Monday, 10 August 2009

Apps on the iPhone: The Search for a Business Model (Once Again)

So here we are again: How does one monetize in the world of increasingly ubiquitous connectivity? The latest variation on this theme is the world of applications for the iPhone. Apps for the iPhone abound, but opinions differ about to translate these apps into revenue, either directly or indirectly.

An article by Stephanie Clifford that appeared in the August 10, 2009 online edition of The New York Times ("There's an App for That/But a Revenue Stream?") reflects the commercial uncertainty among media companies with respect to the role that apps for the iPhone may play in their businesses. Among the most notable examples of the uncertainty, as described in the article, are those summarized below [the captions are mine]:

1. It Time for the Herd--""The iPhone has really been a phenomenon, so I think most media brands, at least the national one, are thinking it's a place to be," said Matt Jones, vice president for mobile strategy and operations at Gannet Digital-USA Today."

2. But How do Build a Revenue Model?--As noted by Mr Jones, maybe we charge a subscription, maybe we rely on advertising, maybe we settle for a one-time payment, maybe maybe we seek recurring periodic revenues? Unsurprisingly, the current evidence does not bode well for subscriptions however.

3. Maybe All We Are Concerned With is a Public Mission--One public LA radio station--KCRW--has introduced three applications: (i) the station's programming; (ii) videos about food: (iii) videos showing in-studio musical performances. The purpose of the apps is to fulfill a public mission. "Our mission has always been to get our content out there--it was just part of who we are as public broadcasters," noted the director of new media for the station.

4. Maybe All We Are Interested in are has come up with applications for the"Today" show as well as "Rachel Maddow" . As explained by the manager of, "[m]y opinion is it's mainly a branding and content play, getting our content out in additional platforms ....I do believe that you get a circular effect: someone interested in you in mobile is exposed to the brand and to your great content. They may then be more likely to tune in to the show or go to the Web site."

Rachel Maddow (I Think)

5. Then Again, Revenues May Not Be All That Bad-- The VP for business and finance brands at CBS Interactive, Stephen Howard-Sarin, pulls no punches. "We do mobile user experiences to make money, so we have no interest in funding mobile as a loss leader just for some intangible brand benefit." Mr Howard-Sarin went on to note that "i]t is experimental ....We have a lot of oars in the mobile water because we think there's money there."

6. And Then There Are the Audio Apps-- Audio apps are in principle simpler. If ad rates are based on the number of listeners, and the streaming of audio content via apps lead to an increase in listeners, ad rates in principle can be raised. As noted by AdMob, which serves ads on applications, "[a] lot of terretial radio stations have their reach extended, and they already have advertisers, so this has given the business a huge boost in that they can get a national reach."

I have to be honest, in rereading this list, I come away with a bout of strategic vertigo. So what do I do recommend: Content for free, content as a revenue generator, content to atract eyeballs to strengthen my brand across mulptile platform, some combination of the foregoing, or some other model? I can hardly wait for my next MBA class to begin in October to explore these questions. After all, who is better placed to provide guidance, than students who straddle the managerial/consumer divide. Check back with me in November to hear their views.

And Jimmy Stewart Thought He Suffered from Vertigo

1 comment:

Unknown said...

That is a correct picture of Rachel Maddow. I watch her every night, so I don't need "an app for that." Like the KCRW approach, though. Will definitely subscribe. Thanks for highlighting the NYT's article. Missed it this morning.