Mobile Economics Will Trend Toward Web Economics

I've been saying for a while now that I think mobile economics will trend toward web economics as the mobile web goes mainstream. In other words, the business models that work best on the web will ultimately work best in mobile.The corollary to that is that the business models that don't work well on the web will not work well in mobile in the long run.

And that includes tablets. There is some discussion in the tech blogs today about why iPad magazine sales have been disappointing. I don't understand why anyone would ever think that adding a presentation layer on top of web based content would make it something people would want to purchase when they are not willing to purchase the same content directly on the web.

A central issue with the Internet, no matter what device and presentation layer you use to access it, is that there is an unlimited amount of content available. Evan Williams calls it "a web of infinite information" in this chat with Om Malik. What is valuable is filtering and curation. Restricting access to content doesn't work. Someone else's content will get filtered and curated instead of yours. Scarcity is not a viable business model on the Internet.

For a while Apple has provided something that has looked like exclusivity and scarcity. They force everyone through their app store and they provide a transaction engine in that app store. Some have chosen to execute a paid content or a paid app business model in that app store. A few have buit interesting businesses with that model. Most have not.

But the mobile web is going mainstream in a big way in the next year. And other devices and presentation layers will develop that will have different models and transaction systems. I suspect that, like the web, we will see a plethora of marketplaces and transaction systems develop across multiple platforms and devices. Developers who want to access users on those devices will have to use different approaches. This interview with the developer of Angry Birds is a good discussion of these issues in real time. Angry Birds uses Getjar on Android instead of the Android marketplace. We will see more of that kind of thing, not less.

I do not believe that Apple's model is going away. And I think Apple will remain an important and leading mobile platform for a long long time. But their period of being "the mobile platform" is ending and it is important to understand what that means.

I think it means the mobile is slowly but surely moving to a web model. And as that happens, it is important to think of it as one big web and lots of devices and software accessing it. Lots of devices means billions of devices accessing largely free content and applications with advertising and freemium and commerce and virtual goods and many other business models generating trillions of dollars for developers. Just like the web, but even bigger and more exciting.

#VC & Technology#Web/Tech

Comments (Archived):

  1. Tariq

    I agree with you on magazines Fred. I’ve had a chance to sample certain magazines and newspapers in ipad app form and have been pretty disappointed. Most of the time the content is displayed in a way that looks visually appealing from afar or in pictures but isn’t for someone trying to read an entire WSJ or NYT.I wish instead, the NYT, WSJ, and others would focus on creating a web experience that plays up to the strength of the device. AVC’s current design is a great example of this.For now though, I usually end up using readability on articles before I read them on my ipad.

  2. Dale Allyn

    Fred, I think your last paragraph is the “meat” here. “It’s important to look at it as one big web and lots of devicess… accessing it.” This is the correct attitude in my opinion. It includes presentation of content which is accessible via many devices, whether large-screen desktops or hand-held devices, as well as respect for accessibility to those who use assistive technologies (such as screen readers, etc.).This is both a business model issue, and a “web responsibility” issue. There is little justification for torturing users by not delivering a pleasant experience regardless of access device. Mobile is very important and growing more so (obviously), but if one approaches her/his web application with an attitude towards agnostics of platform, device, browser or app. the whole system wins.

    1. fredwilson


  3. RV

    So does this extend to online video distribution through paid apps? Will the connected tv + paid app model work?

    1. fredwilson

      yes, because that content is very unique and very costly to producewe do not have an infinite amount of high quality video content on theweb right nowi don’t know if we ever will

      1. Foss

        So scarcity does work as a central chunk of business value when it comes to premium video? Is that what you’re saying here? Premium video is an exception?That was the one thing I hiccuped on in your post as if it’s true and does end up applying to premium video just as it does to other content on the web, then I’m afraid it means that we’re in for lower quality video in the future as no one will risk production capital to make great content. Which I hope is not the case.

        1. fredwilson

          i am fairly certain that premium video is an exceptionthe question is will new business models emerge that will supplant subscriptionskickstarter is one place to look for those new models, for example

          1. Fred H.

            QUOTE: “Kickstarter is one place to look for those new models, for example.”Kickstarter is nothing less than amazing. The situation with the LunaTik is a perfect exmple. Can you imagine raising nearly $1million in presales of a magazine subscription? Why the heck not?My chances of getting 10,000 people to kick-in $50-$100 for a lifetime subscription to a great magazine are a helluva lot better than ever raising $500,000 to $1M from a VC or Angel, very few of which “fund content companies,” as one told me recently. And, in with Kickstarter I’m not taking on an equity participant OR a loan. Helluva deal.

    2. fredwilson

      also, web video economics are moving to paid very successfullyso any device models that emerge should replicate those

      1. William Mougayar

        Curious if you can expand on this point via examples of web video where economics have moved to paid successfully?

        1. fredwilson

          netflix, hulu (getting there), and vudu (the sleeper)

  4. William Mougayar

    The timing for this post is excellent and you hit it right on the head on all points. I too was shaking my head yesterday about this iPad/magazine story where some interpreted as positive, others as negative. The point is that if someone doesn’t want to read a full copy of a magazine as is, they won’t read it “as is” when transposed on the iPad. There was no innovation in duplicating. 100% agreed with your assessment.Users want to assemble their own content and read it in a magazine-like format or other easily consumable format while mobile or on the web. Some traditional media companies haven’t understood that. The unit of value is the blog post itself, the single story, the aha tweet, it’s the atomized unit, NOT the whole magazine or newspaper.”What is valuable is filtering and curation.” is the money quote. I believe in this, and betting on the fact that users/companies will pay for a professional grade level of curation/filtering that takes into account the human-assisted filtering/curation/discovery, but augments it further.

    1. Bob Egan

      I agree – filtering and curation is the money layer. We’ll see more of this, not less.I think that mobile initiatives along these lines drive a “better” web, less cluttered, less noise, less trash.

  5. Sebastian Wain

    In the context of mobile to web transition it’s weird why the main devices (iPhone, Android) don’t support rich editing text (part of html5/contentEditable/designMode). In other words you can’t fully edit a text in a standard way. That’s a core limitation to the transition, a Wiki with WYSIWYG text editor can’t be used on the mobile phone.

  6. heydave

    I think it’s an issue of scale. People paying for apps will not compare with people downloading apps for free. Probably 10-100x more will download an app if it’s free. And because of this the paid app model is limited. However, many iPhone apps are going the FREE model but with in-app purchases for virtual goods and offers. This is a major trend. Already the top grossing iphone apps are shifting from paid to free (because of in-app purchases). FREE gives the distribution reach for the apps, and the in-app purchases gives revenue. Zynga is like this as well. Marc Pincus calls this Web 3 where people actually pay for virtual goods and services. However, I think if you can scale as large as Facebook, Twitter or Tumblr, then you don’t need to sell goods along the way but can rely on advertising because you’re scale is so large. So, I think the advertising model can work (though the app/service must scale huge to be scalable) and the micro-purchase virtual goods model can and is working too. However, the paid app model is definitely more limited, and difficult to achieve scale. But this is not to say that small companies won’t be able to make decent profits.

    1. Guest

      I don’t think tumblr scale compares to facebook or even twitter which itself gets far lesser traffic than facebook.

      1. fredwilson

        wait a year

    2. fredwilson

      totally agree about in-app purchasesi see that as one of the most elegant implementations of freemium that there isthat will be a big part of web economics going forward

      1. Brian Magierski

        I see it as AppCommerce rather than freemium. The difference being that in some cases the user never has to pay anything directly to the developer, but rather the developer gets paid by the opt-in usage of the user through a member of the apps’ ecosystem. The simplest example of this is advertising. Another one would be an app ecosystem partner providing points to the user for behavior which ultimately leads to a transaction by the user where the developer gets a cut.The components of AppCommerce can include advertising, premium features, in-app purchases (data, virtual goods, upgrades), commerce transactions, incentive offers / discounts / coupons / points, etc. The model will depend on the app, but ultimately the app is accessible to the user and the user ends up “paying” the developer through their usage of the app – whether directly for premium features or in-app items, or indirectly because the app ecosystem has partners that are willing to pay for access to the user if the user opts-in.

      2. Jerome Camblain

        In this case, does an app store get a cut of the free app selling in-app goods?Is all this discussion a big eye-opener on shorting Apple stocks?

        1. fredwilson

          apple takes a cut of in app purchases

    3. yofrez

      Can you give a example of a free app that has been really successful implementing a free ad based business model?

