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iPhone Users: We’ll Pay for Content

by Peter Kafka
Posted on November 25, 2009 at 5:02 AM PT

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How do you get Web users to pay for content? Get an iPhone in their hands.

That’s one conclusion you can draw from a new survey, which shows that people who own the Apple (AAPL) handsets are more willing to pay for stuff than the average Internet surfer.

It’s a UK survey, conducted by the Olswang media law firm, but my hunch is that you’d see similar results in the US. And given that consumers look much less likely to pay for stuff than publishers and distributors would like, it’s worth chewing on. Guardian:

The survey showed that 58% of people would pay to access online a film just released in cinemas, 52% would pay for access to a film that will not be on DVD for at least two months and 40% would pay to access a film which is already on DVD or pay-TV. Looking at solely iPhone users, however, those figures jump to 73%, 67% and 54% respectively.

…News content, however, remains a tough online sell. The survey asked how willing consumers would be to buy a newspaper article or column which could be read on a computer or portable device such as a phone or e-reader. Only 19% of respondents expressed any willingness to pay – though that did increase to 30% among iPhone users.

I’ve been repeatedly skeptical that consumers will pay for something solely because it’s on a mobile device — this is the key idea behind the magazine industry’s digital plans — but I do think there are some cases where this might work.

My own anecdotal confirmation: My household just dropped $6 for three Pixar shorts for an iPhone 3G, in a desperate attempt to provide some electronic baby sitting/soothing. This despite the fact that everything we bought is also available for free on YouTube. When you need the stuff, you can’t be dependent on a wireless connection.

Here’s one of the clips we spent $1.99 on:

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November 24

For Samsung, It’s Black Week. But is it a Bargain?

Samsung's Black Friday discounts on TVs deserve a second look.

Reading this story makes me wonder which supposed "bargains" are scooped up on Black Friday and before Christmas, but actually never enjoy a long stay in homes. I don't see anything written about returns until after Christmas, but I'd think it would be helpful to see that data now, at least by category. Anybody have that data from earlier this year?

It's coming. The transformation in the wine industry is proof enough. Glass and cork were always inexorably linked to the wine drinking experience, but that's changing. The transformation in this industry has been swifter than many imagined, but it wasn't the pioneer. It just reminds us of how mainstream eco-friendly packaging is about to become.

One thing about the packaging transformation worries me, however: some marketers won't grasp the idea that too much eco-friendly packaging can be just as bad or worse than traditional packaging. Materials are only one part of the equation. There's waste, curing (which uses wasteful thermal processes), sterilization (which requires chemicals), shape (which impacts shipping) and other considerations that manufacturers must factor in.

If we are on the leading edge of a packaging revolution, we'd better get our priorities straight. Is using recycled or recyclable material enough? What about reducing (total volume) and reusing? How important is cool functionality, durability or increased shelf life? How we answer these questions and translate what we learn into the product development process will determine how much progress we really make toward a real packaging revolution. It would be a shame if all we end up with is creatively designed packaging (to resemble recycled cardboard) that fools consumers into thinking they're their favorite products are eco-friendly.

This interview with William D. Green, chairman and C.E.O. of Accenture, was conducted and condensed by Adam Bryant.

Skip to next paragraph

Dan Neville/The New York Times

William D. Green, chairman and chief executive of Accenture, the consulting, technology services and outsourcing company, says competence, confidence and caring are vital to success.

Q. Tell me about important leadership lessons you’ve learned?

A. I’m a proud plumber’s son from Western Massachusetts. In my family, working with tools is the highest honor. It isn’t how many degrees you have. It’s what you can do. So that had a big impact on me. What that says is, it doesn’t matter what you look like, what you talk like, where you went to school, where you came from, any of that stuff. What matters is what you’re capable of.

Q. What else?

A. I was not a good student. I took what they call today a gap year, but back then it was called “finding yourself.” I did one of those, and I finally found my way into a two-year college. I went from an underperformer to a solid performer, with a little inspiration from some professors. That had a profound effect on me, to realize how much raw talent there is out there for us to exploit, leverage, take advantage of, and how much talent there is that people can give that organizations don’t mine, they don’t harvest, they don’t get the best of, because of structure, because of strategy, because of rules.

