Tag Archives: amazon

Can ad-supported hardware trump ad-supported content?

When it comes to online content, consumers by and large prefer to pay for it in attention rather than currency. As a result, it’s no surprise that far more publishers have built successful ad-based business models than paid content business models.

Advertising, of course, usually isn’t a path to easy money for publishers. Yes, advertisers love the internet, but digital still accounts for a minority of total ad spending, and advertisers generally pay less for digital ads than traditional ads.

That, however, isn’t stopping Amazon.com from trying to find out if advertising can support more than just content.

Earlier this year, the company launched an ad-supported version of its popular Kindle e-reader. The deal: for a price reduction of $25, consumers receive a fully-functional Kindle that displays ads when the device’s screensaver kicks in.

According to the Business Insider’s Dan Frommer, consumers seem to have some interest:

In dozens of checks of Amazon’s “Bestsellers in Electronics” page, the ad-supported, Wi-Fi-only Kindle is consistently the best-selling overall Kindle, followed by the no-ads version.

The 3G version is less consistent: Sometimes, the ad-supported version is listed as selling better than the standard version; sometimes it’s not. (Perhaps this is a reflection that the discount, percentage-wise, isn’t as big for the 3G version).

Does this signal a “future of ad-supported electronics“? Perhaps.

Obviously, giving away hardware gratis would, in many instances, require a hefty subsidy. But Amazon shows that you don’t necessarily have to give the device away to get consumers interested; a modest discount will apparently do.

Interestingly, in some circumstances, the economics of ad-supported hardware may be more compelling than ad-supported content.

To recoup its $25 subsidy, Amazon only needs to generate $25 in ad revenue, and it has the life of the device to do this. Conceivably, the company may be able to do this relatively quickly (read: in a year or less) if its screensaver ads generate reasonable eCPM.

Ad-supported publishers, on the other hand, have a challenge: not only do they need to generate substantial ad revenue, they need to do so to cover costs that are ongoing. When the content stops coming, the ad revenue stops flowing.

None of this, of course, means that ad-supported hardware will be more successful than ad-supported content.

Amazon’s experience with the Kindle may or may not prove viable long-term, and it remains to be seen how many other devices are well-suited to a similar model.

Nonetheless, advertisers and hardware vendors will certainly want to pay attention to it and explore opportunities as they emerge.

Source: http://econsultancy.com/uk/blog/7737-can-ad-supported-hardware-trump-ad-supported-content?utm_medium=email&utm_source=topic

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Visa Advances Toward a Digital Wallet

Visa hopes its technology will lead to mobile device apps that create digital wallets.VisaVisa hopes its technology will lead to mobile device apps that create digital wallets. Visa is taking another big step in its continuing efforts to create a universal digital wallet. On Wednesday, the company announced plans to introduce a one-click payment system that will allow Visa customers to sign up for a set of credentials that will allow them to pay for items online with a single click. Jim McCarthy, the head of global products at Visa, said that the company was trying to simplify the process of buying items online or on a mobile site, which can be cumbersome for people who have to re-enter their card numbers and personal information each time they want to make a purchase online. “E-commerce is our fastest growing channel,” said Mr. McCarthy. “We know we can do a lot to improve the experience in the e-commerce environment.” People can buy things with one click at a particular site, say Amazon.com. But they can’t yet do it across the Web.

Visa’s new feature reduces the multitude of ways a consumer might want to pay for an item — whether with a Visa check card, a PayPal account or some other means — into a single log-in and password. All of the information is stored in Visa’s secured servers so that users only have to sign in to pay for their purchase. Mr. McCarthy said the service would be introduced to consumers in the United States and Canada by the year-end holiday shopping season. Visa has also been testing a system that lets users pay for items with an application that uses “near-field communication” technology on a mobile device to process a payment. This one-click system will also be wrapped into that service when it is introduced more broadly, the company said.

The company says that a customer’s entire financial history could be securely stored in one spot, along with frequent-flier accounts, medical benefits, even appliance warranty information from Best Buy, replacing the jumble of account information that most people have stored in different locations — on and offline. The first users of the service will probably be online gamers. The service will be introduced in social and online games, allowing Visa customers to buy virtual goods. Eventually, Mr. McCarthy said, the company will introduce it “broadly to e-commerce merchants, mobile and social commerce developers who will allow consumers to check out of a site with a single click.” Visa even plans to make the underlying code, or A.P.I., available to third-party developers who want to install the features on their payment Web sites. Visa executives said the plan was the result of two strategic acquisitions that the company made over the last several months — PlaySpan, a start-up that lets people pay for virtual goods in games, and CyberSource, an e-payments company.

Representatives at Visa said it was working with several banking partners, but did not specify which ones. Visa faces stiff competition as it ramps up its online and mobile offerings. American Express and other credit card issuers are fast at work developing and adopting their own solutions. Mobile carriers have also struggled to bring their own solutions to market, but it is not yet clear when or if, they will debut. “We’re trying to get ahead of the curve here,” said Mr. McCarthy.

Source: http://bits.blogs.nytimes.com/2011/05/11/visa-takes-another-step-towards-building-a-mobile-wallet/


Google In-App Payments Appear Slated For a Full Launch in May

Google may be looking at May for a full release of much anticipated in-app billing features, at least according to an e-mail sent today by a payments company the search giant recently acquired to former customers.

In a letter leaked to TechCrunch, Jambool, which was behind virtual currency platform Social Gold said it will discontinue the service in favor of a Google in-app payments product in May. But Jambool customers can use the company’s merchant console through September and get financial statements through February of next year. Google acquired Jambool last August for a reported to $70 to 75 million, just as the company was being cornered on the Facebook platform by the emergence of Credits.

Google’s in-app payments product is currently in beta testing. A handful of developers, including Disney’s Tapulous, have gotten their hands on it to experiment with in hits like Tap Tap Revenge. But it’s not out to consumers yet.

In-app billing promises to bring Android developers the income that has long eluded them on the platform, at least compared to what can be made on iOS. Across multiple platforms including iOS, developers are transitioning from reliance on upfront paid apps and advertising to a model that resembles what has worked on the Facebook platform — virtual goods. Two developers, Pocket Gems and TinyCo, have raised sizable rounds from Sequoia Capital and Andreessen Horowitz respectively on the bet that dominant gaming companies will rise in the next 12 months.

There are a number of remaining questions, however, about how Google will implement in-app payments. Google’s Eric Chu, who oversee the company’s relationship with the Android developer community answered a few of these in an interview in January.

1) Can it execute payments well? Part of the original reason why Google Checkout turned out to be so lackluster, at least from our understanding, was that it suffered from a convoluted vision. It was initially conceived as a product that would help small to medium-sized businesses, but then internal politics turned it into a product aimed at larger corporations, which require more time-consuming custom work. Secondly, it’s unclear how the product is being internally managed — how much is it under the purview of the Android team, and how much is it under the oversight of the commerce group under eBay veteran Stephanie Tilenius?

2) How strongly will Google enforce the use of its approved payment methods in the Android marketplace? Developers selling content, goods or services within apps on the Android Marketplace have to use an “authorized Payment Processor,” which basically means Google Checkout or direct carrier billing. There are two exceptions: if you sell physical goods or services like movie tickets or digital goods that can be consumed outside of the application, which is presumably the loophole that companies like Amazon or media publishers can use to sell songs or content through other payment systems.

Conceptually though, we find Android’s payment policies less problematic than on other platforms. There will be multiple Android app stores, some of which will be heavily promoted by carriers like Verizon or by competitors like Amazon, which developers can turn to if they want to use alternative payment methods.