publishers realize they have to join the Mobile Revolution. They need to be where the eyeballs are, but they wonder: Where’s the $$?

Marc Wilson is general manager of TownNews.com. He can be reached at marcus@townnews.com.

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