      1. Sandeep

        it seems like angrybirds is projecting 1 million ad revenues per month on android phones…

        1. yofrez

          Good example, but I would hardly call angry birds a replicable business model. They are the most popular game on either mobile platform and like the highlander there can only be one. I’m just point out that ad based models would only work for the biggest developers on the mobile platforms and can’t be used for the vast majority of apps who want to monetize their product.

  7. kidmercury

    “And as that happens, it is important to think of it as one big web and lots of devices and software accessing it.”not sure about this. i can see a world in which there are lots of webs and certain devices only work within specific webs. and then those various webs hash out interoperability agreements. that is sort of what i think the trajectory of the governance layer will be. regarding simply extending the current web model, all of that assumes ICANN and the DNS system, net neutrality, spectrum rights, and the nation-state system upon which all of this rests continues as well.IMHO what is really needed is data portability. once we start thinking seriously about that, about how to ensure users are not ensnared in proprietary systems and platforms do not use entrenched user bases as pawns in their wars (similar to how government owners use taxpayers as pawns in their wars), then we will be on the right trajectory.

    1. Alex Murphy

      Data portability is a big deal, totally agree.Many webs, requiring specific devices to get to each … don’t agree. This was the model of the early BBS systems, AOL, Prodigy, etc. The “app” that killed them all was the WWW. Connected will beat out unconnected. It is certainly possible to imagine scenarios where countries like China, Russia, VZ and others put up walls to not allow their citizens to be connected, but I tend to think that those regimes will die off in the long run. Freedom in like a cancer, it just spreads!

      1. kidmercury

        freedom is a bit subjective. i tend to think more freedom will be obtained in a world with many webs. some webs will have net neutrality, others won’t. some webs will use the electromagnetic spectrum in a certain manner, others will use it in a different manner. when we have just one web, that freedom of choice is lost.i know this issue is not likely to be resolved anytime soon as in many ways it is a religious/ideological matter. i do think most folks agree on aspiring to data portability. unfortunately there has been very little progress on that front in a way that is conducive to mass adoption and commercial/economic success. i think if we set out with that goal, we will start to get some more answers on a practical definition of freedom most of us can agree to.

        1. JLM

          The biggest erosion of freedom — whatever the hell that really means — is the wholesale confiscation of a man’s labor and the redistribution of the value of that labor to others at the whim of the government.Second to all of that is the attack on fundamental property rights.When the SC decided that a City could simply take private property and give it to a developer if a developer had a better use for it than the property owner — the strength of America began to evaporate.And, hell, I was a developer. LOL

          1. kidmercury

            yup….which reminds me of one of my favorite pieces of information — how much do americans really pay in taxes?…over 50%.oh well. at least the economy is booming and we’re getting our money’s worth. otherwise, we’d have a really big problem that we’d need to address directly!

          2. JLM

            You are on the rant that I find most interesting in the whole world. Nobody really knows how much anybody pays in taxes and what is worse some folks actually receive a check.We are sheep.We will not create jobs if the job creating segment is sucked dry and if they are embarassed by their wealth and success.

    2. ShanaC

      We already have that – see china. And data portability has been a project of harvard/project vrm for at least a year now-the problem is that the money is being made by preventing portability and by doing lots of algorithms over that data. The money is made by your similarities – imagine what would happen if suddenly all of those data sets were available…

      1. kidmercury

        right, we just need more china/USA/crapple. more big government! if you have lots of big governments and make it easy to transfer between them you will have governments compete for you. if you have just one government, just one world wide web, it is tyranny, it is The Man holding you down.a federation of integrated systems agreeing to share the pie. similar to how central banks adhere to international monetary agreements. the current international monetary agreement is obviously broken. might as well solve that problem while we’re at it!

        1. JLM

          There is some real wisdom in your comment about needing competition between big governments. Excellence is created by competition.America needs a boogie man and hopefully one who does not look like us in the bargain. If we do not have one, we create one.One of the funniest things I have ever read is the account of Iran’s Mahmoud Ahmadinejad’s visit to Saudi Arabia in which he was so well received and the subsequent Wikileaks communication w/ the US and others that the Saudis would just as soon see the guy killed.I would love to know what old Mahmoud thought when he read that the Saudis would have no problem with the US or the Israelis taking him out?Just think about it — Saudi Arabia applauded the concept of Israel assassinating Iran’s ruler and supposedly the Arabs and Jews are enemies?

          1. Sandeep

            hmm Saudi Arabia’s rulers only, not the people of Saudi Arabia. Saudi Arabia rulers do not represent the people it is not a democracy and even if it were a democracy, people who lead the democracy, might perform clandestine actions that the general public who voted them in may not like.

          2. JLM

            Hmmm, I don’t know, Sandeep?The idea that leaders would do things which were either opposed by their citizens or even unpopular?Sounds kind of far fetched to me! LOLLuckily, nothing like that could ever happen in the United States, no?Whether Saudi Arabia is a democracy or a dictatorship, the idea that the Saudi leaders would publicly welcome such a troublemaker and then privately lobby for his assassination — hell, it just strikes me as a bit odd.And to be willing to have their “hated” enemies as their instrument of death? Odder still.But, hey, it could just be me.

          3. Anonymous At Gmain

            Its simple Shia vs Sunni divide. Jews come after that 🙂

          4. JLM

            I think I agree with you more than you do with yourself. Than again I could be wrong.The toughest thing in our culture is to figure out which tribe(s) we really belong to.LOL

          5. Sandeep

            what I meant was vast majority of ordinary muslims whether of the arab variety, or the Indian sub-continent variety or the malay variety or turk variety or the persian variety distrust jews and some of them hate them enough to kill them(terrorists), the fact the Arab leaders were looking to bump off Ahmadinejaad does not change this unfortunately. We can’t read much into the Saudi Arabia’s willingness to use Israel to reflect that muslims attitude towards jews is changing. All of this is conjecture of course, but my analysis is wisdom of the crowds cannot be predicted based on what the leaders of the country does. Just because Obama likes Indonesia, we cannot assume all US citizens like Indonesians(crude example) and this is especially so in a monarchy system like Saudi Arabia where they have no reason to behave as per the public opinion. My 2 cents

          6. JLM

            First, you do not contribute “2 cents” — your view is reasoned and priceless. I appreciate the opportunity to know your views. I learn from them. Thank you.My comments were intended with just a little “tongue in cheek” at the irony of our elected leader being so tone deaf — as demonstrated by the recent elections and the message they contain — to the will of the majority.I have always believed and known that the people of any country — rather than the views of their leadership — are far more “loving” and tolerant of other peoples.I am always impressed to learn that the Russian people to this day treasure flour sacks with the words “US” on them which they received during the Second WW. The Marshall Plan saved western Europe and the individual western European of a certain age knows that.I am also not disabused of the notion that the enmity world wide toward the Jews is not real and simultaneously vile. The unspeakable evil visited upon the Jews in WWII by the French, Germans, Swiss and Italians is beyond belief.The Saudi Royal Family (a turn of phrase which almost me puke to type) is interested in only one thing — perpetuating their own control and wealth. Nothing more.

        2. Ffi

          IMO you always have The Man holding you down – power will always concentrate. In a competitive setting, the strongest party will reign supreme and supress the others. The question is: who controls it? How can we make sure that it is us – the people?This is the conclusion of Alexander Rüstow, a german sociologist and economist who put it on paper in the exile at the university of istanbul during WWII. (“Freedom and Domination: A Historical Critique of Civilization”, amazon)

  8. JimHirshfield

    I agree, in general, with your point about biz models…e.g. that structures like the Android Market vs the iPhone App Store are examples where, in the long run, the web-analogous Android Market will prevail. But certainly there are business models that are better suited to mobile (e.g. Foursquare) than web…and vis versa. So, I think your point is probably a reference to layers lower on the biz model “stack”.On the point of mags on the iPad, I’ve always found it odd that some held out hope that this was a saving grace. It’s about the content, not how pretty it looks. Sure, there’s content out there were only the pictures matter, but that’s another story altogether. ;-)Seriously tho, I think the lack of an ability to have subscriptions on iPad mag sales was a big mistake. Apple and pubs lost the ability to leverage initial interest and capture readers and revenue while novelty was still hot.

  9. Mike9

    It is a pricing problem. Once magazines in the ipad have a subscription pricing model, they will sell. Why would anyone buy each monthly issue at 5.00 when they can obtain a paper subscription for a year for 12.00 ?

