Access is the Biggest Digital Product

Of the $2 trillion consumers spent globally in 2010 on digital information and entertainment products and services, the largest spending segment (62 percent) was for communications subscription-based access and usage services, say analysts at Gartner.

The $1.2 trillion included mobile and wired voice services; mobile data services, such as testing and broadband; fixed broadband services; video services, such as subscriptions to pay TV; and online gaming.

The second-largest spending segment (28 percent) was for devices. The $600 billion is made up of consumer electronic devices, such as mobile/handheld devices, PCs and related devices, and stationary entertainment equipment, such as television sets and game consoles.

The smallest spending segment (10 percent) was for content and software for a total of $200 billion.

That is one perspective on digital goods. As significant as content and software sales might be, 90 percent of the money spent by consumers each year is on the appliances to get and use the content, and access to network services to deliver content.

Some people worry about (low margin) "dumb pipe" business models. The worry is genuine, but collectively, access services and device sales represent most of the economic activity.

Gartner Says Consumers On Track to Spend $2.1 Trillion Globally on Digital Information and Entertainment Products and Services in 2011

Hulu Has to Decide Whether to Sell

Hulu's owners are scrambling to figure out how to make money from a new generation of TV viewers who want to do some of their viewing online or on mobile devices, and also must now decide whether to sell the company, as Yahoo apparently has submitted a bid to buy Hulu. The decision will carry important strategic implications.

Right now, Hulu is a supplemental, "catch up" service that allows users to view recent TV episodes. But Hulu could also be the foundation for building a rival distribution platform that competes more directly with existing multi-channel video subscription services.

Sooner or later, that is likely to happen in any case, the fundamental issue being one of timing. But timing is everything when an industry faces changing end user demand in ways that will cannibalize the sizable existing business.

Hulu's Owners Weigh Cons of Possible Sale of the Site - WSJ.com (subscription required)

DoCoMo Begins Phone to Phone Payments Internationally

NTT DoCoMo announced the ability to make direct payments from a DoCoMo mobile phone to the numbers of foreign operators. The service will be available on i-mode compliant phones through the service "SMART Money," and the first foreign operator to act as a partner, will be the Philippine mobile operator PLDT (Philippine Long Distance Telephone Company).

MasterCard also is working with Smart Communications, the wireless arm of PLDT, to support mobile payments and transfers.

Just Another Mobile Phone Blog: DOCOMO began international mobile payments from phone to phone

Government, Individual Debt is a Worse Problem Than We Might Have Thought

Sometimes you have to admit you were wrong. I originally thought the past recession would unwind, leading to a new round of growth, on the pattern we almost always have seen in past recessions, whic is to say that, by now, we should be seeing much more robust job and gross domestic product growth.

I was wrong. This one is different. See this  or this. 

Of course, some will point to the 1970s "stagflation" as the model, where we have both higher inflation and stagnant economic growth. What might be different this time is the stunning role debt seems to be playing.

"Today, U.S. consumers have more mortgage and credit-card debt than they did five years ago, and the U.S. budget deficit is worsening," says the Wall Street Journal. "At the same time, European governments are having to throw billions more euros at Greece to keep it afloat."

One of the changes I notice is that I am, possibly for the first time, seeing acknowledgement across the political spectrum that the debt and deficits do really matter. True, there is some skepticism about public willingness to make the needed sacrifices. But possibly for the first time there is a common recognition that Greek style unrest could happen in the United States, and probably will, if one assumes that "spending less, much less" is a key part of what is required to remove the debt problem.

"The fundamental problem is that reversing the trend of piling on the debt requires some combination of cutting spending, growing income or the economy, and inflation," the Journal notes. On the job creation front, businesses aren't hiring or investing because they know consumers are unable to respond to the supply.

Some economists would argue that recovery from a specifically financial crisis takes about seven years, on average. Roughly half of the time, a financial crisis leads to a "double dip recession." Economist Gary Shilling says the next recession won't be a double dip; it will be a new recession. That comes in 2012. See this.

Government, Individual Debt Hamstrings Recovery - WSJ.com: (subscription required)

Public Wi-Fi Has Changed Over the Last Year

Over the last year, more consumers have begun using public Wi-Fi networks  to connect their smart phones, tablets and iPod Touch devices, compared to last year, when more users were connecting PCs. 


In part, that might be a result of more smart phones, tablets and iPod Touch devices in the user population.  


