There is a lot more content of the sort you would have bought in the past but now you can get free on the Web: a directory of Congressional offices, standup comedy routines, gym workout videos, Zagat restaurant guides and a growing library of books. There is also a fair bit of free content, public-domain e-books like the complete works of Shakespeare and lots of advertising-supported media. (BusinessWeek has a report this week on the App store’s role in music.)
What’s most interesting is how iPhone users are willing to spend money in ways that Web users are not.
I’ve criticized Apple from time to time for not having a coherent approach to delivering free content with advertising. But in some ways, the development of a market for paid content is a bigger and less expected achievement.
Why has this happened? Apple has created an environment that makes buying digital goods easy and common. With an infrastructure that supports one-click purchases of songs and videos, it was easy to add applications in the same paradigm. Paying for software, especially games, is not new to Apple customers. So when you see the iPhone manual or the Frommer’s Paris guidebook, it feels natural to click. (And of course, your credit card is already on file with Apple.)
There are certainly other precedents. Many people who steal songs through Limewire nonetheless pay $1.99 to use the same tunes as ringtones. And for avid book readers, Amazon’s Kindle has found a market willing to pay for electronic books. Apple is also starting to sell subscriptions to bundles of music, video and images from certain bands, like Depeche Mode. This is technically a product of the Music store, not the App store, but it still shows how people may be willing to pay for various bundles of content online
There is a lot of work to do here. For example, I find the O’Reilly iPhone book a little hard to use. The text doesn’t seem particularly well-formatted for the iPhone page. And I would love to see more interactive features that utilize the phone interface (including some of David’s videos).
Andrew Savikas, O’Reilly’s vice president for digital initiatives, agrees with me, saying that the iPhone manual was rushed to get it out before Christmas. The company now has 20 titles in development for the iPhone (and eventually other mobile phones), and it is spending more time weaving in hyperlinks and adding other features.
“There is a lot more we can do to take advantage of this as a new medium,” he said. O’Reilly, which sells to a lot of early adopters, has a range of digital distribution media.
“We try to say all of our writing is writing for the Web, and all of our publishing is digital publishing, so all our focus is building things into the content that make it more friendly to be digital,” he said.
Before media companies rejoice that Apple has found a way to persuade a generation used to getting everything free on the Web to pay for some content, they should look a bit more closely at O’Reilly’s experience with the iPhone manual.
The book, which sells for $24.99, was initially offered as an iPhone app for $4.99. When the publisher raised the price to $9.99, sales fell 75 percent. O’Reilly quickly dropped the price back down to the lower level.
“This audience is very price sensitive,” Mr. Savikas said.
So even if all content doesn’t have to be free, it may well have to be cheap.
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