Q. So how do you break through?

A. I once sat through a three-day training session in our company, and this was for new managers, very capable people who were ready for a big step up. I counted, over three days, 68 things that we told them they needed to do to be successful, everything from how you coach and mentor, your annual reviews, filling out these forms, all this stuff.

And I got up to close the session, and I’m thinking about how it isn’t possible for these people to remember all this. So I said there are three things that matter. The first is competence — just being good at what you do, whatever it is, and focusing on the job you have, not on the job you think you want to have. The second one is confidence. People want to know what you think. So you have to have enough desirable self-confidence to articulate a point of view. The third thing is caring. Nothing today is about one individual. This is all about the team, and in the end, this is about giving a damn about your customers, your company, the people around you, and recognizing that the people around you are the ones who make you look good.

When young people are looking for clarity — this is a huge, complex global company, and they wonder how to navigate their way through it — I just tell them that.

Q. Talk about the challenge of running a big global company in this tough economy.

A. We operate the company so that we keep one foot in today and one foot in tomorrow, regardless of what’s going on. In an economy like this, everyone wants to look at their shoes. You can’t. We’ve got to be doing as many things about tomorrow as we are today. We operate with a philosophy that says, never be afraid to change, even when we’re at the top of our game.

In our company, usually in the summer, people ask me, “When are you going on vacation?” Because when I come back from a week’s vacation, they know I’ve had time to think and reflect and have been strategizing about changes and it could be anything.

Q. Does that usually happen?

A. Happens every time. People even joke about it a little bit. Even my outside board members say, “When are you taking the vacation, Bill?” This year, in the middle of tough economic times for everybody, we built a human capital strategy for the future, we refreshed our corporate-wide strategy, and I moved my leadership people around into different positions and promoted some new people into leadership roles to infuse energy.

All of this is about energizing people, giving them broader scope and new experiences. This obviously helps build durability in terms of people being able to have multiple jobs, and it’s an important part of succession planning, getting the athletes the experience they need in different spaces.

So just when you think all the cylinders are clicking and everything’s right, that’s the time you have to change, because that’s the world we live in now. If you rest, it will cost you, because global competitiveness is here to stay, and it’s not about the traditional competitors anymore. It’s about new and emerging competitors that you’ve never heard of, and you just have to get your mind around the new normal, as they call it.

Q. Can you elaborate on why you shift people around?

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Love this concept and the site they put together. New Orleans is a living food history museum, for sure, but other cities have distinctive culinary traditions. And we're also starting to see more towns and cities resurrect old recipes, brands and beverages, introducing a new generation to local food history. Now more than ever - with big food brands introducing faster, easier and more processed foods - it's great to see food preservation in action. Be sure to support similar efforts in your town or city.

Business

A spat among professional networks

Class war

Nov 19th 2009 | PARIS
From The Economist print edition

Does local beat global in the professional-networking business?

Getty Images

Untold billions, five contacts

IN THE three-way fight between the biggest online professional networks—America’s LinkedIn, France’s Viadeo and Germany’s Xing—this week the French contender scored a victory. Last year LinkedIn had struck a deal with Apec, France’s best-known professional-recruitment service, to offer search functions to its huge customer base of over 30,000 companies and 500,000 executives. But on November 17th Apec made a new deal with Viadeo, having noted that although LinkedIn could reach executives at France’s biggest international companies, it failed to connect enough people in the country’s thousands of smaller firms.

In professional networking, argues Dan Serfaty, Viadeo’s founder, having local depth is better than signing up a narrow slice of the highest-powered people around the world. A typical LinkedIn member would be an investment banker at Société Générale, a French bank, he says, “too proud to invite his friends to join or to pay for it”. In contrast, Mr Serfaty claims, Viadeo signs up branch managers for Société Générale, who use the site often and are happy to spend €5 ($7.50) a month on a subscription. Local entrepreneurs and provincial civil servants may be less impressive as members than Bill Gates, Microsoft’s co-founder, Mr Serfaty continues, but they are more engaged. (Mr Gates has been on LinkedIn since last year, and so far has made only five connections to other members.) At Xing, too, a hyper-local network which went public in 2006, the typical member is not a senior executive but a middle manager, says Stefan Gross-Selbeck, its boss.

