This is my first post for De Nieuwe Reporter. I am an American journalist and the former editor for interactive technology at the Los Angeles Times. I’ve been spending this year traveling and studying trends and practices in online journalism around the world. I will be writing here occasionally, and I also blog (infrequently) on my own site.
If the future of online news is paid (and that’s an admittedly big if), what might that future look like?
On a trip to Japan a few weeks ago I sought some answers from the gurus at InfoCom Research, a think tank run by NTT DoCoMo, the country’s largest mobile provider. I was looking for lessons on mobile content distribution from a country with a track record for innovation and early adoption in the wireless sphere, where customers often are more willing to pay for content.
We talked a lot about i-mode, DoCoMo’s proprietary mobile content platform, and how it successfully supports the creation of high-quality content through usage fees. I-mode is such an important revenue stream for content providers that they produce a great deal of i-mode-specific content, often to the detriment of their own free mobile web offerings.
Let’s look at the economics. According to InfoCom, just 9% of the subscription fees paid by i-mode’s 50 million Japanese subscribers flow back to content providers, but that still amounted to 20 billion yen ($208 million / 148 million euros) in 2008. Split among i-mode’s 2,800 content providers, that’s an average of 7.1 million yen ($75,000 / 53,000 euros). To look at it another way, if each of those content providers were a single reporter or photographer or blogger, i-mode commissions could pay living wages to 2,800 information gatherers. Of course, a handful of providers probably account for the lion’s share of the revenues, but however you slice it, we’re talking about real money.
One of i-mode’s successes is in providing a simple way for users to pay for content. At a time when news organizations are talking about launching micropayment and subscription walls, it’s worth noting i-mode’s simplicity: Users don’t have to think about providing payment information to multiple publishers. All they need to do is click and browse. If paid content is going to succeed on a large scale, it needs to be that easy. (Related thought: The problem of paying for content is clearly bigger than the newspaper industry, so why aren’t newspaper publishers collaborating with broadcasters and other content providers on a common payment system?)
Now it would seem that i-mode’s star is dimming. Foreign carriers have mostly phased out their versions of i-mode — launched with great fanfare under license from DoCoMo a few years ago — and even in Japan the platform faces growing competition from devices such as the iPhone and tiny netbooks with built-in mobile broadband, which can bypass the walled garden entirely.
To call i-mode a failure would be inaccurate. For one thing, it is still hugely popular in Japan: 48 million of DoCoMo’s 54 million mobile subscribers pay in the neighborhood of 4,500 yen ($47 / 34 euros) a year for information services ranging from sports results and news to e-mail and games. I-mode was also the first high-speed mobile data service in widespread use, and in the 10 years it’s been around it has helped define Japanese mobile culture. For example, i-mode’s feature-rich e-mail system, rather than SMS, has become the dominant means of exchanging information among phones, resulting in a raft of mobile-specific content pushed over e-mail.
Unfortunately for content providers, the apparent undermining of i-mode by the open mobile web suggests that walled gardens will succeed when technology is nascent and access is limited (think of AOL, Prodigy and their ilk) but ultimately will lose out to the broader ecosystem of the Internet.
Where print still reigns: I was also curious about how to reconcile Japan’s high mobile content usage with the fact that newspaper circulation there remains relatively strong. (Total circulation there fell just 2.7% between 2003 and 2007, according to the World Association of Newspapers, compared with a 5.91% drop in the EU and an 8.05% slump in the US.)
I never found a satisfactory answer. Maybe it has to do with the large number of people commuting by train (though I didn’t see all that many newspaper readers in my train travels there). Whatever the reason for print’s current strength, the circulation slide we’ve seen in Europe and the U.S. is certain to happen in Japan eventually. But will Japanese users, with their i-mode experience and newspaper loyalty, be more willing to pay for news on the web than are those in the West? We’ll see.