Wireless

by Derek Kerton




The Middle Man In Wireless Content

When I started developing wireless content in 1999, it was easy to get a meeting with the top carriers in the US to discuss distributing my content. Granted, I was in charge of strategizing and building Disney's wireless efforts, so the carriers were fairly familiar with my brands (ESPN, ABCNews, Infoseek, Disney). But the important thing was that there was so little content available, that the carriers were asking for it.

By 2002-3, the situation had changed. The carriers were inundated with more content developer pitches than they could manage, and couldn't handle the relationship overhead, so they started looking to aggregators to reduce the number of relationships and to screen content. Thus were born players like Thumbplay, Jamdat, Infospace, Wireless Developer, etc. There were dozens of consolidations through 2006, as the larger aggregators who had carrier relationships held a huge amount of power over smaller rivals and simple developers. Essentially, these aggregators were leveraging the fact that they "owned" carrier relationships that no one else could get anymore.

Then, this year, the tables turned on them: Carriers realized the large cuts the middlemen were extracting, and started putting the squeeze on them. Meanwhile, the big brand content owners were squeezing the aggregators from the other side. Today, my friends at aggregators complain that the carriers are re-negotiating their contracts, and keeping a bigger slice. Turns out, the carriers don't want the complexity of managing hundreds of content relationships, but neither do they want to give a big chunk of money to middlemen, so according to Wireless Week, they are growing their internal content acquisition groups and bringing the work in house. This seems logical, but also scares me, because the US carriers have historically done such a bad job of screening, partnering, and aggregating content. If you're a carrier, you may disagree with me, but just lurk in the halls at any CTIA or Developer conference (hide your badge) and listen to what the developer community is saying about you behind your back: they hate working with you.

Consistent with this shift, Infospace is reeling in their wireless business, and considering re-trenching in their legacy online search business. Infospace had originally started out in wireless in the 2000s as an outsourced "WAP Portal" that managed all the decks and content for the carriers. Carriers slowly brought that role back in-house, but Infospace still managed to grow by morphing the portal role into an aggregator's role. It must be frustrating for them to have that role now taken back in house, as Cingular is rumored to do shortly. Infospace needs to re-re-invent itself in the wireless space, perhaps focusing on their strength in search. And they have the resources to do it, holding on to $400 million in cash despite laying off 40% of their workforce this month. Other aggregators will have to get out of the "middle" and either create, or go find creative talent and artists and contract to develop and market their content. They need to create, or do their own content "A&R".

Just where this leaves the mobile content developer is hard to say. Aggregators squeeze you, and are losing their valuable carrier blockade, but carriers don't truly have the resources to evaluate and add your content in an organized way. And that's just the biz dev hassle on top of the development hassle of every different platform and phone.

It's too bad the US hasn't seen the adoption of the democratic Asian model, where carriers put up just about all content available, and let the customers decide which is which is bad, which is good, and which belongs at the top of the decks. This model has worked wonders in Japan and Korea, and would work even better when joined by new emerging solutions in custom UIs, search, segmentation, and discovery.

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    Derek Kerton (profile), 3 Nov 2006 @ 7:36am

    Absolutely

    Benoit, Absolutely agree with most of your comment. I didn't get into user generated content in this post, because we're very limited in the size of each post, and this one was already over-sized. But we have been talking about the importance of user-generated content here for years. Mostly, how the media companies and the carriers (and cable/satellite companies for that matter) never seem to realize how subscribers might want to view more than the commercial schlock. Here's just one example of many: http://news.techdirt.com/news/wireless/article/4772 Meanwhile, YouTube comes up and surprises them all with its popularity. Those YouTube videos would look great on mobile, because they're already low quality frame-rate, small screen size, and people have proven that they are popular anyway. Most YouTube clips could move to mobile without any degradation! The independent YouTube was the world's "Most Successful Middleman" since it did what Infospace was trying to do, but better: paying nothing to the content suppliers, and it charged about $1.7 Billion to its customer.

    reply to this | link to this | view in chronology ]

  • identicon
    Benoit Bergeret, 3 Nov 2006 @ 7:36am

    user generated content

    Derek, Good point. However I think that you have left out a key aspect of mobile content: user-generated content. Video for instance, as the flurry of emerging mobile video exchange startups (YouTube mobile included) shows, is getting more impotant every day. Or handwritten-messages and "wireless postcards" such as those generated by Pashamoji Memo and Pashamoji Card in Japan -- Sanyo's rebranding of our own Digitizer and w-Postcard best-sellers (shipped on over 10 million phones ww in the last 12 months and generating 12 MMS per week in its active users according to an independent syrvey in Japan). Or digital copies of documents generated with camera phones (as with www.qipit.com), for which carriers are just a transport network, nothing more. Their worst nightmare come true. I think that the best bet for carriers at this stage is to position themselves as aggregation portals for _any_ kind of content -- including user-generated. For this they need to free up data plans, offer a content-friendly platform (get rid of that dreaded 300KB on MMS size limit!!!), and content-aware business models and plans (why not cut a rebate on data for those users who generate traffic by posting and sharing their stuff. Over the mobile network?) And then let users pick the winning content as you rightly conclude. Benoit. -- Benoit Bergeret CEO, Realeyes3D ph +33141120670 www.realeyes3d.com ww.qipit.com

    reply to this | link to this | view in chronology ]


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