What Kinds of Online Content Will Consumers Pay For?

Consumer willingness to pay for online content seems to be shaped by their current experience with existing media.

Online content for which consumers are most likely to pay—or have already paid—are those they normally pay for offline, including theatrical movies, music, games and select videos such as current television shows, a new survey by Nielsen suggests.

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Content users might pay for tends to be professionally produced, at comparatively high costs, and definitely not user-generated content, including social community content, podcasts, consumer-generated videos and blogs.

Respondents had mixed willingness to pay for newspaper, magazine, Internet-only news  and radio news and talk shows that are created by professionals, relatively expensive to produce and commonly sold offline.

After surveying 27,000 consumers in 52 countries, Nielsen also found 85 percent prefer that existing free content remains free.

Whatever their preferences, consumers worldwide generally agree that online content will have to meet certain criteria before they shell out money to access it. If respondents already pay for a product in physical form, 78 percent believe they should be able to use online versions of the same content at no additional charge.

At the same time, 71 percent of global consumers say online content of any kind will have to be considerably better than what is currently available free before they will pay for it.

About 79 percent say they would no longer use a Web site that charges them, presuming they can find the same information at no cost.

 Only 43 percent of respondents say an easy payment method would make them more likely to buy content online.

About  47 percent of respondents say they are willing to accept more advertising to subsidize free content. Some 64 percent say that if they must pay for content online, there should be no ads.

Killer Apps and Devices of 2020 Are Not Knowable

What will the killer apps and devices of 2020 be? About  80 percent of experts surveyed by the Pew Center's  Internet & American Life Project agreed that the “hot gadgets and applications that will capture the imaginations of users in 2020 will often come ‘out of the blue.’”

"The experts’ record is so lousy at spotting key technologies ahead of time that there is little chance they will see the killer gadgets and applications of 2020," Pew says. "If you had asked this question a decade ago, no one would have predicted the iPhone."

In other words, we don't know.

But some trends are clear, because they already have begun: Mobile connectivity and location-based services will grow in the next decade.  Still, it takes a generation to figure out which technologies have real impact and which are just fads, so many other application and device trends we now see might, or might not, be actual "killer apps."

 Significantly, just 61 percent of respondents suggested the Internet would remain a place where any user can communicate directly with any other user. About 33 percent think “the Internet will mostly become a technology where intermediary institutions will control the architecture and content, and will be successful in gaining the right to manage information and the method by which people access it.”

A significant number of respondents they argued there are too many powerful forces pushing towards more control of the internet for the end-to-end principle to survive. Governments
and businesses have all kinds of reasons to control what happens online, Pew reports.
There will be alternative networks for companies and individuals that prefer to have a more controlled environment for sharing and consuming content, many believe.

The future will produce a hybrid environment with a bit more control exercised in the core of the internet for some purposes, but for other purposes will enable end-to-end practices, researchers at Pew conclude, based on the responses. "Some things will have to be managed, especially if the capacity of the current internet becomes strained," Pew analysts say.

"The dictates of business will shape large parts of the online experience and more pay-to-play business models will affect information flows online," Pew says.

"The needs of users themselves will sometimes drive changes that bring more control of online material and less end-to-end activity," Pew notes. There will be “content service providers” who are gatekeepers of many users’ online experiences.

The point, one might argue, is that although the "open, end-to-end" Internet will continue to exist, so will many relatively closed experiences, sites, networks, applications and devices.

Telekom Austria Looks to Wi-Fi for Offload

Mobile broadband is cheaper than fixed-line access in Austria, and also the single largest method of access. In some ways, that is good for iTelekom Austria, if success is defined as dominant market share.

On the other hand, it entails capacity issues, since PC users consume far more bandwidth than smartphone users.  So it is not surprising that Telekom Austria CEO Hannes Ametsreiter says the company is looking hard at ways to better use Wi-Fi connections to offload much of that traffic. 

Is This Evidence of Declining Use of At-Home Broadband?

