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Aug. 10, 2010, 2 p.m.

To click or not to click: Could tiered data plans water down advertising possibilities for news publishers?

In the good old days (of three months ago) you could surf the web on your iPhone with abandon. Do I want to watch this video? Sure! Do I want to download this huge attachment? Why not? Data plans were unlimited; there was no need to think twice, at least not about cost. And that offered news organizations hope, especially when the iPad came along. Maybe slick smart phones and tablet devices would usher in a new advertising revenue stream more akin to print advertising rates than the standard, abysmal web rates.

But now AT&T has nixed the all-you-can-eat data plans for users of the new iPhone 4 and the iPad. (Some lucky folks have been grandfathered in.) And rumor has it that Verizon will soon follow suit with their smartphone plans. It sounds like the Internet’s trajectory from dial-up pay-by-the-minute plans to unlimited — only in reverse. I can picture my mother now: It’s 1995 and she’s waiving the AOL bill frantically, exasperated. What are you spending all this time online doing? Back then, the Internet was like the worst big box store you can imagine: get in, get what you need, and get out. Quickly. When the billing structure for Internet usage went unlimited, Internet use exploded in our house — and everywhere. It’s a version of Chris Anderson’s “mental transaction costs” — even “very cheap” forces a thought process that “free” does not.

So what happens when we move back to a world where data is scarce? Will we act like I did in the days of my 300-minute cell phone plan? (Wherearewemeeting? OKbye!) With consumers facing an extra $15 per extra 200 MB used (depending on your plan), will news sites — particularly those heavy on video — suffer from user indecision? This New York Times video on New Orleans bounce weighs in at 32.9 MB; our latest video is 216 MB. Mobile versions are smaller when available, but even then, a few videos can send users of the cheapest iPhone plan down the toll road. (AT&T estimates that someone on that plan could watch only 20 minutes of streaming video a month before hitting the cap.)

I spoke with Jeff Whatcott, senior vice president of marketing for the online video platform Brightcove, which provides the video back end for lots of news sites. He said that while the shift may cause some changes in user behavior at the margins, he doesn’t predict a shift away from mobile video. If anything, he says, Brightcove has seen the opposite: The iPad has triggered immense interest among advertisers, who want to get rich media like video ready for mobile.

Whatcott suspects that AT&T wouldn’t set prices in such a way that they’d “kill the golden goose.” If users started seeing their monthly bill skyrocket, they might abandon their devices. But going over, say, ten bucks a month? Abandonment seems less likely. “The people that are buying [mobile devices] have disposable income and unless the cost of these new data plans are just exorbitant, where people are getting bills for hundreds or thousands of dollars, I think the costs are going to be in that reasonable range.” No one likes paying the cable bill, he points out, but most of us do anyway.

But what about just the threat of a higher bill? Could fear water down use? Whatcott says he can imagine that sentiment, it being somewhat like using a costly international data plan, which he does traveling. “I think it’s a real world concern,” he says, “but it hasn’t been an acute thing that has bubbled up to us as a crisis.”

I also reached out to Adobe, which helped Wired build its successful iPad app, which weighs in at a whopping 500 MB. Dave Dickson, product marketing manager for digital publishing at Adobe, said he didn’t think the move away from unlimited data would have a big impact on apps like Wired’s. AT&T already limits the downloading of large (over 20 MB) apps to wifi or desktop connections only, and downloading an entire magazine issue at once eliminates the slow dribble of data that its web equivalent would involve.

Indeed, a shift to wifi is a common prediction for how consumers would react to capped data plans. AT&T has in the past pushed iPhone owners to shift to wifi whenever possible.

Still, smartphones are designed to be mobile devices, and it’s not realistic to expect users to have wifi available anywhere they’d like to consume content. “Should smartphones emerge as the device class of choice,” Dickson emailed, “publishers may need to tailor their content package to the capabilities of the device (for example, streaming video instead of embedding it) so that users can more easily download and view content applications under bandwidth-restricted conditions.”

Mobile Marketer Daily explored this topic when the new data plans were announced, and analysts for the mobile ad industry agreed that the new structure is unlikely to reverse a trend toward an explosion in mobile devices. “I don’t think this move by AT&T will slow the adoption of smartphones and connected devices like the iPad, as enough consumers have experienced first-hand the benefits of how these devices enrich their daily life,” Paul Kultgen, director of mobile media and advertising at Nielsen Online, Chicago told Mobile Marketer Daily.

In any event, we’ll find out in the coming months whether there’s any real impact for mobile video. If you’re on a newly tiered plan and watching your KBs the way you once watched your minutes, has it affected how you surf the web?

POSTED     Aug. 10, 2010, 2 p.m.
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