Willingness to pay for news apps remains low © Tom Evens

Now that media consumers start satisfying their appetite for news and information via smartphone or tablet, the challenge for media organisations is how to monetise mobile apps. According to a study of the European Commission the app economy is worth €17.5 billion and its value will quadruple by 2018. Apps have the potential to, at least partly, compensate the declining advertising income. At the same time, con-sumer studies indicate a low willingness to pay for digital content as well as a growing aversion to advertising, even if information becomes freely available. All this makes designing sustainable business models a tough challenge.

User-driven app development

In collaboration with Master’s student Lisa Riti we analysed the willingness to pay for mobile apps and the willingness to accept advertising for such apps. Using an econo-mic choice model, decisions to download and buy information apps (news, weather, sports, travel etc.) were mapped. We believe that a better understanding of consumer needs and requirements allows to develop mobile apps that meet a user’s expecta-tions and to design realistic business models.

Information apps rule the waves

In a first research phase, we logged the mobile phone usage of 40 test users who were sent a short push survey two times a day. The results show that, apart from so-cial networking apps including Facebook and Instagram, information apps are by far the most downloaded and used among all types of apps. In-app purchases were found popular for entertainment apps, particularly games. Remarkably, paid-for apps, especially practical tools, account for only 1% of the total amount of apps installed on our smartphone. Furthermore, the acceptance of advertising is the lowest for infor-mation apps. This is an important finding since advertising account for a crucial reve-nue source of news media organisations.

In-app purchases as a stepping stone

In a second phase, an online survey was held among 383 mobile natives. These peo-ple grew up with the ‘free philosophy’ and traditionally have a lower willingness to pay for content. Unsurprisingly perhaps, our results show that youngsters prefer app-financed apps to paid-for apps. By lack of free option, in-app purchases are a valid alternative. They may have a negative attitude towards advertising, but this this group of user appears to be the most willing to accept it and get free access to

© Tom Evens

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