If one looks at the quarterly or annual data on broadband subscriptions during the course of the recent recession, one is hard pressed to find any significant evidence that broadband users downgraded their connections to dial-up or stopped using the Internet.

This data from the Pew Internet & American Life Project, on the other hand, shows leveling in 2009, about a year into the recession, and an actual decline late in 2009.

Some might note that a three-percentage point swing in reported behavior on this sort of survey would be within the margin of error, so it is hard to infer anything conclusively. But even a flattening would be significant, should the trend be later confirmed.

Broadband access at home has not yet ever declined. Virtually all the public firms have reported continual net customer additions, so any slowdowns or reversals might have occurred at private or smaller providers. We'll have to watch this.

Unified Communications is Not a New Market, says Frost and Sullivan

"Unified communications is not a new market," argues Melanie Turek, Frost and Sullivan analyst. Mostly, it is a repackaging of many existing businesses, ranging from business phone systems to collaboration software suites.

That doesn't mean there are not some new products, industry segments and providers. But most of the revenue is driven by legacy products, she suggests.

"It's a way for vendors in existing markets to continue making money," says Turek. "The biggest impetus for the players in this space to keep playing isn't to deliver new business revenue; it's to stop existing, or past, revenues from disappearing—not to another vendor (although that's always a risk), but from the market altogether."

In many cases, the goal is simply to give customers a reason to upgrade. "Unless those vendors can deliver a compelling reason for companies to move to the next version of their communications and collaboration software, companies aren't going to," says Turek.

And the telephony vendors have it even worse: Hard phones and network gear should be built to last: sometimes decades or more, says Turek. " And except in certain specific use cases, like the contact center, businesses don’t need or want to add more features to their employees' handsets."

That doesn't mean there isn't a market for UC, she says. There are new applications. But those new products might simply serve to keep those vendors in business.

The question for vendors, then, is how to grab a bigger piece of the already-existing pie, says Turek.  And that is what makes quantifying the size of the UC market so difficult.

Google CEO Eric Schmidt at Mobile World Congress

Google CEO speaks at Mobile World Congress 2010.

Netbooks Are Changing Consumer Expectations

A new survey by PriceGrabber.com suggests netbooks have set new expected price points for computer purchases, an outcome many suppliers likely feared would be the case.

The percentage of online consumers who personally own a netbook has increased from 10 percent last year to 15 percent early in 2010. Moreover, 11 percent of consumers plan to purchase a netbook in 2010.

The disparity between the dollar amount consumers are willing to pay for their next device compared to the amount they paid for their last device is evident. About 65 percent of consumers say the maximum amount they plan to spend on their next computing device is $750, even though 52 percent of online consumers spent more than $750 on their last device.

The average price of products in the PriceGrabber.com laptop category dropped to $645 in December 2009, from $808 in December 2008. This suggests a 20 percent decrease in average price.

Netbooks are more of a complement than a replacement for laptops, though. Some 55 percent of consumers do not see a netbook as a feasible replacement for a laptop. Additionally, 63 percent indicate that a netbook is best described as an additional device while on the go, not a substitute for a notebook or desktop PC.

The largest age group of netbook owners has shifted from 35 to 54 years to 45 to 64 years over the past year, the survey suggests.

In January 2009, 53 percent of netbook owners were between the ages of 35 and 54 as compared to only 31 percent one year later. In January 2010, 55 percent of netbook owners fall within 45 to 64 years of age as compared to 43 percent last year.

Of those consumers who indicate personally owning a netbook, 86 percent also own a laptop and 73 percent also own a desktop. More netbook owners indicated also owning laptops and desktops last year.

The survey suggests there is an opportunity for netbooks to cannibalize other products, though. In fact, 72 percent of consumers see a laptop as a feasible replacement for a desktop, 45 percent of consumers see a netbook as a feasible replacement for a laptop, and 27 percent of consumers see a netbook as a feasible replacement for a smartphone.