Ohmigod, teens are so over e-mail!
E-mail use is dropping fast among teens - a bonanza for wireless operators, but a troublesome trend for Web portals and online marketers.
By Michal Lev-Ram, Business 2.0 Magazine writer-reporter

SAN FRANCISCO (Business 2.0 Magazine) -- E-mail is so, like, 2005. Just ask the kids: A recent ComScore Media Metrix report shows teen usage of Web-based e-mail dropped 8 percent last year.

In search of a faster, more fluid way to communicate with friends, today's so-called "instant generation" is turning to text messaging and IM instead.

The growing trend spells good news for mobile operators, who last year raked in $70 billion in text messaging revenues worldwide, according to technology research firm Gartner.

But it could spell big trouble for Web portals, which depend on e-mail for much of their traffic. According to Hitwise, a research company that tracks Web traffic, Yahoo (Charts) and Microsoft (Charts) got more traffic to their e-mail Web sites than their main portal pages.

Big bucks from short messages

With charges of up to 15 cents per outgoing and incoming message, it's no surprise wireless network operators are making lots of money from the billions of emoticon-packed text messages young users churn out on their cell phones each year.

While text messaging is far more popular overseas - users in some European countries send more than 100 messages a month - usage in the United States is picking up fast. In the first quarter of 2006, Verizon Wireless's 54.8 million customers sent and received about two messages a day on average, generating nearly 10 billion text messages over three months.

"It's the folded-up note of this time period," Joel Kades, Virgin Mobile USA's VP of strategic planning and consumer insight, says of the growing popularity of text messaging.

Among parents, text-message charges are controversial, if only for the end-of-the-month shock when they receive their bill. But to their credit, mobile operators have gotten smarter about the way they charge young customers for text messages - many are now pushing affordable monthly plans, instead of the more traditional (and pricey) pay-per-message fees.

The always youth-centric Virgin halved its per-message fee - from 10 to 5 cents - to attract avid young texters with fixed budgets.

Earlier this summer, Virgin also kicked off a "penny texting" campaign, promoting new text-message packages that give users a thousand messages for $9.99 a month. A crowd of young texters showed up for Virgin's penny-texting launch party in New York's Times Square last month, where B-list celebrity K-Fed (also known as Mr. Britney Spears) showed up to help spread the affordable text messaging word.

Texts are for kids

Haven't heard of K-Fed? You're probably not the target audience for Virgin's message.

But it's a demographic Maya Bruhis, a 16-year-old who can text with her eyes closed, fits into well. The Palo Alto, Calif. teen sends 10 to 15 text messages a day on her Motorola Razr phone.

"If I want to send quick messages to my friends, I text," says Bruhis in a rare phone call. "E-mails are more for work and school."

Bruhis isn't alone. According to a recent Pew Internet & American Life Project report on teens and technology, nearly two-thirds of teen owners of cell phones use text messaging.

Getting the instant message, too

And when kids aren't on cell phones, they're probably using instant messaging instead of e-mail. The same Pew report found that 46 percent of teens who are online chose IM over e-mail as their preferred method of written communication with friends.

Text messaging and instant messaging sound pretty similar - and in fact, they're converging on cell phones, creating another way for wireless carriers to profit. Many also offer young customers mobile versions of IM services like AIM, MSN and Yahoo Messenger. Often, these are being marketed in the form of monthly plans as well.

"Everybody's got an IM account," says Beverly Wilks, marketing director for Oz Communications, a Montreal-based company that sells mobile IM software and services to network operators such as Sprint Nextel, T-Mobile USA, and Virgin. "What we're doing is extending that presence to the mobile phone, so young users are able to share special moments on the go."

Radicati Group, an analysis company, expects IM use worldwide to reach 46.5 billion messages a day by 2009. There are no estimates on how many of those will be delivered to cell phones instead of computers, but analysts expect mobile IM usage to grow rapidly.

With numbers like those, one can't help but wonder: Are teens, like, really going to stop using e-mail altogether?

Probably not, says Mary Madden, a senior research specialist with Pew Internet who worked on last year's report.

"I really don't think e-mail's going to disappear anytime soon," says Madden. "But for social interactions, it's definitely no longer the bread and butter for teens."

Even if e-mail becomes less popular, that's a troublesome trend for operators of Web portals like Yahoo, Google (Charts), AOL, and Microsoft. All of them offer free, Web-based e-mail to draw users back to their Web sites on a regular basis. If teens log on to check e-mail once daily, rather than several times throughout the day, that will be a major hit to their traffic.

Marketers could switch from Web ads to text-message ads. But carriers and government regulators restrict what kind of ads are allowed. And texts are limited in length, making it hard to craft campaigns. That adds up to a tough message for advertisers hoping to reach teens. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.