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  5. Special report: Mobile phone users do not mind ads for free content

Special report: Mobile phone users do not mind ads for free content

The Spotify model of allowing mobile phone users to access internet content and services for free and subsidising the service with revenue from advertising would prove popular among UK consumers, a new study has shown.

In a survey conducted by KPMG, 40 per cent of mobile phone users polled said they would prefer to watch advertisements and get free music rather than pay for songs. Meanwhile, 28 per cent of the sample said that they would be happy with advertisements were they to be offered free instant messaging.

The results suggest that the advertising-subsidised model which has most recently been used in Spotify will be more and more prevalent among mobile phone content providers in years to come.

Tudor Aw, partner at KPMG, commented: “This willingness to view adverts in exchange for free content is good news for advertisers and is perhaps a pointer in the ongoing debate over whether advertising or subscription is the right revenue model.”

Further interesting trends discovered by the poll were that the things that UK mobile phone owners are most willing to pay for were navigation tools and music. Over a third of the sample had bought one or the other of these for their handset during the last year. Conversely, online banking via handsets appears to be stymied by fears over security, with nearly seven in ten confessing that this had dissuaded them.

Mr Aw added: “When considering how best to monetise mobile services, it is important for mobile service providers to be aware that there are notable differences in how consumers wish to access different mobile services.

“Social networking - another big area of focus for mobile providers – is not a service people are prepared to pay for.”

News of the findings comes at a time when the battleground for market share in the mobile phone sector is seeing more and more official application stores being launched in a bid to rival the iPhone App Store. It is thought that the marketplaces do not yield huge profits for manufacturers, with 70 per cent of the revenue from the sale of an app on Nokia’s Ovi Store going to the developer. However, handset makers are aware that they must offer the stores to retain consumer interest in their mobile phones.

Currently, all these sites include a selection of paid-for and free applications withe none using the Spotify model. With many having been unveiled very recently or still yet to appear, it is debatable when the practice of advertisements subsiding content will arrive at app stores any time soon.

Other key players who have launched application stores or are planning such offerings include Palm which is to unveil a store to support its Palm Pre phone and Google. The search engine’s Android market opened towards the end of last year to coincide with the launch of the first-ever Android-powered phone the T-Mobile G1.

Category: News
Tagged: apps & software
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