With the recent announcement of the iAd advertising platform for iPhone/iPad applications, Apple is filling one of the last major gaps in content monetization. They now have a full spectrum of monetization options for their platform: ad-sponsored free content; free trials; “bite sized” in-app billing for impulse buys, premium apps, and subscription billing. Publishers can choose the revenue model that best suits their content and audience.
For consumers, the Apple model is remarkably easy. Granted, the initial iTunes account set-up is somewhat of a hassle, but once completed, consumers can painlessly make purchases thereafter. Apple solved the micropayment problem years ago in creating the iTunes store for selling songs, and has carried forward that same keep-it-simple philosophy for premium content and applications on the iPhone.
Here is my take on the magic formula for getting consumers to pay for content:
Desire + Relationship + Ease = Spend
Desire is straightforward: how much do consumers want your content? Desire is a function of the degree to which your content and experience are unique and compelling.
Relationship is a measure of your brand and the extent to which you’ve consistently delighted a customer (or their friends) in the past.
Ease is achieved by making it effortless to pay for content.
Apple has nailed all three of these drivers, resulting in substantial and growing spend from consumers. On desire, they’ve made a product and a content experience coveted by loyalists and consumers en masse. On relationship, their platform has proven itself with a billion consumer delights. And in ease, Apple has set a new standard with the 5-second purchase process consisting of a just a password.
Many publishers and app developers complain about Apple’s closed system (indeed, Adobe has reason to do so), but that same closed system allows a controlled – hence predictable – experience for consumers. Apple is reducing the friction to purchase by leveraging their relationship and making the purchase easy.
This leaves me to wonder however: why is Apple the only company to innovate a complete platform for content monetization? The result for publishers is that they are better served by jumping on the Apple bandwagon than by striking out on their own. But as Apple continues to amass share of eyeballs, the media industry will resist the premium that Apple charges.
Can publishers directly offer consumers such high levels of desire, relationship, and ease and crack the code on getting consumers to pay? That is their challenge; and if they do, the money- and their independence – will follow.