The most important outcome of this week’s emerging tussle between Apple and Google is that we are about to have an intense and financially difficult conversation about what a fair price is for delivering customers to developers, publishers, and producers. Economically, this is one of the most critical issues that has to be resolved for the future of electronic content. Very soon, a majority of consumer experiences (that which we used to refer to as the media) will be digital. But not until the people who will develop those experiences have unambiguous, market-clearing rules for how they can expect to profit from those experiences.
The question comes down to this: Is 30% a fair price for Apple to charge? I must be clear about my intentions here. I do not employ the word “fair” the way my children often do. I am not whining about Apple’s right to charge whatever it wants. Apple may do whatever is best for shareholders in the short- and long-run. I argued yesterday that Apple’s recent decision does not serve its shareholders in the long run. Google announced One Pass yesterday – hastily, I might add – in order to signal to Apple and its shareholders that monopoly power rarely lasts forever. But none of that questions the ultimate morality of Apple’s decision or its rights.
I use the word “fair” to refer to a state of economic efficiency. A fair price is one that maximizes not just individual revenue, but total revenue across all players. Such revenue maximization cannot be achieved without simultaneously satisfying the largest possible number of consumers with the greatest possible amount of innovation.
This quarter I'll be writing a report on the rise of the digital brand -- focused on how interactive tools have changed the ways in which we convey the meaning of our brand to our customers, and how smart marketers can react to (and even take advantage of) those changes. I'm at the early stages of my research, and I'd love the community's help in shaping the direction of this report.
Next week, on February 28, I will speak at the ESOMAR Insights Conference in Brussels on 'The Evolving Online Consumer' and I'm currently organizing my thoughts around this topic. Looking at the uptake of the Internet globally, the numbers are impressive: In the past five years, the global Internet population has grown from about 1 billion to 1.6 billion, and this growth isn't about to stop any time soon. The Internet population will increase in every country in the world over the next five years, but emerging markets will grow at a faster pace. In 2014, one-third of Internet users will come from Brazil, Russia, India, or China (the so-called BRIC countries).
Companies that want to capture this growing number of online users — and their growing funds spent online — will need to look beyond the markets of North America and Europe and approach their online strategies much more globally. But emerging markets don’t just offer a lot of opportunities; there are also many challenges to consider. On top of the needs and wants of the consumers in the different countries, their online behaviors, and the way they are being influenced (and are influencing others) in their purchase decisions, companies need to understand the social and economic business environments.
Most wealth management firms have gotten a pass on mobile, because the people with the most money – older Boomers and Seniors – are the ones least likely to use the mobile Web or mobile apps.
But that pass is expiring. Mobile is exploding, and even the older investors are part of the surge. As we show in the just-published The State of Mobile Investing, 11% of online adults with investment accounts are now mobile investors, up from 8% six months ago (see Figure 1). Two thirds of these mobile investors use their mobile devices to check investment account balances. Half get stock quotes or other market information via mobile. A quarter are mobile traders.
Figure 1: More Than One In 10 Investors Is A Mobile Investor
As channel managers at investment firms scramble to map out a mobile strategy, they face one particular dilemma: mobile apps or Mobile Web sites? While downloadable apps command lots of attention today, we believes that the mobile Web will remain a critical delivery method for the foreseeable future. The simple answer to the app versus mobile Web debate is: both. We recommend that firms develop a high-quality dedicated mobile Web to get the broadest possible reach, and choose a single platform on which to pilot downloadable apps. Then buckle your seat belts! The pace of mobile market innovation won’t slow down for the next few years.
Yesterday Apple announced its intention to tighten its hold on the payment for and the delivery of content through its successful iTunes platform. (I’ll leave off the I-told-you-so; oops, too late.) Apple will require that all content experiences that can be paid for in an Apple app must be purchasable inside the app, with Apple collecting its 30% fee. The app can no longer direct you to a browser or some other means for completing a transaction. Crucially, the in-app purchase offer must be extended at the same price as the same offer made elsewhere. Though the announcement of the subscription model was the triggering event, the policy extends to all paid content.
I do not believe this is where Apple will stop – I personally expect them to eventually deny the delivery of content paid for outside of the app without some kind of convenience charge. But my personal expectations are irrelevant here, because what Apple has done already is sufficient to make providers of content aggressively invest in alternative means to reach the market.
Subscription content services are the lifeblood of the content economy. A full 63% of the money consumers spend on content of all types comes through a renewable subscription (I’ll be publishing this data from a survey of 4,000 US online adults as part of a bigger analysis next month, hang tight). Most of that subscription revenue goes to pay-TV providers, but 17% of it goes to newspaper and magazine publishers, including their online or app content experiences.
The consumer appetite for smartphones shows no signs of slowing in 2011 and neither does the growth of the mobile channel at leading retailers. eBusiness leaders, who have been focused on replicating the online store experience on mobile are now turning their attention to new mobile innovations that will not only drive revenue growth for the mobile channel but create an immersive multichannel consumer experience that bridges the gap between online and in-store shopping.