    1. Fred H.

      No, no, no. The question should be: “Why would any magazine publisher in her/his right mind sell an annual magazine subscription (12 issues) for $12.00? What kind of insanity is this? Is there any wonder that traditional magazines are SO dependent upon display ads? What we need are magazine subscriptions that cost $30.00 per year ($2.50 per issue) with a $2.99 single issue rate.

  10. JimHirshfield

    “Scarcity is not a viable business model on the Internet.” So true. We live in a world of abundance, but many businesses and biz models work hard to create the perception of scarcity (as you point out Apple does…and has been doing for decades). Same goes for mobile service carriers pitching handsets that are exclusive to their networks (ehhem, ATT). Ditto Nexus S only available at Best Buy. Limited distribution (as in sales deals like these) is a human construct to present perceived scarcity. The ironic thing is when this scarcity strategy works so well – and everyone buys, say the iPad – it turns into “exclusivity” (gotta get me one, ’cause everyone else has one)…which turns into abundance.

    1. Bob Egan

      Lets just be sure we do not to confuse the term curation with the term scarcity.

  11. Wilhelm Reuch

    I like the “apple model” better as it would support a more open and wide spectra of content providers and not just “the big three” that the web economics seem able to support. true, many apps is just a thin layer on top of the web but this merely reflect the sorry state of todays internet with almost no interesting content (unless you count pdf-versions of print-magazines). after 15 years it is time for something new – the web model seems to only lead to bland sameness all over the world. if Apple can get this ball on the roll I think they have a big-big winner. otherwise it will be google all over the place and that would kill the internet – they are just so boring. this is what happened when the internet came on – microsoft tried to finalize the deal with MSN (remember the old private network they had? not the website) and OLE and developers and users embraced the web instead. now it is google that is close to owning the internet and will go for finalizing the deal that will give them full control.

  12. Midou Nafaa

    great post.I don’t think the element of scarcity/exclusivity is behind the failure of online magazine subscription, which I believe are still a compelling proposition especially with the raise of Tablets. Most magazines/journals still generate very valuable (expensive to produce) content ……. we also know that peoples want it (in printed version, at least). Improving the content access ubiquity will be all the better.The main inhibitor for the take off of online magazine subscription is the cost of production, and ultimately the final cost to customer. It is very costly to adapt the content for say a perfect iPad (resp. Android) viewing experience. Most publishers use vertically integrated processes from another age; you would be surprised how digital unfriendly these processes are. As soon as someone builds an overarching “presentation” platform that takes any content and adapt it to all the devices out there, the cost will significantly drop and we should see an explosion in online magazine subscription (not necessarily cannibalizing the print subscriptions). We need a market place for professional press publications that accommodate any type of device out thereS

    1. Fred H.

      QUOTE: ” We need a market place for professional press publications that accommodate any type of device out there.”Yes, yes, yes, and yes. About the closest thing we have out there right now is Zinio.

  13. erja

    Tablets are secondary devices which are not constantly connected (few people have a stomach for two mobile data plans), so I expect the containerized Kindle/app model to have some life in it still. People will want high quality content on these new larger form devices, even when they are out of wi-fi range. If a few things improve (more reasonable subscription rates, more compelling/rich value-added content, more sensible ways of viewing/organizing content from different publications) I think this trend could reverse on the iPad. This assortment of magazine apps are hackneyed early attempts to get on a new platform. I hope that Apple provides a more thought-through solution for publishers.For example, I love The Economist’s iOS apps, which include a lot of features that make them superior to the web – the ability to download an entire “issue” to a device is especially valuable when these devices aren’t always connected to the web. You can also download entire issues in audio format – high quality narration that you can seamlessly turn on while you’re in an article. If more magazines follow their model and incorporate rich media (especially audio versions of articles) in a truly useful way, then I think the app model will probably have a few more years of life in it.

    1. William Mougayar

      “Tablets are secondary devices which are not constantly connected”. I disagree. The iPad offers a very immersive experience – a user picks it up and spends lots of time on it.If we follow that logic, we could say same about PC’s. “PCs are not constantly connected…therefore bla bla bla”. Actually, PCs are starting to become secondary devices themselves as we do more and more on smartphones and tablets.Truth is…any device that is not constantly connected is a dead device.

      1. erja

        I think I’ve been a little bit unclear. I agree that the iPad is highly immersive/gamechanging/etc.What I mean by “not constantly connected” is that there are many common use cases (e.g. a user takes their iPad or Nook Color or Galaxy Tab to the doctor’s waiting room or subway) where a highly portable, wi-fi only device will not have a reliable internet connection. This is, at the moment, a big stumbling block for “the web model” of digital content. Without apps or an internet connection, how do you read the New York Times on your wi-fi only tablet in the doctor’s office? For the time being, we need downloaded content, which lends itself to the App Store or Kindle Store model pretty nicely.

      2. JLM

        I think the iPad is a very important talisman in the evolution of how we consume information.It is also a luxury good which conveys some of the exclusivity of Tiffany’s — luxury goods which say something about who the user is rather than just what the product is.This is a very, very important retail and branding concept. If not, we would all be driving pick up trucks — dirty, nasty ranch pick up trucks.

        1. William Mougayar

          Funny you say that. I recently picked up a Samsung Galaxy Tab tablet and played with it, and being an iPad user, it dawned on me that it wasn’t the car I wanted to drive. It was another type of car model more appropriate for the dirt roads. It didn’t have the same immersive experience as the iPad. It made me appreciate my iPad even more.Moral of the story: Tablets are like cars…

          1. JLM

            Cars are cool and they reflect who we THINK we are rather than who we REALLY are.This was written by a guy who regularly drives a fire engine red ’66 Chevy Impala Super Sport almost every day and cannot understand why everybody else does not. And, yes, it IS a convertible!Top down in the coldest weather!

          2. William Mougayar

            JLM- You’re a Classic…just like that car!! (meant as a compliment)

      3. andyidsinga

        William – agree with you about tablets and PCs and especially connectivity:)

    2. ShanaC

      I agree with this comment quite a lot (granted I’m writing this comment from a 3g connection on the Chromebook). I do think that the web model could catch up with that sort of on-off behavior, if only because I’ve found elements of that sort of model to be true with this computer (poorly done, but doable), but it was designed for ubiquitous access…

    3. andyidsinga

      Erja – agreed that kindle has life left.It seems the value is not as much in the formatting as much as providing the ability for authors to create a salable good and deliver it to a buyer.Ebooks seem like the most natural “virtual good”.Its seems like, on the web, we’re going to start learning how to sell both durable and non-durable virtual goods… Ebooks being an example of durable and a maybe a magazine subscription being a non-durable. Seems non-durable goods are more advertising and freemium based whereas durable can be discrete purchases.

  14. phoneranger

    The real problem is that viable business models on the Internet are scarce. And the ones that work become crowded with copycats very quickly.

  15. Javix

    Sure, 2011 will be the year of web on mobiles.

  16. Alex Murphy

    In April, Chris Anderson of Wired gave a keynote at Ad Tech in San Fran and talked about how the tablet would enable publishers of content to produce beautiful pieces and create scarcity. The problem with most Magazines is that they are only interesting for a brief period of time. A book is interesting forever. I still like to read the classics even though they are 200 years old or older. But, I don’t like to read magazines from last year let alone 200 years ago.The economics of the web are such where there is less margin than in traditional formats, and marketing requires some form of referral to get people to engaged. Neither of these truths are good for magazine publishers.One last thought: I found it ironic that as Chris was giving his address, he was talking about how amazing the tablet was and how transformative it was going to be, but he was using printed notes on paper instead of using notes on the ipad in his hand.

    1. William Mougayar

      The problem is with “how the tablet would enable publishers of content to produce beautiful pieces and create scarcity” is that it’s NOT the publishers that will be producing these “beautiful pieces” of content. It’s the USER who will easily assemble these PIECES of content literally.

      1. Harry DeMott

        Yes – but the publishers/editors have to give them the tools to do it. A framework in which they can enjoy that content.Right now magazines do a pretty nice job of laying everything out in a format that people are comfortable with and familiar with – but once you get to the web it all changes – as do your expectations.Imagine reading through an article on the web and instead of getting to the end you got – please flip forward 55 clicks to finish reading the story. We expect that in a magazine but not on a website.

        1. William Mougayar

          What tools are you referring to? No tools required. Content has been atomized to its most basic unit level: the post or article or tweet. We have RSS, readers, aggregators, all kinds of apps that put this together for a pleasureable user consumption and social participation.Look at FlipBoard and TweetMag. They are the future platforms for news reading on tablets. They broke the online magazine paradigm to pieces literally.The online magazine of the future will not get downloaded. It will get assembled and re-assembled on the fly. Your fingers will control it.

