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New Tech Fails to Match Old Media Revenues

The takeover of the media landscape by smartphones and tablets such as the iPad continues, but media companies have yet to generate the revenues from new media that they gained from newspapers and books.

Apple iPad
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Apple iPad

More than one-third of people in the UK surveyed by the company in the six months to April now own a smartphone, up one-third from the previous six months, according to research from KPMG.

Ownership of tablets like the iPad or the Samsung Galaxy Tab in the UK more than doubled in the six months to the end of April.

While consumer spend on smartphones and tablets has increased, with those surveyed by KPMG now spending close to 9 pounds per month on applications (apps) for their tablets and around 6 pounds on apps for their smartphones, this has not yet offset declining revenues elsewhere.

Apps generate less revenue than traditional media such as newspapers and hard copy books.

Some newspaper websites, such as NYTimes.com and thetimes.co.uk, have recently started charging for access in an effort to regain some of the revenues lost as newspaper circulation declines.

“There is less revenue and that’s one of the issues facing lots of companies, that revenue from new media is less than from traditional media,” David Elms, head of media at KPMG, told CNBC Monday.

“There is uncertainty about how fast online markets will develop. However, high awareness levels indicate latent demand, with aspiring consumers buying smart technology and paying for online apps and online media.

“The catalyst for growth is likely to be the introduction of lower-priced tablets and smartphones. More affordable online media services may bring on the tipping point that turns innovative services into mass media.”

Competition is heating up in both the tablet and smartphone market, with new tablets from Research in Motion, the maker of Blackberry, Samsung, and Lenovo.

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EBooks such as the Kindle and the Sony Reader are attracting more spending, with users spending 4 pounds on eBooks on average per month, compared to 2 pounds on online games and 5 pounds on downloading music.

“Apple has obviously done well so far but there are others who are positioning themselves in the tablet market,” Elms said when asked which companies had done well out of the changing media landscape.

The ongoing decline in traditional media continued, with just 77 percent of respondents reading a newspaper in the past month, down from 81 percent between April and October 2009.

Smartphones are especially popular among younger consumers, according to KPMG, with 54 percent of 18-24 year-olds owning them. Three-quarters use their smartphones to surf the net and to read emails, while 61 percent use it for social media and one-eighth has read an eBook on the device.

Tablets seem to be more popular for accessing the internet, with more than 60 percent of tablet owners paying to access online content on their devices in the previous month, compared to the 24 percent who paid to access content on their smartphone.

Men are more likely to own a smartphone than women, while female smartphone users are nearly twice as likely to own a BlackBerry, made by Research in Motion, as any other smartphone.