Monday, May 24, 2010

Cannibalise your bootstraps

I am planning to launch a version of FanFooty for the iPhone this week, after testing it in the weekend just gone. No, this is not just a puff piece for my site, I have actually got some mildly interesting thoughts to lay out, despite that rather boring first line.

I have always treated mobile Internet with the greatest of suspicion. Back when the Earth was young and dinosaurs roamed the fetid swamps of Elsternwick, I was a technology journalist during the first boom, and I heard chapter and verse about how the mobile Web was coming, just around the corner, wait and see. Very quickly, I developed an extremely jaundiced view over whether there was any future at all in mobile browsing, given how interminably sluggish the Australian industry is, and how shockingly backwards our competition environment is in telecoms. I remained right all the way through that first boom, and I had nothing to challenge my view until the advent of the iPhone.

Even the iPhone started relatively slowly in Australia, but 2010 is the year it has really taken off. iPhone ownership has jumped from 7% penetration to 15% in a year, I am told, and FanFooty's numbers show a similar jump from 5% to 15% year-on-year to April 2010 from the previous April.

I was talking on a forum somewhere last week about current threats to FanFooty, and the major one I could come up with in a standard SWOT analysis was the iPhone. It's a gamechanger. It also represents an opportunity for an application like FF, which is designed to be ultra-low bandwidth and maximum availability for high traffic spikes. One of the design criticisms of FF has always been that it looked "clunky" but my spartan aesthetic appears to work like a charm on the iPhone, where extraneous graphics, excessive page weight and long load times are a much bigger issue than on the mainstream of today's broadband-saturated Web.

Monetisation is my major issue. I have no experience with mobile advertising, so I am wary of committing to a new partner when my current one is going so well at the moment. Apparently AdMob, which has just been eaten by the Big G, is the main game so it would be an old partner I guess. My first inclination is to offer an ad-free version and charge users an annual fee directly through the iPhone App Store. I have already done the sums about how much money I make per user per year from advertising, and will adjust the iPhone app price to suit. That does lock out Nokia, Blackberry, Android and other mobile users though, which adds up to another 5% of the whole. I guess a separate ad-supported mobile version is the next step. Three versions of the one site, it's starting to get a bit unwieldy! Then there's the iPad coming over the hill...

Intertwined with this issue is exactly how mobile usage fits into the overall Web consumption habits of the average punter. Will mobile usage replace or complement desktop Web usage? Is it just the case that mobile will only replace desktop when users are out of the house, or will they work their thumbs over sitting on the couch fiddling with their JesusPhone even when a PC is in the next room? How does the iPad work into that dynamic, is its usage pattern more mobile-like or more PC-like, or something else entirely? How much does each of the three cannibalise usage of the other? These are all important questions to site operators like me, because - ironically - we now actually have to turf to defend, namely the "traditional" Web usage environment where publishers get more screen real estate to show more ads to the user. I can hear the newspaper owners' crocodile tears from here!

Last time I looked at the Web advertising industry in depth, the trend seemed to be with bigger display ad formats and shovelware TVCs in video pop-ups. I have benefited from the latter on FF, though I have refrained from the former as I think it's a sign of desperation from the agencies. Users are now flocking to mobiles where the opportunities for advertising are reduced in size and scope, which could be more than just a casual correlation if my gut feeling is right. I need to do some research into what the response by the publishing and advertising industries has been to the mobile explosion. How much revenue for content on the iPhone comes via app sales and how much via advertising and marketing? Is the iPhone a catalyst for a solid shift in monetisation away from advertising and towards user-pays models? Or is it another case of the whole being lesser than the sum of the parts in the older medium?

This is the world we are living in as of 2010. Apple has complicated the Web development environment just like the old browser wars, lengthening the dev cycle and calling into question the economics of the Web publishing industry. I would appreciate comments from people who are more experienced in this field than I, as it appears I have a lot of reading to do.


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