          1. Fred H.

            QUOTE: “The online magazine of the future will not get downloaded. It will get assembled and re-assembled on the fly.”I do not agree with this statement. Crap Out = Crap In.You and I and everyone else commenting here are tech savvy. At least 90% rest of the known universe is not.QUOTE: ” I think reeder is great, but to get a friend on it, I have to teach them about (1) RSS (2) Google Reader and (3) get them to buy Reeder. I have not once been successful!” (Kurtains)About 10 years ago I configured my daily NYT email to send me stories from the sections I want to read. I have NEVER gone back to change it. What makes you think people (the 90% referenced above plus 90% of the 10% tech savvy folks) will ever take the time to configure a magazine so that it matches there interests PRECISELY. It’s just never going to happen.

        2. Jared McKiernan

          well, we expect that on business insider also 🙂

          1. Harry DeMott

            I love it.I’ve all but stopped reading that particular blog – as it is mainly reblogs and slideshows about the same topic over and over.Unfortunate – because it really does attack an angle of business coverage that others don’t – but just too painful.

  17. Harry DeMott

    Here’s the problem with magazines on the web.Most of the general interest magazines have gone the way of the dodo – leaving highly specialized magazines.These titles are heavily edited and curated – and if you are into the topic – generally provide a ton of entertainment and informational value (I should know I probably subscribe to 30 different magazines)They essentially give away the printed product to subscribers to include them in their rate base which allows them to get advertising – which makes up the profit on the magazine and to top it off – the advertising is usually specific to the topic so it feels a lot less like advertising and more like editorial content.Now contrast that with the web/tablet versions of the same thing.The price is higher – because people tolerate advertising on the web far less than they do offline. In addition, the benefits of the web (searchability, different layouts etc…) are generally lost on these publishers – who have opted to give us the same exact magazine – only in digital need to adapt the content to the form factor.What works great in a page by page print version of the magazine – with gatefold ads commanding a big premium at the front of the magazine just doesn’t work online because there is no front or back – all the pages are just laid out before you to skim.Interestingly, I think once magazine editors understand these issues they will be incredibly successful on the web – because the human desire to engage in different interests just doesn’t shut off when we go online – hopefully it should be amplified by the infinite content on the web.So if I read Islands magazine and read about the Virgin Gorda in the British Virgin Islands – is there any reason I have to look at just one picture of a beach – why not 10 or 100, and why not a Flickr stream in addition to the editorial shots. Why do I even have to look at photos when I could be watching videos? Why can’t I explore airfares and hotels and reviews and make restaurant reservations (actually you don’t need them on VG) right from the site.That’s the promise of magazines on the web – but to date that promise has been woefully missed.

    1. Dave Pinsen

      Good points. I also think there’s something of an un-tapped opportunity in creating a magazine drawing content from the long tail of the Internet (a “Long Tail Journal”). There is no shortage of little-known writers online who are as talented as most high-end magazine writers.With respect to advertising, another idea could be to incorporate affiliate partnerships organically. For example, let’s say you’ve got a cooking magazine, or a magazine where cooking is one of the topics. You find a talented cooking blogger who already uses certain high-end products in her kitchen (e.g., a Vitamix blender). Then she just mentions the product in context when she happens to be using it in a recipe, without overtly selling it. Nearby (e.g., in a tasteful sidebar) there’s a “More about the ingredients and equipment used in this article”, with photos of the featured products and ingredients, with affiliate links to the respective vendors’ product info pages embedded.

      1. Harry DeMott

        Absolutely.check out ThingD – a catalog of every object in the world – or something like that is their goal.No reason not to be able to link everything up.

        1. Dave Pinsen

          Thanks, will check it out.BTW, a Disqus glitch apparently prevented me from giving your comments here a “like”. Consider them liked though.

    2. ShanaC

      Not completely – the magazine itself has been supplememted by a lot of crap. Look up the following term “Will he call” and you will see one of the essentially biggest problems with the web – you can sell a bazzillion Cosmos with that term, but you can’t make really good web content that flows and allow you to do something about the term – what products or services will someone take seriously with that term (and if you say cell phone plans…)

      1. Harry DeMott

        Of course Cosmo is essentially a porno magazine at this point – so I would say it has already been dragged down into the gutter. Even the mens magazines I read like Men’s Journal and Men’s Health or GQ don’t go nearly as far as Cosmo does every month on its cover. Very hard to have some sort of web flow with one off articles about how to please your man.

        1. ShanaC

          Not the point -the point is Cosmo sells in its current format, and to keepthe advertising clean a good chunk is fashion ads. Meanwhile the samecontent on the web is owned by the likes of Associated Content, yahooanswers, ivillage, thefrisky, etc. And the vast majority of these peoplecan’t figure out how to advertise with such a LCD question. And there istons of content like that. At least with cars, the what to advertise is easy. Same thing withknitting magazines and a pure fashion play, or a pure technology play. Other than that ????

    3. JLM

      You nailed it. Take the rest of the day off.

      1. Harry DeMott

        Heading out ice skating right now with the family.Happy New Year.

        1. JLM

          Same to you. Every time I ever hear the words “ice skating” I am reminded of a very influential person in my life who always used to say —“We’re going to fight those bastards until hell freezes over and then we’re going to lace up our skates and take it to them on the ice.”Happy New Year and be safe out there.

      2. Fred H.

        Yes, Harry. You nailed it. We need to talk!

  18. Evan

    Corollary is not spelled correctly. /spelling nit.

    1. fredwilson

      thanks, fixed itcommunity powered copy editing ftw

      1. Evan

        I normally wouldn’t nit like that, but you seem to like getting corrections.Assuming that you really do write so many of your posts on the treadmill, it’simpressive that there aren’t way more typos.

  19. Peter Cranstone

    Fred,If you’re correct (and I believe you are) then the web model will need to be “extended” to Mobile. This means that you have multiple problems to solve…1) Device detection – still incredibly primitive2) Location detection – harder to do than the press thinks3) Privacy protection – hint cookies are NOT the way to goI’ve been posting on your site for years. I’ve been waiting patiently for this post of yours. When we started 5o9 we did so with this exact post in mind. Solving the problems that will show up as you extend your web service model to mobile.The first issue to contend with, apart from the three items above, is how fast is your mobile web site. To date there is no known way to measure HTTP traffic performance inside the mobile browser. That problem has now been solved along the ability to recommend new ways that will increase mobile performance and drive net new revenue for Enterprise customers.2011 is when it all begins.Cheers,Peter

  20. Guillermo Ramos

    Some thoughts about mobile internet:1) Ipad and alikes are only 10% mobile devices. They mostly substitute desktop traffic.2) 95% of current internet services are not mobile internet players. They only have to adapt their web page to different screen sizes.3) There are very few pure mobile internet players (Foursquare,…). “Pure internet mobility” is pocket size device + user out of home/office4) “Pure internet mobility” will be a very rewarding business model although not as big as most think

    1. David Fishman

      Totally agree, “Pure internet mobility will be very rewarding business model although not as big as most think.” For example shopping on the net for soft goods is pain on desktops alone. Good luck shopping for apparel on a mobile device. BTW apparel represented one of the greatest growth (yr/yr) sectors for 2010 ecommerce. Mobile ecomm. growth will be dependent on shifting some of this traffic ….

      1. Guillermo Ramos

        …although “mobile internet traffic” statistics will include a lot of “mobile traffic”… which is mostly wifi home/office relatedA good discusion would be to define what “pure mobile traffic is”. My understanding up there.

  21. 程肯

    “I’ve been saying for a while now that I think mobile economics will trend toward web economics as the mobile web goes mainstream.”While I agree with your point, why preface your point with the “i’ve been saying for a while now”, it just makes me want to skip your post, as it looks like you are just going to rehash something I’ve already read from you.

    1. fredwilson

      i’ve been saying it in public appearances and comments but never in a full blown blog posti guess i should have clarified that

  22. sheynk

    Interesting post …I think that the note about curation is spot on, context and relevant information can be quantified and charged for.What I don’t agree with is greater fragmentation. I think for the majority of the market the mobile economy will still be driven through a few key players (apple, msft, rim, nokia) with android getting their fat share through numbers alone.Closed systems, while evil in the VC/developer/blogo view, tend to get great commercial traction if done right (consumer trust + convenience) . The battle of the eco-systems is on!

