As mobile distribution platforms grow, cost of smartphones drops (Mediatek/Android targeting $70 smartphones!), and competition for paid apps increases, mobile advertising will eventually gain the critical mass needed to fund more and more mobile apps. Like on the desktop, once there is enough advertising money to cover the opportunity cost of charging for apps, what can be free will be free. By 2014, Pyramid Research predicts 80% of mobile apps will be free compared to 30% in 2008.
Similarly, as the capabilities of web browsers increase to match fully capable desktop browser, the bar for what can be charged for on mobile goes up. Media companies that are able to charge for their content on premium platforms like iPhone or iPad, will need to evolve their apps to offer functionality and services that are uniquely tailored to the mobile use case, and that deliver value beyond an optimized, high-touch display of the same content they make available for free online.
This should unleash a new wave a innovation in paid mobile apps, both by traditional and new media companies. Magazines whose print revenues are under pressure can retain their consumer base and monetize it both by extending the value they provide them on mobile through extra functionality particularly designed for the mobile experience and by maximizing the distribution of their ad-supported content on the web accessed by mobile browsers.
Similarly, new media companies extending to mobile must go beyond delivering a mobile optimized version of their site in their mobile apps and mobile web sites. There is still a lot missing in enabling social networking in the context of the mobile experience (ie not being in front of a desktop, meeting new people or looking to socialize in a mobile context). And speaking of which and fast forwarding a little – how far away can a “Facebook phone” be? Will the Social Graph do for Facebook what Android is doing for Google? It may just be the mobile app marketing engine needed to navigate the coming onslaught of mobile apps.
UPDATE: Interesting article on BBC deciding that paid apps will be challenged by the mobile web here
beyond 140 