Mobile news habit grows, creating new business opportunity with old challenges

From a business perspective, the growing legions of tablet and smart phone users who get at least some of their news on mobile devices can be viewed as an opportunity, a puzzlement or a disappointment.

There is evidence for each of those viewpoints in a new study, out this morning, from Pew’s Project for Excellence in Journalism in collaboration with The Economist Group.

The data was drawn from a survey of 9,513 people conducted June 29-August 8, 2012.

Tablet ownership has doubled (11 to 22 percent) in the year since the first PEJ/Economist survey.  Smartphone ownership is up from 35 to 44 percent.  Half of Americans now have one mobile device or both.

Furthermore, news is a leading use of the devices – trailing only e-mail and double that of shopping. Despite the availability of free news apps and sites, nearly one-fifth of users have paid for a digital subscription. Users also notice ads, click and buy at substantially higher rates than desktop and laptops users viewing conventional sites.

At the same time, surprising trends are developing. Though for some mobile is a substitute for print (and they contemplate canceling subscriptions), the most intense laptop and smartphone users are likely to be loyal print readers and many still prefer a “print-like” experience on mobile.

The PEJ survey finds a clear majority of users (60 percent) now prefers browsers rather than apps (about 25 percent) to access news.

Disappointingly, only a small fraction of tablet users (smaller than the first generation surveyed a year ago) indicates a willingness to pay for news.  Similarly tiny percentages prefer viewing ads on tablets or smart phones to print or desktop/laptop. Nearly half say they do not like to see ads in any medium.

So you could say that users are coming to the new platforms with a familiar deadly-for-business attitude: We want it all, we want it now, and we want it free.

The report does not dig into the commercial history to date of mobile news ventures, but we know it has been littered with disappointments. Smartphone advertising has been negligible for most news organizations. First generations tablet apps like The Daily or Wired have been cut back; the Orange County Register’s Peel quietly folded a month ago a year after its launch.

“Nobody has hit the jackpot yet,” PEJ director Tom Rosenstiel said when I asked him about the business implications of the new study, but that is no reason to walk away from the platforms.

“Smartphone and tablets are already huge and they are still growing  rapidly,” Rosenstiel said in a phone interview Friday. “Half the population has mobile access compared to the 75 percent who have desktop/laptop.  So this is where the business is going. These are the computers people will be using at home.

“Clearly mobile is part of the future of content. It is inescapable, even if it is not [fiancially] rewarding yet.”

To date, Rosenstiel continued, “Nothing is working magically different or better on the tablet,” but content providers can take encouragement from the time users spend in tablet reading and the intimate, home-setting engagement with the platform.

“There are two other important bottom-line findings,” Rosenstiel added. “People are reading in depth, even looking at back issues. This is content people value, and you can work with that.”

Also, he said, users “are going to brands they prefer — the familiar and trusted. So the value proposition looks good.”

Agreeing with Rosenstiel on the promise, I think the study also points to some tricky here-and-now business challenges.

If browsers are king, for the time being, doesn’t that underscore the need for better ad display in conventional sites and responsive-design that looks good in each of the platforms?

I am also wondering whether those who want a print-like experience and those who want other options can be served well in a single site or app. The New York Times website comes close to the best-of-both for me, but may not work for those who want a clean break from print traditions.

Another open question (the subject of an ongoing Poynter EyeTrack study of apps) is whether better tablet design and a smoother running interface will in time win back some of those users who have switched away to browser alternatives.

When PEJ did the first survey, 81 percent of the tablet owners had iPads; a year later it is only half, with significant numbers gravitating to less expensive Android-based products. This is a replay of the smartphone market where Apple was first mover and its iPhone iterations remain top of the line, but now a buyer has many choices.

I read between the lines of the study that the wealthiest (like a majority of Economist readers) are likeliest to be four platform users and spring for the best and most expensive in each. But a suite of products tailored just to that elite market could miss some of the growing mass of mobile users.

There is lots of potential here, but also a lot of permutations to master, to put it mildly, for those who think the news business has become partly or largely mobile. Like most Pew studies, this one is not prescriptive. But it delivers a boatload of helpful data to those engaged in inventing the digital future of news — and making some money while they are at it.

My own take on the business implications of the findings: Mobile advertising solutions are still very much a work in progress, but bundled subscriptions are looking better than ever. Sell users a subscription on their favorite platform and give them access to the rest free or at a small up charge.

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