  23. Bob Egan

    Fred, magazine subscriptions aside, i am afraid the economic trend you cite is is the trend. The question i would ask is should the economics model of the web port to mobile? I’m not sure.Screen and device size i think drive the expectation and thus the tolerance level of consumers. Not device or network power- they are both enablers. It started with voice. Press send, complete call. If that is not happening in milli-seconds anxiety beings to reign. Period.In the world of data – albeit browser or app access, the expectation is the same. Press “get”, get MY content.If the web economic model, based largely on advertising eyeballs, ports to mobile without much better context (eg, through for example an in-app purchase) the result may be more “press get, get YOUR content”..and that can’t be good.

  24. robsandhu

    Fred, there are some technical hurdles to overcome before mobile follows the web. For example HTML5 apps are great for distribution, but currently cannot access all of the device hardware such as the camera. I doubt apps like Facebook would move to an HTML5 version without the ability to capture an image and post it to their wall.As HTML5 progresses we should see more apps migrate to the web. From a developer’s perspective, mobile web is ideal for iterative development, but they must be able to access all of the device hardware and provide an excellent user experience as native iOS apps do.

  25. robsandhu

    Fred, there are some technical hurdles to overcome before mobile follows the web. For example HTML5 apps are great for distribution, but currently cannot access all of the device hardware such as the camera. I doubt apps like Facebook would move to an HTML5 version without the ability to capture an image and post it to their wall.As HTML5 progresses we should see more apps migrate to the web. From a developer’s perspective, mobile web is ideal for iterative development, but they must be able to access all of the device hardware and provide an excellent user experience as native iOS apps do.

  26. Albsure

    Wow! Its hard to handle someone with such an obvious interest in the “free-web” model making these comments and everyone agreeing so enthusiastically. Lets get a little basic economic principle in place. Scarcity IS BUSINESS. It is the core of economic principle. The distribution of FINITE resources is what the world is all about. This has to be at the core of every content producer and every worker in the world or else why would anyone buy anything?Scarcity was always re-enforced by the fact that there was only ever a finite amount of goods made that had to be distributed. This allowed businesses like the music industry or the newspaper industry to price in the fee for the intellectual property of these products into the total cost for the consumer. That is modern industry in a nutshell.Even though we have digital distribution which is more or less free, we still have intellectual cost. How do small businesses grow into large businesses without the marginal return from selling a product like in he old days? Oh.. lets see, we BORROW huge amounts from VC’s to build UBIQUITY which then leads to profits… Oh thats so simple..So this ubiquity thing means your everywhere. But only a few products can reach that level given the very nature of the word “ubiquity” (i.e. if something is everywhere why look for something else to use?).Notice how NO ONE is making any real money (i.e. profits – cost) in any of these web companies.Even facebook only makes like £500 million in revenue (not profit) compared to how much its valued at. Its BUBBLE time all over gain. When investors start asking for their money because they need a quick exit (i.e. major disaster like war and stuff always sharpens the minds of men) then one by one the domino’s will fall. Everything is about confidence and slight of hand, all engineered by money lenders (VC’s, bankers etc.. ).Back to the topic. Apple + News International are 2 firms who understand how to make money. And at their core is “scarcity”. Apple have created it with a “one way” installation policy that they control and curate. News International are withdrawing their media from the web and prefer a marginal return for everything they produce rather than this mass race to the bottom for the web.At the end of the day, all the VC’s want to talk about is scale and advertising. All that does it make the cost of doing business ESCALATE not decrease. Do you think programmers grow on trees? Do you think servers cool themselves down?Lets back to reality instead of this modern day alchemy. Go back to basics. Make something interesting. Sell it to someone who likes it. Stop messing about…

    1. andrej

      Scarcity is business, but what is scarce here is customers, not goods. There Is too much information on the web, and too little customers. Basic supply and demand economics say that this means that the price of goods will drop to zero.Not all news will be taken of the web, as some companies are able to offer this news for free and pay for it through ads. This means that customers have a choice, and why pay when the same goods that are also offered for free?

      1. albsure

        The reason there is lots of information is to be had is not because digital text has not got the natural scarcity aspect built in. In order for the internet to remain healthy companies have to build that scarcity model into their products. Thats why their is DRM for movies and why content companies will eventually put a walled garden around their content.The content is not free to produce so how on earth can it be free to consume? The business model of “free” does not benefit the vast majority of businesses who by definition do not have “economies of scale” to fall back on.A free internet favours the already rich parasite companies like Google or VC’s/Banks/Money lenders who know that “Scale” is the only way to win in that game. Those companies profit not from their business skills or ability to produce a great product, but on being the only people who have the deep pockets to survive the race to ubiquity..Free is stifling small, medium sized businesses and entrepreneurs, not creating them. The App store has made more “average joe’s” rich than any “free” web model could ever do.

        1. fredwilson

          there are so many examples of people making tons of money off content that is free to consume that i can’t even begin to start listing them

          1. Matt A. Myers

            For example,I just released an iPhone app exclusively to read for just $97 monthly — regularly $197!! Well worth the price!Just kidding!

          2. Bob Egan

            Fred, you said this a number of times now, I have to call you out on it.Do you mean there are a “many examples of people making tons of money” as in throwing off cash, or profits? Cash, i get. Profits? – i find quite elusive except for a very few “very ubiquitous” examples (eg.Google), and even in many cases i haven’t seen REAL numbers that bare that out (FB being one).

          3. fredwilson

            Yup. Profits

          4. Bob Egan


          5. Lucius

            Fred, how can content be free, except for a small period of time while burning through VC funny money?Just a few days ago I watched Restrepo, a great documentary of two journalists that spend a year embedded with the Second Platoon in Afghanistan. Producing this content cost really money and can’t be consumed for free.What you perhaps really meant is that content of lower quality that does not require any skill or effort to produce can be consumed for free.Since China was mentioned: China serves as a good example what happens if everyone expects music content to be free. The Chinese music industry has mostly collapsed.Google is a winner-takes-it-all story, combined with excellent execution, which started the ad funded business model. Some businesses make money at the periphery of Google. Google is trying hard to find other revenue streams, not based on ad funded business model and ubiquity (but has failed thus far).I am skeptical of the free content model, especially ad funded. Ubiquity as a business model reminds me of the .com crash more than 10 years ago. Some sort of Ponzi scheme waiting to collapse.

          6. fredwilson

            i’ve written extensively on this concept here at AVC over the past seven+ yearshere is one post i found with a google search…

          7. Lucius

            Thank you for sharing the link. Here are the problems I see:Problem #1:Total advertising market size world-wide = $500 billion per year. Assume 1% growth rate = $547Assume 25% moving online in the next 10 years (=$136 billion).US market opportunity equals to a quarter of global opportunity = $34 billion.Top US players that use their own ad serving engines: Google, Facebook, Microsoft, Apple, AOL. Percent captured market share of top US players of online market = 90%.That leaves $3.4 billion left for all remaining US ad funded businesses. Assume 10,000 US ad funded companies including all the Windows Phone 7, iPhone and Android app developers (but excluding the top five): $340,000 revenue per ad funded business per year.Conclusion: The sheer amount of ad funded business chasing the same money is too big due to the few giants taking the majority of the revenue. Why do the top five take the majority of the revenue? See problem #2.Problem #2:Ad serving technology is a scale and numbers game. You must have a gigantic amount of data to target competitively. There are less than a handful global companies (Google, Microsoft, Facebook, Apple, Baidu) that can pull this off. Just to illustrate what type of resources it takes to build competitive adverting technology for Microsoft: Thousands of people some of the brightest people with hundreds of PhDs, a research arm funded with a few billion year over year. And still MS is loosing money because CapEx/OpEx is so high, that Bing must capture at least 30% search market share to become profitable, despite in many vertical searches, like Travel, Health, Shopping better than Google.No startup, no Twitter can pull this off. Therefore ad funded businesses have no other choice then sharing revenue with the top players (through programs like AdSense or iAd). That revenue sharing takes away another 40%Conclusion: Ad funded business (except for the big players) must share revenue, diminishing opportunity further.Companies like Twitter therefore won’t be able to serve advertising competitively, since they won’t have the resources to pull it off. Ubiquity won’t help.That leaves only a few business models left, such as licensing, or selling off to the big boys, which may be profitable.

          8. fredwilson

            you are leaving out a number of other monetization options; commerce,virtual goods, freemium, etc

          9. fredwilson

            i should also say that some content will be paid forpremium video content is a good example of that

        2. andrej

          There are costs to create content, but there are many ways to pay these costs: adds, selling info about the readers, marketing value (just look at the great posts written by fred here, often a lot better than material written by professional journalists).There is too much content payed for in alternatives ways that content that demands readers to pay cannot survive.

