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Just before Christmas, my boss -- BI editor-in-chief Henry Blodget -- published the results of a survey of our readers which, he argued, suggested that mobile devices would not be a big deal for publishing companies like ours because old-school, big-screen computers would retain a huge chunk of reader market share. He said:
... in the developed world, which already has a massive installed base of desktops and laptops, bigger screens are still extremely important. And they are likely to remain so, even when everyone who uses them also owns a smartphone and tablet.
The strong part of that argument is that mobile devices will likely become so advanced that they won't need a special mobile-optimized ecosystem to function. They'll just handle the web like laptops do, and the whole mobile problem will solve itself: Phones will simply be small computers, and publishers will not need to adjust their tactics.
The weak part of that argument is that if Henry is wrong and mobile does become the dominant way news is consumed by readers, we could all lose our jobs to an as-yet-unidentified mobile competitor that is better at publishing in the new medium.
So here's the alternative universe, in which mobile is the dominant factor for publishers.
Henry begins his argument with a compelling but misleading piece of anecdotal evidence, this photo of our office, in which "there is not a single person in the newsroom whose primary office device is a smartphone (or even tablet)":
This is a bit like taking a photo of a bus station and concluding that there is not a single person whose primary transport device is a car. (Besides, if you look closely you'll see that the nearest desk has an iPhone 5 on it in front of the computer keyboard!)
While "we" may indeed work all day like this, billions of people do not, especially in Asia and Africa, which is where our long-term readership growth (and the ad dollars attached to them) will come from. In those geographies, the dominant "computer" is the mobile phone.
The photo also doesn't account for that huge chunk of the Western world that no longer works near a "computer" on a desk. Walmart is the U.S.'s largest employer -- I'll bet its staff don't check the headlines on their laptops mid-shift. JC Penney is switching its entire checkout staff to iPads. Most large drug companies have supplied their entire salesforces with tablets. There are hundreds of companies doing something similar. We need to serve our readers, not hope that our readers' devices can figure out our product.
What do 30 percent of our readers really want?
Next, Henry notes that about 30 percent of BI readers see the site on phones or tablets, but that "the idea that we would suddenly drop everything and design Business Insider for, say, smartphones first just doesn't make any sense" because 70 percent are still on computers, and we use all our gadgets in conjunction with each other.
This is a familiar argument, based on a truism about the history of media -- that each new technological medium adds to the total media ecosystem but never fully kills off the incumbent media. Thus, radio didn't kill newspapers, TV didn't kill radio, the web didn't kill TV, and so mobile won't kill the desktop.
Fine. But the one thing you hear over and over again if you talk to people in the mobile ad business is that mobile right now "feels" a lot like the web did in 1996: A huge amount of new money is pouring into the sector; the sector is still unproven; the big money is still in the older media; but the tide is shifting in favor of the new. During that time, it was common to hear newspaper publishers proudly proclaiming that 30 percent of their readership (or some similar proportion) was now on the web.
How did that turn out for them? (See this eMarketer chart for the answer.)
The lesson of media history is that you don't want to be the incumbent, you want to be the challenger.
Follow the money
So now let's look at the economics. In May 2012, Facebook didn't have a mobile ad business. By the end of the year, a majority of its users accessed Facebook on mobile, and its nascent mobile ad business could book $340 million in sales when it reveals its Q4 earnings.
Google is an even more instructive example. It now has an $8 billion run-rate from mobile ads, which would be good news if it wasn't causing a deceleration risk to its sales curve, and cannibalizing 2 percent of its desktop business. (It's a similar story at Pandora.)
The reason mobile is both a growth factor and a threat at Google and Facebook is that mobile ads are cheaper for advertisers than web display ads are. Supply and demand aren't yet hiking prices on mobile the way they have on the web -- but I'm guessing that both companies are going to figure that out.
Henry believes this is a false dichotomy because Google on smartphones is basically the same thing as Google on desktop. Well, kinda. The two experiences are different. But the mobile experience is often more useful to users than the desktop one is. When you search on your phone, you're often looking for something with a geographic component. Who hasn't used Google Maps on their phone to find the nearest Starbucks?
Currently, Business Insider lacks a mobile news localization strategy. We may not need one -- business is international, after all. But we don't yet know that we don't need one. And it's not implausible to imagine a world where readers might want news tailored to their zip code. In that world, the mobile competitor -- reading its users' device locations before serving information -- will win. (And ad prices for impressions delivered by location are more expensive than raw impressions, for obvious reasons.)
Mobile is social
News publishers know that Facebook and Twitter are our new overlords. We syndicate headlines into their ecosystem through likes and tweets. A huge chunk of our traffic, and thus the revenue generated by that traffic, comes from social sharing.
A majority of users now access Facebook and Twitter on mobile devices. And there's a whole new ecosystem of semi-social mobile-only apps that do the same. Again, it's easy to imagine a world in which a majority of our readers do with us what they're already doing on Facebook and Twitter.
News, like Facebook, is about what's happening now, after all. And if there's one thing you use a phone for, it's to find out about something now. News and mobile are going to walk hand in hand like high-school sweethearts. In fact, news often finds users through Facebook and Twitter a lot faster than it does through The New York Times or Business Insider. There's a reason it's called the "News" Feed.
There's no law that says the news media as we know it has a right to stay in business as the dominant provider of current information. The Times' revenues are still in decline, and have been for years. Twitter already syndicates more headlines each day than Bloomberg or Reuters combined.
And Facebook's business -- selling ads against that feed -- is already lot bigger than The Times' ad business.
The medium is the message
I still subscribe to hand-delivered New York Times on Sunday (don't ask). Each week, I wrestle with a broadsheet that just won't fold back on itself without turning into a crumpled mess. I have to wash my hands after reading it to get the ink off.
My wife reads the same thing on her iPad and has none of these problems. Plus, she doesn't pay for it.
Clearly, this is ridiculous. But it illustrates how inherent structural differences between media technologies change the way news is consumed. The web, obviously, morphed page-turning readers into point-and-click readers.
But on tablets and phones, it may be the swipe, not the click, that is the dominant structural difference. That would suggest that the winners in mobile news will be the providers that best utilize swiping.
Business Insider, obviously, is a click-based site. Is this a battle we are going to win? Again, we don't know. But we can't assume that clicks won't go the way of ink.
Are we on the wrong devices?
In 2012, Apple's sales of iPads, iPhones and iPods (non-Mac computer devices) far exceeded its laptop and desktop Mac sales in both dollars and units shipped. Given that Apple is no longer a "computer" company -- it's now a mobile device company -- why would a publisher bet their business model on a product best displayed on computers, the dwindling share of Apple's business?
What Henry's office photo also doesn't show is that every single computer in our newsroom is an Apple -- and they're all desktop or laptop devices.
They're great -- but we're already a minority of Apple's users.
Is that really where we want to be?
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