IPad Users Prefer Advertising to Pay Model for Content

Whopping 86% Said They Would Watch Ads in Order to Receive Free Content Such as TV Shows, Mags

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NEW YORK (AdAge.com) -- Media companies everywhere gleefully glommed on to Apple's iPad when it launched in April, hoping to see better profit margins for their content that had been languishing online. Luxury publisher Condé Nast spent significant time and money developing hefty app versions of Wired and Vanity Fair early on, and, more recently, News Corp. CEO Rupert Murdoch poached journalists across Manhattan media to create an iPad-only news app called The Daily that launches this week with blue chip advertisers and a 99-cents-a-day download price.

But a new study shows that iPad owners are in fact less willing to pay for apps and are more willing to accept advertising in turn for free or lower-cost content.

In a survey conducted by online research company Knowledge Networks, 86% of iPad owners said they would be willing to "watch" ads to gain access to free content such as TV shows or magazine and newspaper articles. In practice, iPad users download an average of 24 apps, and of those, only six, or about a quarter of them are paid.

"That was part of what was surprising," said Knowledge CEO Simon Kooyman. "Not as many people are willing to pay for magazine or news content than we thought they would."

Only about 13% of those surveyed said they were willing to pay any fee to watch a TV program or read a magazine on the iPad to which they already have access, and they are only willing to pay an extra $2.60 on average for that content.

Interestingly, despite the hype around the emergence of apps both as a form of content and a business model, iPad users primarily use the device like a home computer. The most commonly used feature is search, with 97% of people saying they regularly use Google on the iPad, followed closely by web browsing and email at 91% of regular use. Media apps, however, are used at a much lower rate, with 70% of people saying they regularly read books on the iPad, 66% for music, 61% for reading magazines and newspapers and around 50% who regularly watch TV or movies.

With regard to magazines, which in many ways have flocked to the iPad more heartily than other media, the survey found that about 14% of users would be willing to pay to get a special iPad edition of a magazine they already receive in print. Condé Nast has taken this idea a step further, experimenting with iPad-only content, such as its Condé Nast Traveler "Best of Italy" app, which is in fact a collection of articles about travel in Italy from its extensive archives. About 12% said they would be willing to pay a small additional fee for a magazine they already get, while only 1% said they would pay the same as the cover price of a magazine they already have for the iPad version.

As for advertising, despite the fact that such a high proportion of users are willing to accept ads, almost as many, about 78% say that advertising "takes away from their enjoyment of their iPad."

Still, Mr. Kooyman said, "My feeling is although it's early in the game, the willingness to accept advertising is good news, I think."

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