          1. albsure

            Many ways.. whats Advertising, Advertising and maybe statistics to sell to .. wait .. Advertisers!Ever heard of journalistic integrity?People are willing to BUY things at the right price. To give everything away as free and then “pimp it” via the ad route is not always the way forward.Freemium favours money lenders. Period.

          2. andrej

            People are not willing to buy things at the right price. The only right price is the cheapest. Why do you think everything is produced in china? Everybody complains that all jobs are moving to china, but nobody is willing to buy more expensive products produced elsewere. Even so called luxury products like apple products are manufactured in china.

          3. albsure

            I disagree. The Chinese situation has happened precisely because businesses in the West have refused to compete on innovation and decided to compete on price. Its a classic “race to the bottom” which has lead to deadly embrace America finds itself in with China.There is no reason why those products could not be built in factories in Kentucky or North Carolina except that US businesses wanted to make a quick buck at the overall expense of the US economy.If you pay American workers good money to build goods they will use that money to buy other American made goods. The irony is when you try to cut corners by not paying American workers good money and they go on to HAVE TO BUY the chinese made product because they cant afford the US made one on their low wages! A country is like the eco-system in a pond. Everything matters to keep a nice balance. You have to look at how one enlightened move (oh quick.. lets outsource everything to India and China) can have on your whole thing long term.There is always one company that breaks from the pack and starts a price war that messes up the whole marketplace. Thats why you have Chinese made goods. Pure greed and quick buck mentality of US entrepreneurs…We are here again with the Web.. When will we learn that we should be training and encouraging people to actually buy things.. bravo Apple!

          4. JLM

            I agree with you more than you agree with yourself! LOLWell played and well said.The political implications of exporting jobs are nuts. It is sheer folly to export low level jobs and then to pay low level workers unemployment. Not everybody is going to be a computer networking genius.If you want access to American markets, VCs, banks, securities laws, stock exchanges, physical safety, Courts, tax laws — then you should have to employ Americans.There is even an obvious immigration implication. If you allow illegal immigrants to stroll into the country and take these low level jobs which remain, then you only compound the problem.If you want Americans to be employed in America, then you are going to have to jerk a knot in somebody’s butt. You cannot be loved by everybody and be the Leader of the Free World.

          5. Bob

            FB and TWIT are pioneers in mass-scale, user-generated content (UGC)they have some minor curation costs, but they get to publish massive amounts of content at zero costfurther, they have a viral model for recruiting new content creatorsadd at least a touch of context and you get one or more successful advertising modelsthen sprinkle in premium content (e.g., games) and more revenue portendsre-invest some of this dough into new features for authors, advertisers, and readers to further raise barriersthen use the power of monopoly to project into new areas (e.g., email, identity, e-commerce)all fueled by free content and viral acquisitiona thing of beautyand the only need for “money-lenders” is to provide working capital to deploy more servers….

    2. Guillermo Ramos

      Internet is free and open. That is the basic principle. Anyone trying to build walls around will not succeed in the long run.Social internet is about building large community new places where people can discuss, chat, share, stroll… Places that people love to be in. They are like new streets where you feel good. New streets where you can see shops, street ads, people handing out leaflets, others chatting, others buying … and others grumbling

    3. ShanaC

      my scarcity is time. i want ubiquitois access so i can access other things/people with my scarce time.

    4. fredwilson

      i don’t think back to basics is the answerlook at the new models, like google and facebook, which make a ton of moneyyour estimate of facebook’s revenues is low by a factor of 2x at least and they have been printing money (ie very profitable) for several years nowyou don’t need scarcity to make money in the digital worldyou need ubiquityit’s the opposite moveif you stick with scarcity online you will be bankrupt

      1. albsure

        Ubiquity only works for the first maybe second entry in any one field. What are the rest going to do? What is the business model for the other startups? Once your their your scale freezes out any new competitors. That breaks that natural economic cycle (think short run vs long run positions of markets)Ubiquity is PAID FOR. If you don’t give up half your company to VC’s and money lenders you will not naturally get ubiquity. You only get it by being the company that can survive long enough without making a profit. Hardly a real business plan for the majority in the real world without access to endless supplies of VC cash..

      2. JLM

        Back to basics? They no longer exist.I used to think nobody had 20 years of experience any more. We all have one year of experience 20 times.Now I think the world is moving so fast, we have 6 months of experienct 40 times.As an example — are there any more truly “blue chip” stocks in the world anymore? Did you ever think you would prefer EXPW v C? That’s EZ Pawn Corp v Citicorp, my friends. Look at the charts and tell me which on you would prefer to own over the last 3 or 10 years.

        1. JLM

          Tried to edit — EZPW, sorry.

    5. kidmercury

      google, the leader of the free web by a painful margin, has reduced marketing costs for countless small businesses and has enabled an entire industry of search marketers — mainly small businesses — to blossom.looks like you’re wrong and fred’s right. hope you will apologize and acknowledge that he is the better person.

      1. albsure

        I cant really argue with the figures.. because you haven’t produced any!There are a lot of unhappy people in the google ad sense world, they are not all singing their praises. It would be better if Google had real competition in its core market like other companies do. Thats not going to happen because google have created a near monopoly. If it wasnt for MS I dont know where would be (how ironic to be championing MS as an anti-monopoly company!).At the end of the day, I’m a software developer by trade and I favour free enterprise in this world rather than rampant multi nationals controlling everything. Wherever I see a market or industry that favours the individual over the corporate I’m right there!Apple have provided a way for single developers and small businesses to make a buck without selling their souls to the big cash rich publishers, VC’s and Bankers. It should be applauded. I’m not anti web, I am pro-choice. If you want to sell content that you have sweated over to make you should be able to. Google was steadily eroding the value of content until publishers like News Intl. woke up and thought.. WTF?Apple have brought back the pioneering spirit of the early 80’s developers who worked primarily for themselves. I like that. Remember with Google / Facebook etc.. there is NEVER a free lunch. Someones always picking up the tab..

        1. kidmercury

          you haven’t produced any figures either, so perhaps we are even in thatregard. if you are honest with yourself, though, it will be plain to seethat google, the leader of the free web, has created a larger developereconomy than crapple has. however i am living proof, i run my own smallbusiness, which gives away free content, and am largely dependent upongoogle. not entirely pleased about this — i could use more money anddislike being very dependent upon google — but the fact of the matterremains that no other company comes close to even accomodating people likeme. definitely not crapple. gotta give props where props are due.the whole point of the open/free stuff is to create an economy. you shouldbe thanking fred and worshiping the ground he walks on for the opportunitieshe is giving to mere peasants.

          1. raycote

            Good comedy !I Hope?You do realize that it is only a matter of time before Google’s freedom train will be derailed.Google’s cash cow, advertising monopoly, will inevitably fall to the web’s incessant drum beat of disintermediation.Google is particularly susceptible to the digital gene swarm. Live by the swarm die by the swarm!

          2. kidmercury

            Yes i welcome evolution, whoever beats google will do more to create wealthfor their ecosystem

          3. Guest

            true, but google has two things still to fall back on, online ad spending is rising and rising fast and compared to the time spent on traditional media, time spent on the internet is ever increasing.

          4. Email

            Perhaps you would want to know the story of this sailor who bet and lost his house on adsense $s.http://www.duckworksmagazin

          5. kidmercury

            i do not earn my living off adsense, i am more dependent upon youtube andgoogle traffic — that is the dependency i am referring to. i alsoacknowledge its risks and am not pleased about it (and work to allay it besti can) but i give props to google for at least enabling so much. that is whythey are the leader and why they are so far ahead of other technologycompanies.

        2. Pierre Bureau

          Saying “I’m not anti web, I am pro-choice” and supporting Apple at the same time is overwhelmingly confusing for me….Apple is everything but giving you choice, once you start using one of their product you’re locked to use the entire ecosystem… it is even worse than MS in the dark ages of Windows 95…

  27. raheeln

    fred, as this happens countless opportunities will be opening up with an infinite canvass for creative potential. such trending only spells out platforms will increasingly become ecosystemic, meaning it’s not about being in one place. It’s now about the ability to be anywhere, depending on the context and the moment. ipad magazines is just web content with a condom on.

