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Will Mobile Develop a Dual Revenue Stream Where the Web Failed?

The first reason to watch this clip from 3-Minute Ad Age is because of the headline, "People Logs 18 Million Mobile Page Views Monthly" -- but the second is that listening to Fran Hauser, who heads digital operations for Time Inc.'s style and entertainment properties, makes you wonder if mobile will succeed in developing multiple revenue streams where the Internet has not.

Hauser points to People's Celebrity News Tracker app for the iPhone. Released in June, it's currently ranked #67 among paid apps (although it was higher at the time of release). At $1.99 a pop, it's cheap, but those dollars add up. It's also ad-supported. While this one app isn't enough to save Time Inc., it's worth noting that distributing these apps is virtually free. I haven't studied the profit margin on magazine subs vs. digital applications, but it's got to tilt in favor of the latter. (I have however been reading Chris Anderson's book, "Free: The Future of a Radical Price," in case you can't tell.)

I mention this app not only because of the revenue stream it generates but also because of the consumer behavior behind it. It's strange how content publishers online have trouble charging for anything, and, yet, in the mobile environment, they are able to. Some of the other best-selling apps from the media-sphere (not including games) are the apps for the Weather Channel ($3.99), AOL Instant Messenger ($.99), the Twitter apps Tweetie ($2.99) and Twitter Pro ($.99), and Weather Bug Elite ($.99).

An easy assumption as to why people are willing to pay for these is that the builders of these apps got the price point right -- but I don't think that's what it is. Consider that on the Web, newspapers have trouble even charging $.99 for a story.

Instead, I think what's going on is that the Web world was built around the notion that everything is free; the mobile realm, even though it's so closely related, was not. Not only are people used to paying for every aspect of their cell phone's basic services, the app market is so new that no free precedent had been set when app developers started charging for them; the mobile app world created a paid market early. Granted, there are many free apps, but I'd argue that if the entire app market had started out as being free, people would balk if developers started to charge. It's a perception game, more than anything else, and one that will benefit mobile content providers.

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