The pendulum swings back to “paid for” content

It looks like the swing towards “ad funded everything” is quickly coming to an end, and there is a trend back in the direction of selling products and services to users. 

“Ad funded” for many businesses really meant “shareholder funded in the hope of later monetization”.  Meanwhile, people actually selling things were ignored – that was thought too “dirty” or “difficult”.  However, in difficult economic conditions, remember the Yorkshire expression: “where there’s muck there’s brass”.

It was interesting to see the announcements about Google’s apparent shift towards becoming an e-Commerce business.  They will be selling music and games direct to consumers on their YouTube site.

http://www.reuters.com/article/technologyNews/idUSTRE4970U820081008

This, and a glut of other recent announcements around music stores, music subscriptions, online games sales, and the various “app store” initiatives from Apple, Google, Blackberry(RIM) and others all indicate that we are seeing a return to the traditional model of “selling things to customers”.  For a few years, there has been a swing in the other direction.   “Freeconomics”.  The idea is that everything is free, you just get it by watching ads, so the advertised pays for whatever you need.

Looking at the world of TV, it seems the pendulum started swinging back to paid-for a year or two ago.  Ad funded TV companies (like ITV) are struggling against their “paid for” counterparts (Sky).  The latter are adding more and more options to buy content – ad-free as technology and consumer behavious changes.  Now that SKY has the technology in place they are making users pay to vote.

TV and radio shows are increasingly leveraging technology and mobile payment to sell participation in gameshows (votes cost money, entering games, bid-up auctions).

Now that belt tightening is on the increase, as people reduce their investments and feel concern about a potential recession, is the natural time for a move towards basic business.  Advertising will get cheaper to chase the customers.  Advertisers will get much sharper in their use of analytics and measurement to verify ROI.  Content owners will be more nervous about devaluing their offerings.  Increasing unemployment might reduce the demand for some forms of entertainment – although erotic content and teen spending on games seem in teh past to have been resilient to this – but advertising is sure to feel the pinch much more.

My prediction is that there will be amove back towards “value” over the next year or so, with paid for content moving to the front of the agenda.

Fortunately, the timing is right on teh technology and business front.  Most leading operators (Verizon,TIM and France Orange being teh notable exceptions) now embraced a paid for content model by opening up their billing systems and empowering innovation.  Device makers are supporting more innocation and opening up capabilities not they have a “green light” from the carriers.

Bango has seen a surge of interest in “mobile payment” interest at http://www.bango.com/payment  and we are working with a host of “app store” and “content store” developers targetting the fast growing SymbianS60, Blackberry and Windows app opportunities.

Companies who could benefit from this move could well be the older internet companies like Yahoo, who have platfomrs and the reach to leverage demand and a historic capability to sell things.  As a newcomer, Google might be able to succeed in this area, but only if it can embrace non-google avenues for payments and  take the risks necessary in being a “supplier” or “seller” rather than an ad channel.

Apple iPhone Software Store generating sales

According to Apple, sales of software in the iPhone App store were $30 million in July.

“This thing’s going to crest at half a billion, soon,” Jobs told the Wall Street Journal: iPhone Software Sales take off. “Who knows, maybe it will be a $1bn marketplace at some point in time. I’ve never seen anything like this in my career for software.”

With a run rate of around $30 million a month, the App store is certainly showing that making apps easy to find and relatively easy to buy makes business possible.

Interestingly, Apple’s offering has a number of restrictions which if lifted could make it even more successful:
(1) You can’t do single click payments to your phone bill
(2) The range of apps is very limited and subject to many restrictions
(3) Apps are limited to a “one shot” pricing model (subscriptions or on-demand are forbidden)

Just as the iPhone made usability a key factor in new phone design – because customers like it – the success of Apple in selling premium content should do a lot to refocus people’s minds on selling content to users without having to place it in the “Operator Deck” or “Portal”.

We have seen many smaller businesses do very well by opening up mobile content and application stores on the mobile web, collecting payment through mobile operators (via Bango) and marketing through search and mobile ads.

Just imagine how successful Nokia might be if it got serious about an off-deck store!

Web Browsing or Widgets?

“Mobile web browsing is something of a dead end.” – according to an article in The Register at http://www.theregister.co.uk/2008/04/24/china_mobile_vodafone_widgets/
which is all about Vodafone and China Mobile working together on some sort for widget project. 

I don’t think so.  Mobile browsing is taking off fast.  100 fold growth in UK in last 4 years, everybody in Japan and Korea does it. iPhone seems popular for browsing.  Microsoft and many others fought to resist the web browser on the PC for fear it would shift the power from devices (PCs) to service providers (Yahoo, Google, Amazon, eBay etc.) and commoditize the PC.  Thank goodness they failed!