    1. Guillermo Ramos

      perhaps that´s the problem: condom-ipad-magazines doesn´t fit in apple´s no sex policy…

  28. kurtains

    First of all, I think this is the environment where a VC firm, such as Union Square Ventures, will see the greatest opportunity.Looking at my own family and friends, most don’t know what RSS is, think twitter is for vain celebrities, and have no idea why anyone would want to check in somewhere. Many have smartphones, but to them, curation IS the Huffington Post. Flipboard is cool, but they wouldn’t actually use it.If the mobile internet is set to explode in the next year ( due to low end Androids?), what is going to change these consumers usage patterns, to the web model you speak of? I think reeder is great, but to get a friend on it, I have to teach them about (1) RSS (2) Google Reader and (3) get them to buy Reeder. I have not once been successful!These lagging consumers are not going to jump into smartphones and then push the mobile internet forward all at once. Buying a droid or iphone or WP7 device is not the same as them all of a sudden “getting” twitter.The pattern of computer adoption (work driven, and tied to the screen all day) is much different than smartphone adoption (phone first, then slowly branching out.) Developers will have to provide users with a more compelling proposition then HuffPo or WSJ, and have a way to monetize once they gain scale, all on a screen < 4 inches.And they have to gain scale without any strong distribution channels! People like channels. Retailers still exist for a reason. Maybe Union Square Ventures and these other top VC’s firms can picture themselves as a type of Saks Fifth Avenue for app deployment. They will be the curators of the top mobile web services.

  29. vruz

    The question is simple: Do you want Disneyland or do you want the entire, actual world?AOL vs. WWW all over again… The real world is just so much bigger than Disneyland.AOL just can’t win.

  30. Nikhil Nirmel

    My single thought on web monetization: charge people for stuff you can prevent them from obtaining for free. There’s no reason this should differ on mobile.

  31. JLM

    This is all about convergence — in the sense that things which were separate are coming together at such a high rate of speed that they are becoming one with each other.Desk computer, lap top computer, iPad, iPhone, smartphones, GPS, PDAs, digital still cameras, video cameras, music, video, huge bodies of info, content of all kinds are all converging into a form which obscures their origins, focuses only on their utility and simply presents unlimited capabilities.The business model for every underlying system is also converging.What is not converging as fast is the customer base which is still segregated by a sense of intellectual and technology flexibility. And a bit of too much of a good thing.I don’t really care if you can read a magazine on a smartphone. I do want to read it on an iPad and I do want to be able to see every possible article on wood finishing ever created.The whole world is converging but some folks are stepping off the conveyor before they get to the end. And why not?

    1. William Mougayar

      “I do want to be able to see every possible article on wood finishing ever created.” Just curious, is this a real hobby of yours, or only an example?

      1. JLM

        I am an inveterate tinkerer who loves to work w/ my hands. I have always been a builder.As a kid, I worked in construction and can do rough and finish carpentry, cabinetmaking, concrete finishing, masonry, painting and ceramic tile and stone installation. I can make a totally leak proof shower pan the old fashioned way.I am a Pottery Barn kind of style builder.I can do the work of a plumber though I do not know the code and finished plumbing work is pretty dicey. I can do all the electrical work but I have to have a pretty damn good plan to follow. I have started only one fire but I have managed to shock myself more than a few times.I love working with wood and trying to match finishes on furniture pieces I refurbish for things like lakehouses and college sorority houses. I have gone a bit overboard and allowed it to become a bit of an obsession — not the magnitude of the work but the amount of sprayers and chemicals and stuff I own. I have poisoned myself a few times, I think.For a while I was trying every waterbased pigment, stain, sealer on the market. I am totally green not solely out of environmental considerations but because of the ease of work and the idea it is the future.I like to work with beadboard and milk paint to create vintage looking comfortable Pottery Barn furniture.So, I guess it is a bit of a hobby.I am slower than molasses.

        1. William Mougayar

          Impressive! You’ve definitely come out of the woodworks on this one LOL.I have a couple of 19th century pieces that need re-touching…just kidding!On a serious note, can I email you or you email me at williamATeqentia-dot-com?

          1. JLM

            On a very serious note, the best thing to do with old pieces is to clean them with a good product like Murphy Soap or something that will take the dirt off. Do it real quick and don’t let the liquid stand. Furniture is often just dirty.Then give them the lightest possible wet rubdown with the finest possible steel wool — the way you would French Polish a museum quality piece in the day. It sounds counterintuitive — using water with steel wool — but it works. The key is to do it very lightly.Look at the piece using a very high powered magnifying glass and you will be amazed what is really happening. You may have to go through several increasingly fine grits to get it just right but you can see the scratches getting smaller and smaller and aligning themselves.You are trying to bring back the finish within the thickness of the finish itself. This is a form of cheating which is constantly done.Another good trick is to make the top of the piece perfect — because this is where your eyes are going to gravitate and just do a workmanlike job on the balance.I am also convinced the whole thing about finishing is the “sealer” that is used. I have cleaned up some very utilitarian finishes and then put a world class sprayed on thin sealer in 4-5 coats and it looks truly amazing. The trick is very, very thin coats.This is the big Pottery Barn secret. Thin finishes, thin sealers and lots of hand wet sanding.You can only do this with a commercial spray rig but a quick and easy way is to take it to an automobile finishing shop. They deal with very delicate sealers all the time.

          2. William Mougayar

            Gee…inveterate was a mild adjective.

          3. JLM

            E-mail on its way.

        2. Dave Pinsen

          It must be great to be able to build stuff like that. I made a polished wooden box once in summer camp. Took me all summer.

  32. hassan

    Kevin Kelly tolk about OM (for one machine) as a single machine (witch is internet ?) and we access to it with multiple devices : mobile, tv, computer , car, fridge …

  33. ShanaC

    Just because there is one big web doesn’t mean all computers will see the same angle of that one big web. One could leverage that problem into a paid business – it is one of the strengths of SAAS, for example. It is also one of the strengths of targeted adverting, which really isn’t being used correctly as content (although that may have been mentioned already)Further, mobile has the benefit of even further time scarcity plus odd connections (and not like a desktop either, more along the lines of when the 3g goes down between buildings because of the way they are shaped) – just because you can browse all the time, doesn’t mean it will work when you need it (see the changes to Google Map app)We need both advertising and pay models that work along the lines of when and how people use their very portable devices.

  34. Trend Guardian

    I think that in the future, the applications that are going to succeed are the ones that combine the mobile app integrated with the web. Since you can access the application everywhere with you, the mobile application will be integrated with reality and the data will be real-time. If you are interested about mobile and web trends, please visit my website:

  35. andyidsinga

    Re presentation layers / paragraph 2:It seems that when a user goes to an store they probably have more purchase intent vs visiting many current web sites. If true, it means that presenting content apps through a store could generate $ whereas presenting via a website might not.I’m not suggesting that everything has to look or run like an apple app store – Etsy and Amazon are great examples of web site stores where purchase intent is the default.Re scarcity being a viable business model:I don’t really understand why you think that? There’s only one Mad Men series and afaik I have to pay to get it. Or maybe I’m confusing the definition of scarcity with something else..

  36. John Honovich

    “Restricting access to content doesn’t work. Someone else’s content will get filtered and curated instead of yours. Scarcity is not a viable business model on the Internet.”In my experience, niche business content is also an exception. In 2 years, we’ve signed up thousands of paid members from over 80 countries for our testing and research on video surveillance. It’s boot-strapped, already quite profitable and growing strongly.The big thing we found is that advertising can’t pay for original content when the market is small. For instance, in surveillance, even a free article is likely to be viewed only a few thousand times. With so few page views, it’s infeasible to fund via advertising. While readership will grow, I don’t see how it can ever be large enough to fund original research/reporting in small niches.

  37. MartinEdic

    The presentation layer can’t be monetized, IMHO- it’s the value of the content that drives monetization, not the delivery method. That’s why I suspect the impending NYTimes paywall is going to be a disaster. I read it daily online but won’t pay. The other issue of monetization is paying for sites also carry advertising. I might pay to not see ads, especially on my Android where it is virtually impossible to scroll without triggering ads that are across the top and bottom, something means I can’t read the Times on my phone.Even with the mountains of info on the web it is still relatively difficult to get info similar to the wood finishing tips offered in these comments. I’ve written three books for Taunton Press, the primary publisher of woodworking information and their way of selling an ‘electronic’ book (yes, they call it that) is a big honking PDF. They are a magazine publisher and a very successful mid-sized publisher yet they don’t get eBooks, something emblematic of Fred’s whole point…

    1. Ted Carroll

      I likewise believe the new NYT paywall will not be successful. They will promote it like kingdom come but it will not “get there.” The only way I’ve seen paywall work is with truly proprietary niche content. They have some, and some opinionators but not enough to get a big enough take rate.Small premium niche content creators (like those who do great work at Taunton) will have significant challenges in garnering anything greater than peanuts as far as online advertising is concerned. And selling audience data to digital profile aggregators is going to get increasingly dicey as deepening global concerns about privacy increase. A Taunton PDF Publishing approach is a very poor one. Something better will come along and let’s hope they grab it. But I’m still questioning Fred’s financial cornucopia thesis regarding digitally distributed content.

