Old Media's Mobile Future

Traditional content will survive, but it will keep morphing

When it comes to broadband, America is old school. A recent Federal Communications Commission study showed it ranked only No. 16 among the world's most broadbanded countries. Much the same holds true for mobile phone use; for those devices, media possibilities have barely been plumbed in the U.S.

So there should be much to learn from countries that were early adopters, and from people who spend an abnormal amount of time studying them, like Jeffrey Cole. As director of the University of Southern California's Center for the Digital Future at the Annenberg School for Communication, he oversees the World Internet Project, which has tracked the Net's impact in 20 industrialized countries since 1999.

Cole is ridiculously well-versed in different nations' media habits. Swedes, way ahead of the curve in adopting new technologies, still read newspapers far more than Americans. Massive TV screens and TiVo (TIVO ) are largely U.S. phenomena. Newspaper penetration in China is low, but the Chinese trust Net info more than most other nationalities; the Japanese trust it the least.

Cole is convinced that U.S. teens will carry their text-message-happy, media-mash-up ways into adulthood. "The ability to move media from platform to platform, on whichever screen they want and whenever they want, [will be] an absolutely dominant feature for the rest of their lives," he says. This is bad news for radio and newspapers; his data shows newspaper readership in America dropping faster than in other countries. TV-watching took an early hit when the U.S. was a dial-up nation, but Cole believes that TV will persist. (Lest you peg him for another doom-and-gloomer, Cole is quick to stress it will be decades, not years or months, before established media formats die off.) Of course, our conception of TV itself may change. Cole is almost alone in predicting that Americans will watch longer-form video on their phones and iPods -- think 30-minute sitcoms, though not three hours of King Kong.

Mobile is where battered American media companies may find new paying customers for their content -- more on this later -- but Americans' transition to more mobile media habits won't happen overnight. Life in the U.S. is characterized by large personal spaces (big houses for big-screen TVs) and solitary car rides to work, points out Rishad Tobaccowala, chief innovation officer of Publicis Groupe (PUB ). Compare this with Japan, says Cole, where train commutes are long and home Internet usage is lower, all of which made a ripe market for multimedia phones. Still, despite Americans' notorious fondness for bigness, Tobaccowala and Cole agree a small-screen mobile future looms here, as well.

Which would mean more bad news for traditional content players, right?

Actually, no.

There is a key difference between content on the Web and content on cell phones and iPods: Consumers are willing to pay for content and services on mobile devices. (Think iTunes and text-messaging.) This is why U.S. content players ranging from ESPN to American Media Inc. -- publisher of Star and National Enquirer -- have reported pleasant jolts of new revenue from mobile applications, as consumers pay for sports and celebrity news updates. Youths in South Korea -- who have the most technologically advanced media habits, says Cole -- spend serious money for mobile data and messaging. According to media consultant DhaliwalBrown's mobileYouth study, they will spend $2.6 billion for mobile media in 2006 and $2.9 billion in '07. Now consider how few companies, anywhere, have figured out a way to make a buck selling Web content.

For all the talk of convergence, media behavior doesn't often hop across platforms. The Web trains users to expect free content, but such expectations haven't migrated to mobile devices. Therein lies a silver lining for traditional media -- including newspapers -- in the move to mobile. It's a new way to charge for content.

For Jon Fine's blog on media and advertising, go to www.businessweek.com/innovate/FineOnMedia

By Jon Fine

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