The Surprising Tale of an Apps Failure

More of us are consuming news via tablets, according to a new study from the Pew Research Center. Some key numbers from the report:

  • Roughly 11% of the U.S. population now owns a tablet computer of some kind.
  • Of the 1,159 tablet users surveyed, 77% use the device daily and 53% use it to consume news daily. For perspective, 54% said they use tabs for gaming and 39% for social media.
  • What's more, 33% said they've tried new sources for news and 42% said they use tablets to read in-depth articles.

Both Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) investors should be thrilled. The Mac maker wins by selling more iPads while the search king profits from higher ad revenue connected to increasing levels of digital consumption. A win-win for two rivals that are increasingly butting heads.

So who loses? The canned answer would be device-making peers who haven't captured the imaginations of users in the same way that Apple and Google have. This time, the canned answer is wrong.

The real losers here are the newspapers and magazine publishers -- all the companies that News Corp. (Nasdaq: NWS  ) chief Rupert Murdoch believed would benefit most from the rise of interactive tablets. News York Times Co. (NYSE: NYT  ) , Gannett (NYSE: GCI  ) , and Murdoch's own News Corp. lose because, while users are engaging with their products more, they're unwilling to pay for the privilege.

Only 14% of tablet news users identified by Pew had paid directly to access news while 23% more said they get access through a print subscription of some kind. Meanwhile, 40% of all tablet news users said they get their news via a browser rather than an app, and only 21% of those who said they don't pay would be willing to spend $5 a month for digital access if that were their only option for receiving news.

The message? Say what you will about the rise of the app economy. Murdoch and his peers have yet to see the benefits, and it may be a long while before they do.

Do you agree? Disagree? Please weigh in using the comments box below. You can also keep tabs on the world's media mavens by adding these stocks to your Foolish watchlist:

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Google and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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