  38. Rocky Agrawal

    As a former online news guy, I view the iPad app craze as an attempt by the newspaper companies to try to turn back time.Many in the business still believe in the “original sin” of not charging for content online when the Internet first launched. (Conveniently ignoring the reality that many newspapers, including ours, tried and failed to charge for online content.)I’ve spent time with apps from all of the leading newspaper companies. They remind me a bit of TimesFax, a digest of the New York Times that was delivered by fax to remote locations. The only one that was engaging was USA Today — and that was because of their great implementation of the crossword.The apps give publishers the illusion of control. They can push a package of identical content to people, just like they do in print. The only people these apps will appeal to are those few who liked the PDF versions of newspapers that the industry kept pushing.They would all do better to skip the proprietary apps and work with someone like Flipboard, who understands that the keys to success will be personalized, social and free.

  39. Elia Freedman

    I completely agree. I am seeing web development that blurs the line between mobile and native apps. And I don’t see anymore how apps without web-based components and interaction works even if native.I developed software for handhelds and desktops and have tried to move that business to apps (on iOS first). Software and apps aren’t the same, I have concluded. My analogy is that software is to apps as humans are to monkeys. If I was to start over again, there is no way I would have tried to sell our software but instead used a web-based approach, like in app purchases, to drive a freemium model. I am concerned that it is too late now to salvage this app, and that is a real shame as it is excellent for what it does (according to our customers.)

  40. Tom Hughes

    I’d like to argue a somewhat different take on this: I think mobile will actually highlight the shortcomings of the free-information economy, and put a greater premium on curation and pre-digestion of news and opinion by a trusted source. Free works best when searching is super-easy, time is not of the essence, and screenspace is cheap; but those conditions are not met in the mobile environment: the mobile user is more time-sensitive, has less screenspace than the desktop user, and is less patient of being pestered with irrelevance (or ads).If that’s correct, then premium news channels — redefined as curators of news — have a hope.

    1. Bob Egan

      Yes, you’re right and dovetails nicely into my earlier comment

  41. enyibinakata

    Where are the usual vicious comments that follows any article which is less than effusive about anything apple ? The fanboys are probably on hols :). By the way, very good article. The author is quite informed and free of herd mentality disease.

  42. yofrez

    While I agree with a lot of your post on the extension of the web to incorporate mobile and tablets I disagree with your take on mobile business models. If you look at the big mobile winners to date, which include angry bird, ngmoco, and tapulous, they all have either upfront payment or freemium business model. I can’t think of one app that has made a substantial amount of money on a pure advertising based model. Consumers don’t interact with ads enough and ad rates just don’t pay enough. I also think people inherently interact with mobile, web, and tablet mediums differently. I don’t like to watch movies or read long post on my phone so I use it in short sporadic burst. I think the average use of an app is less than 4 minutes. Which helps explains why all of the top grossing apps are game related vs. anything else.

  43. RJ Johnston

    Interesting topic. Last week I was discussing this with a family member who happens to report for the Washington Times (when he’s not acting as a family member of course). The times was recently sold to a new group and has been actively working to capture new subscribers through several mediums.The discussion started with my suggestion that the emerging tablet market will provide a much needed source of revenue for fledgling news organizations looking for new sources.His question, and several subsequent iterations of the same question, was “how is it different from a website?”. Followed by “if I don’t pay for it on my phone, why would a tablet version be different?”.For this particular use case I believe it is plausible the virtual purchase of a seemingly tangible item can gain traction. What have we lost as our content consumption has migrated from the physical world to a virtual one? IMHO the ability to hold something in our hands and consume the content in front of us.Computers with all their instant messengers and millions of content sources create an environment of mass consumption. People looking for a quiet singular source from which they can easily access and consume without the agitation or aggravation of distractive marketing or messages the tablet market may provide just that. As a subscriber I am provided daily with virtual representation of my selected content source (i.e. newspaper) allowing me to read at my pleasure just like a physical paper.Where a provider would go wrong is by trying to mimic their web presentation on a tablet. Instead an exact representation of their physical paper with the exception of links to supporting pages and sections, and possibly the occasional supporting video embed may be the model their industry needs.Although I could be wrong and frequently are, I certain don’t think pursuing the tablet market as an alternative revenue stream would hurt.

  44. David Shellabarger

    Actually… Angry Birds is on both GetJar AND the Android Market.They initially launched on GetJar exclusively, but several hours later released to the Android Market too.I think the exclusivity was suppose to last for a weekend or something but because GetJar couldn’t handle the traffic so Rovio went ahead and published on both.

  45. im2b_dl

    Good piece Fred … I think free will win… But I think that is on all levels. I think the vast majority of the population is actually going to become more hostile toward paywalls not less … But I do think the magazine on the IPad issue is a much more complex issue as to what is happening (demographics, model of distribution, organic flow of experience with interface /platform transition..etc) …all at the beginning (yes still the beginning) of a paradigm shift that has as much to do with a new format of communication we have yet to see. As always imho

  46. Guest

    the size of the facebook app platform app economy(right now mostly on the web and mostly free) compared to the size of apple app platform app economy should give a good idea of where the future is.

  47. Steven Kane

    Agreewould you take this to its logical conclusion and view “apps” as nothing more or less than tuned browsers?and so, will “apps” eventually become moot as standard all-purpose browsers become as useful on the mobile platforms as they are on desktops? that’s my gut view.or do you see the opposite happening — apple’s mac app platform will become popular and apps will replace browsers?

    1. fredwilson

      I think the browser is a better model because it supports links and mashupsbetween multiple apps

  48. Jim

    Excellent article!

  49. Paul Flanigan

    Fred, great post. Got me to thinking…Don’t stop with just mobile and online. My sector, digital signage, every day sees influence from online and mobile activity. I think this will converge as well. It will make screens much better to look at, but will affect the business model(s) networks have put up. Why pay for content to show your audience when, with minimal knowledge, you can download HD content and edit it for your screen?It’s all converging.

  50. markslater

    I am typing this using the flipboard app. It’s very cool for a ‘weekend magazine’ type of format but as you point out repurposing content that is truly free at it’s core is a big ask.

  51. David Henderson

    Great post Fred..Web Economics + Mobile Economics = Real World EconomicsThere is no place to hide anymore. If you are a bricks and morter business, mass retailer or one location coffee shop Web Economics + Mobile Economics are driving your business….That’s the huge shift here… the Web has moved off the Web and into the actual world.The fun continues! 🙂

  52. Martin Ramsin

    Great article and lots of good comments!Re LinkabilityThe main issue with apps that serve exclusive content packaged as a paid app is that it is not linkable as Fred points out. It means that I cannot share the individual article of an ipad magazine, I can only link to the iTunes download for that mag and that is not very good. The effect is that the ipad magazines will be less talked about on the social networks compared to content that can be linked to on the web.So content needs to live online and be freely accessible to be social.People have learned to hate browsers on mobile but someone will come up with a new kind of browser that does not look like a standard browser and this will be a killer app. Flipboard is a nice try but to complicated for non-techies that want to take their web sites with them on mobile.

  53. Greg Athas

    I agree with the post, but it’s missing one key word: ARTIFICIAL scarcity is not a viable business model on the Internet. This is the strength of the internet, it finds a way around barriers that are imposed as opposed to real (such as bandwidth).

    1. fredwilson

      so true. i will try to use that qualifier going forward. you are spot on.

  54. Dom

    I’ve taken the liberty to translate your very inspiring article in French, thanks to it CC license:

    1. fredwilson


  55. Trevor Doerksen

    “What is valuable is filtering and curation.”I’m confused.”… why anyone would ever think that adding a presentation layer on top of web based content would make it (valuable).”Is filtering and curation not essentially presentation?

    1. fredwilson

      i see curation and filtering as functionality not presentation

  56. Markus Kobler

    For some time now I have arguing of the mobile web’s potential to make many native mobile apps redundant. The big challenge currently is the quickly evolving mobile browsers and their sublet differences. Non trivial apps will also require a different breed of web developer and set of frameworks.Curation wise I thought this has typically been one of traditional media’s strong points over the years. I also dont think its a bad thing for publishers trying to diversify their business models away from the purely advertising driven one.I ended up posting a lot more thoughts here if you interested… on the lack of adoption.