Meraki, a supplier of Wi-Fi networks to enterprises and other larger organizations, anonymously surveyed over 100,000 randomly-selected devices accessing general use, public, and educational Wi-Fi networks across the United States. 


The survey looked at bandwidth usage and operating system popularity over selected periods in 2010 and 2011.


http://meraki.com/press-releases/2011/06/22/meraki-reveals-ipads-use-400-more-wi-fi-data-than-the-average-mobile-device/

U.S. Smart Phone Preferences

A recent survey of smart phone buying intentions in the U.S. market by the Yankee Group shows 36 percent planning an Android purchase, while 33 percent of respondents said they'd buy an Apple device.

About 15 percent said BlackBerry would be their choice, while nine percent indicated a preference for a Windows device.

As has always been the case, Nokia does not register, scoring one percent interest, on a par with Palm.

Whether Nokia's switch to Windows for its operating system will have a positive impact on OS share remains to be seen, but many believe Windows will be the clear winner, overtaking BlackBerry.

Some Implications of the "Social" Web

Online video consumption and social networking are growth areas in terms of end user engagement, it is clear. When you exclude just Facebook from the rest of the Web, consumption in terms of minutes of use shrank by nearly nine percent between March 2010 and March 2011, according to data from comScore.

And, even when you include Facebook usage, total non-mobile Internet consumption still dropped three percent over the same period.

The important news is that Facebook usage does not seem to be adding to Internet engagement time. Facebook is displacing time spent with other Web apps.

As many will note, social media and Facebook in particular, are emerging as a powerful news referring source. At five of the top 25 consumer news sites studied by the Pew Research Center’s Project for Excellence in Journalism, Facebook is the second or third most important driver of traffic.

Twitter barely registerd as a referring source. In the same vein, when users leave a site, “share” tools that appear alongside most news stories rank among the most clicked-on links. See http://www.journalism.org/analysis_report/navigating_news_online. That doesn’t necessarily mean the same trends will hold for business-to-business content. One suspects search engines will still drive half or more of delivered visitors.

The Pew data on consumer news sites shows 60 percent to 65 percent of traffic is “direct.” In my experience that is not true of B2B traffic, where it can easily be the case that half or more of traffic comes from search engines.

Still, the overall comScore data suggests that people have changed the way they use Internet apps.

At a high level, one might say that the legacy “searchable Web” is either being replaced by, or augmented by, “the social Web.”  What’s the difference? Maybe something as simple as connections between pages being replaced by connections between people.

The implications for content publishers could be important. Up to this point, one of the requirements for online content has been its ability to be found. So digital media publishers create lots of content around top keywords, engineer for search engine optimization (SEO) and expand the surface area in search engines to reach more users.

Some might argue that SEO’s strategic value is quickly fading as Google’s growth slows and its prominence in distribution slides away. Some of us might argue that is a good thing. Too often, SEO techniques are applied in ways that actually make content less useful. Writing for an algorithm is not the same thing as writing for a person.

Links embedded as an SEO technique often do not add much, if any, value. And the need to repeat “keywords” in body copy runs counter to traditional good writing techniques, which call for varying terms so no one word is used too frequently. But SEO calls for repeating keywords often in body copy. So less emphasis on SEO would strike some of us as a welcome change.

Still, the point, some would argue, is that Facebook has become the hub of the connected Web, a new “home base” that might have been anchored by Google’s home page over the last decade.

Facebook began receiving as many visits as Google in March 2010, and already garners more than three times as many minutes as Google each month from users, according to comScore.

Looking ahead, the best projections of U.S. online reach indicate that Facebook will surpass Google on that metric in less than a year, too.

And with this change, the nature of the relationship between users and publishers is being altered. Search offers a utility relationship, connecting users to content for the briefest of transactions; typically, it provokes users to just one page view so they can find a piece of information, and then they move on.

Social discovery arguably can build a relationship. By definition, a bit of content or a site found using a social mechanism already has some “connection” operating, between one user and another, or between one user and a community.

At least in principle, social discovery had enhance a relationship more than a “search” function can. At least, that’s the theory. See http://allthingsd.com/20110623/the-web-is-shrinking-now-what/?refcat=voices.


Facebook’s new popularity doesn’t mean brands can dispense with content published on their own sites. Facebook, after all, is used as a way to point to the original source. But there is clear logic to create ways to automatically create Facebook posts when a new bit of content is published.