“We have the most elite, international and aspiring people,” says Kevin Eyres, head of LinkedIn in Europe. The firm’s global approach, he says, has brought rapid growth in members at a low cost relative to its competitors. Having a large American membership is a particular advantage. In Mexico, for instance, Viadeo started from scratch and had to visit dozens of local alumni associations to recruit members, whereas LinkedIn could offer Mexicans the chance to connect to American business people right from the start.

In Italy and Japan, LinkedIn is number one even though it has not translated its site into the local language in either place. In China, however, LinkedIn has to compete against the Chinese-language website of Tianji, the country’s biggest professional network, which is owned by Viadeo.

Which is the most attractive model? All three networks have benefited from the crisis, as executives fearful of losing their jobs have rushed to burnish their contacts. But it is estimated that fewer than 1% of LinkedIn’s 50m members worldwide actually pay for the service, compared with around 10% of Viadeo’s members in Europe and 18% of Xing’s German-speaking members. LinkedIn, therefore, relies on firms’ human-resources departments and advertisers for most of its revenues, which reached $100m last year. The firm has been profitable for two years. Revenues at Xing and Viadeo come mostly from subscribers. In the first three quarters of 2009, Xing, with 8m members, brought in revenues of €33m, 33% higher than the previous year, and operating profits of €9m.

LinkedIn is concentrating on growing quickly around the world, not on extracting profits in each market, says Mr Eyres, and is only starting to localise. It could soon launch an initial public offering of its shares. In October Viadeo bought Unyk, a Canadian-based networking service with members in several countries including America and Brazil. That put the French firm in second place behind LinkedIn measured by number of members: it now has 25m in total. It too is contemplating a share offering. That may advance the day when all three firms are obliged to focus on profits, making the relative value of humble local managers versus masters of the universe clearer.

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This is dedicated to my colleague Gretchen, a Canadian transplant.  I have, by the way, sampled Poutine in Canada, St. Johns to be exact, and it is indeed a great, comforting dish.

Open air wine spa? Not sure what it really is, but I want one to open in Boston.

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Last year, e-commerce retailers spend $21 billion, or 15 percent of their revenues, in online marketing to drive traffic to their websites. The end result — a dismal 2-3 percent conversion rate between visitors and sales.

Mountain View startup Runa, a provider of revenue growth and profit maximization solutions, is looking to help e-commerce retailers to change low conversion rates with the launch of their new conversion marketing solution. The new web application focuses on converting web traffic into sales while shoppers are still on the website. By determining a consumer’s buying intent, Runa helps to deliver more effective personalized sale price incentives in real-time.

Here’s an example of how an e-commerce site might use Runa: Say you’re shopping online and you decide to choose a new table for your kitchen. As you proceed to checkout, you suddenly decide you want to shop around. As you click to leave the site, a real-time pop-up appears offering you a $60 discount if you agree to buy the item now. By agreeing, the $60 is taken off your total price at checkout. A demo on the site refers to this as a “cart abandonment campaign.”

Runa works closely with the e-commerce retailers to determine goals and what they call “business rules.” These rules are pre-determined by the retailer to decide the individualized pricing each type of consumer will receive. Individualized pricing can take several forms including discounts, free shipping, buy one and get one, free specials or no tax.

Conversion marketing is not a new concept. Companies like Omniture, who provide rich data to customers on consumer behaviors, and RichRelevance, specializing in product personalization and relevance, are helping e-commerce retailers find ways to increase sales (there are a number of other companies with similar goals, too). Both companies lack the real-time benefits but are valuable in compiling data over time to help campaign efficiency.

Not convinced? Runa service is offered on a pay-for-performance basis, which means that e-commerce retailers don’t have to fork out any up-front costs, making it a low risk option if they are looking to jack up sales just in time for the holidays.

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Looking at this news about Runa, it gets me thinking about the changes we can anticipate in consumer shopping behavior. If a Runa pop-up appears as you're about to abandon your shopping cart, offering $60 off at that moment, will consumers begin to treat online shopping experience like car haggling? In other words, the price on the car really isn't the price. I'm going to pay something different than the sticker (and different than the next guy too). So, when will this become the norm online? Will we one day automatically click in and out of a shopping cart app because common sense says you'll get a different price. Or will we abandon the cart all together knowing that we'll get an offer later in the day because we were oh so close to buying. I don't know, but it's worth thinking about for sure.