The Register says: “No matter how great your scaling technology, most websites won’t work properly on the smallest screen. So operators, manufacturers, and pundits are betting that mobile widgets will be the vehicle that brings the mobile internet to the masses.”

Thankfully, operators, manufacturers and “pundits” don’t write mobile websites.  Those who do write them are adapting them to work on small screens. Yahoo, Google, eBay, Facebook, MySpace, Bebo, BBC, CNN, USA Today, The Sun, Flickr, The Times, even Nokia (but not Apple yet) all have small screen sites that work fine.

The mobile web is in its infancy, but has a great future ahead of it. We love mobile web!

So how was CTIA?

The flight back from CTIA was taken up by trying to “close off” as many actions as possible by emails, and then on lying back and reviewing what I had seen at the show – ready to report back to all the people who would say “so how was CTIA?”.

In a word: Quiet

CTIA has traditionally been about “big bang” announcements of major new initiatives (mobile TV, mobile advertising, Java initiatives, music clubs, big brands doing stuff….) but I did not see any of those – apart from the Virgin/Google joint venture – Virgle – to put a colony on Mars that was announced on 1st April.

Without those big announcements that everybody could have an opinion about, the show got down to basics.  75% of the activity seemed to be about companies trying to snare mobile carriers – the main reason CTIA is held.  25% of the activity was around networking and selling between other parties who where there.

Bango had a busy booth and a lot of off-site activity, but 50% of that activity was with existing customers, 25% was with prospects we had already met with and the remaining 25% was new contacts.  Talking with staff on the AdMob, Yahoo!dotMobi, Microsoft and other mobile web booths indicated the same balance of activity and similar sentiment.

So the show was productive and worthwhile, but not a sudden stimulus to new activity or a change in thinking that it might have been in the past.  Also, with Vegas easily able to mop up 20,000+ people who attend, there was little of the buzz/chaos/excitement of a Mobile World Congress in Barcelona – which has 80,000 there incl. hangers on.

One big trend we did identify was an increasing interest from the carriers in moving towards WAP billing models to cut down on the customer service hassles and the that are caused or enabled by Premium SMS’s model of “out of band billing”. No real news, but an awful lot of activity.

My current hypothesis is that DRM is on the way out.  Its too user hostile and there are so many ways to bypass it.  I recently bought (for the first time) a track from iTunes – and discovered to my disappointment that I could not play the track on my phone – even though I could make it play on my PC – until I used a special tool that makes MP3 files direct from your sound driver….   Everybody I met at CTIA seemed to accept the same belief, although with different estimates of timings.  In 3 years time I suspect we will hardly be able to remember when you could not transfer your music to any device you wanted, or when some carriers offered “subscription music services” where you lost everything when you stopped subscribing. 

CTIA Spring 2008 shows the industry is maturing – moving away from novelties and towards the real grind of getting down to business.  For mobile webbers, the September event always seems very dynamic – with the focus more being on content and services.  Its in San Francisco this time, so web heads will definitely be around – and we are really looking forward to it!

 

I saw what you did and know who you are

It’s not Big Brother, but with the launch of Bango Analytics this week, mobile website owners will now get a unique view on who their visitors are and what they are doing.  Also it’ll provide valuable information on how mobile ads are performing, right across different ad networks.  All this is done without revealing any personal data. Many marketing firms have not taken the pluge into mobile advertising for the sheer inability to measure the effectiveness of a campaign prior to this point.  This all changes with Bango Analytics – see what the media thought of the product:

Posted in mobile web.

Fall of an SMS Titan?

Just picked up some news on the Bango Forums that Monstermob has gone into administration.
( http://forums.bango.com/viewtopic.php?t=210 )  Bango was one of the first companies to enter the mobile content business.  Three years ago they bought one of Bango’s early customers, Phunky Phones, who was at that time was very small but was a fast growing mobile web music / ringtone provider. Probably a world leader in Mobile web off portal music.   Unfortunately the founding team was told to migrate the business over to a subscription model, which effectively killed the business, and the founding team left after a few months.

Its always amazing how a disruptive technology (in this case the mobile internet) can cause many of the giants of the previous era to fall.   Remember Wang (wordprocessor disrupted by PC), Digital (Minicomputer disrupted by PC and commodity server), Pointcast (Internet broadcasting disrupted by the web), Microsoft Blackbird (DIsrupted by Java & HTML), iPods (disrupted by music feature in phones … but wait that hasn’t happened yet!)