The Mobile Wave: iPhone 3.0 and Newspapers

iphoneEarlier this week, in another installment of their infamous product announcements, Apple previewed their upcoming changes to the iPhone firmware.  The new iPhone 3.0 firmware includes a plethora of additions and fixes such as the long awaited implementation of something as simple as copy and paste functionality.

One feature, which allows users to purchase items from within an application, caught my eye more than the others.  For those unfamiliar with the iPhone, Apple allows iPhone users to purchase applications made by third party developers through the App Store.

Since the conception of the App Store, the interaction between developers and their customers ended once an app was purchased and installed. With iPhone 3.0, developers will be able to sell additional content from within their applications, increasing their potential revenues and encouraging them to upgrade their applications.

Apple used game developers as an example of one community which could potentially benefit from this feature.  A game developer could sell their product in the App Store, but offer additional levels or features to be purchased from within the game.  Ben Parr of Mashable wrote an excellent article today about the importance of this feature to the mobile economy (read it here).  The possibilities are, quite literally, endless.

As a grad student working on my masters in journalism, the current crisis facing newspapers is a topic that is constantly crossing my mind.  For years, newspapers survived heavily on advertisements and classified ads for their revenues, and subscriptions played a much smaller role.  But with the introduction of free online services like Craigslist, the well of cash which classifieds brought to newspapers has all but dried up. Additionally, advertisers are putting more of their money in cheaper, more focused online ads forcing newspapers to brainstorm ideas for paid subscriptions services.

The newspaper industry did little to prepare itself for the oncoming storm of the Internet, and instead chose to ignore the problem.  Now, with revenues plummeting, some are grasping at straws to find ways to survive, while others are either closing their doors (as in the case of Denver’s Rocky Mountain News) or switching to an online-only publication (take for instance the Seattle Post-Intelligencer).

Most newspapers have some sort of online companion to their printed editions, but the majority of their revenues still come from the printed edition.  The problem is, the cost of printing a newspaper is far more expensive than maintaining a website, but until the newspapers can discover how to transfer their revenue from print to online, they are stuck in their downward spiral.

In a recent episode of the MacBreak Weekly podcast, Andy Ihnatko stated that the only way for the newspaper industry to survive on the web was to abandon the web because the web will always and forever be free.  Instead he suggested that newspapers concentrate their digital monetization efforts to mobile devices such as the iPhone and Amazon’s Kindle.

Newspapers have already missed the web wave, and to jump on now is impossible.  As Ihnatko pointed, the web inherently wants to be free, and newspaper survival on the web would seek to break this law.  Besides, why pay to access the New York Times website when there are thousands of other free credible news sources and aggregators?

Instead, newspapers need to see that another wave is coming, and they can choose now to jump on before it overtakes them.  The wave is mobile devices, and with the new iPhone 3.0 in-app purchasing feature, there are now countless possibilities for newspapers to get on-board.

Hypothetically, a newspaper like the New York Times could sell an application for the iPhone which accessed their top stories at a low price of, say, $2.99 (about half the price of a week of print subscription).  Where the Times could turn a profit is offering subscriptions from within the application.  Perhaps a user could subscribe to different sections of the paper, like Politics or Sports for an additional $.99 a month which they could be prompted to renew.  Or the Times could even offer personalized news feeds based on keywords or a user’s interests and browsing habits.  Exclusive content made specifically for the iPhone could also be sold at a premium, and prices could be placed on viewing an entire story versus the first couple paragraphs.

As the nation’s mobile infrastructure expands, the number of people with the need to access the news on their mobile devices will continue to grow.  In 2005, 40% of mobile users in Japan (over 100 million people) used their devices to access news and information services.  This number grew to 52% in 2007, and I would venture a guess to say that nearly two-thirds, if not more, are getting news on their phones today.

The possibilities are out there, and newspapers need to be talking not only with companies like Apple and Amazon to learn how they could profit from their devices, but they also need to be communicating with each other.  Additionally, I think newspapers should be getting the word out to the public about their woes, instead of calling out for help when it is too late.  One day we could wake up and our most beloved papers could be gone, and many may not even know why.

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