Location-based commerce is one such innovation that is gaining interest among eBusiness leaders responsible for mobile strategy. Some retailers have experimented with third-party location-based services including foursquare and Shopkick to roll out location-aware mobile coupons. A few retailers have innovated further and are developing location services into their own mobile shopping apps beyond the basic "store finder" feature to create new ways to interact with shoppers via their smartphones. With my latest research, Location-Based Commerce: An Evolution In Mobile Shopping, we look at how consumers' mobile shopping habits, location technology available in newer generation smartphones, and mobile push notifications have matured sufficiently to empower a new set of location aware multichannel experiences. Retailers are using geo-fences defined in the vicinity of their brick-and-mortar stores to attract nearby consumers by sending relevant, timely, and location-aware messages to customers' phones.
I was invited to speak at the annual Distree XXL event in Monte Carlo last week. Now in its ninth year, Distree XXL gathers together top executives from tech industry vendors and distributors plus, in recent years, retailers from around EMEA for three days that include a trade show, presentation sessions, and meetings to discuss industry-specific channel topics. The 2011 event drew 950 delegates from 127 tech vendors and over 400 distributors. One of the event highlights for everybody is a process to request and set up formal one-on-one meetings between the various players, similar to our own one-on-one sessions at the Forrester Forums (only their software is better). A total of 5,000 such sessions were scheduled: some at tables in larger rooms around the trade show, many others in private meeting rooms elsewhere in the conference center.
The keynote presentation I gave was a clone of my recent Forrester Teleconference , where I use the word “changes” both as a noun and a verb: I describe what changes we see happening in the channel due to recent industry trends, and I propose how channel resellers and distributors must also change their business model for continued success. The most common comment I heard from attendees after I presented was, “It was good to hear somebody outside our business make these points. We’ve been discussing this for a while now, but not everybody is convinced this is happening or knows what to do about it.” I must say, I have never, ever collected so many business cards after a presentation where I must follow up by sending slides as well as two relevant reports (one on channel resellers and one on distributors) by my esteemed colleague Tim Harmon and myself.
Are costs to run your eBusiness operations increasing or decreasing? Last year eBusiness professionals reported that on average they spent over $25 million annually to run their eBusiness channels. With the pace of innovation and investment in digital channels barreling forward, we expect that number to increase in 2011. The only way for us to know though is for you to help us. As part of our quarterly panel survey of eBusiness professionals, we have deployed a survey to get to the heart of the cost of running digital channels -- namely the Web and mobile -- and also to understand how the cost of customer acquisition varies by channel. We'll publish the results in an upcoming research document.
Because this will be the third year fielding this survey, we'll be able to provide year-over-year data when we publish the results to highlight the key areas in which eBusiness costs are rising and falling, with more emphasis on mobile in particular than before.
Please take our survey today. It should take about 15 minutes to complete, and you'll get to choose some free research as a thank you from us. As always we'll only publish aggregate results and will never list the names or companies of participants. It's Valentine's Day after all, please share some survey love!
The democratization of technology has arrived. New IT servicing models like cloud combined with improved user experiences make it easier for non-technical employees to download and install technology services. This phenomenon will only accelerate as these workers bring high expectations into the workplace from their experience with cloud-based services like Facebook and universal providers that allow access from any device.
Forrester's Forrsights Workforce Employee Survey, Q3 2010 shows that the consumerization of the enterprise is not always driven by a lack of collaboration of the IT department, only 8% of business technology users feel that their IT department is either clueless or a hinder. But the majority take things into their own control because they feel that IT is either too busy or they are restricted by corporate policies:
Cloud-based personal and professional services will liberate the individual from device and place, and set the bar higher for workplace IT. Today already 47% of business technology users at North American and European companies report using one or more website(s) to do parts of their jobs that are not sanctioned by their IT department. We expect this number to grow to close to 60% in 2011 as frustrated workers work around IT to self-provision technology.
"Where to get help for interactive design projects in Europe?" That's the question I want to answer for customer experience professionals in my next research. To do that, I'm inviting all interactive design agencies in Europe to help me. Would you like to be included in a report that will help Forrester clients with their interactive agency selection process? If the answer is yes, please complete this 15-minute survey at:
The survey is designed to gather data from European firms that have significant experience in designing and developing digital experiences (web, mobile, etc.). Survey questions cover interactive agency size, practice areas, industry expertise, locations, and a range of costs for typical engagements. If you know any agencies that should be included in my report, please forward the survey link to them or show them this blog post.
If you have questions, please send me an email: jbrowne at forrester dot com.
[16/Feb/2011]: Some people asked to see the questions before going through the survey online. That's a fair request, so I've uploaded a PDF of the survey to this page: