The Long Tail: A Glimmer of Hope for Premium SMS

In a matter of just a few years premium content over SMS grew from nothing to a multi-billion dollar industry. In the US this growth has been losing momentum in the past year and a half. This would not come as a big surprise if it weren’t for the fact that in the rest of the world PSMS continues to grow.

The problem in the US could perhaps be attributed to the shortsightedness of some content providers who, so intent on making easy money, consistently delivered a poor and, in some cases, even deceptive user experience. Or perhaps the mobile operators are to blame for discouraging investment by content providers as a result of imposing controls that not only are demanding on content providers, but that also stifle user adoption.

From where I see it, however, where there is easy money there is little innovation. Many mobile content providers have settled for delivering the same user experience over and over again. The common recipe is a combination of uninspiring Web sites, cheap late night TV ads, and itty bitty print terms of service. So I’d be willing to bet that consumers also got bored, and smarter.

This is why it is so refreshing to see content providers delivering innovative ways to spread the adoption of mobile premium content. And more importantly, for delegating the discovery to parties better positioned to deliver a relevant and compelling user experience.

ThumbPlay’s Open Marketplace provides all the tools any independent Web publisher would need to distribute ThumbPlay’s vast library of digital content. By doing so distributors can partake in the revenue. Integration of the set of APIs and feeds promises to be not only easy, but also to provide a set of rich tracking and optimization tools.

Open Marketplace also allows independent artists and content creators to submit their content for distribution

Following this trend, FunMobility also announced MoMoney. MoMoney is a widget that allows any Web site or independent publisher to provide a storefront for mobile content by embedding simple code on their Web property.

I expect this is just the beginning of a trend that may result in users becoming more receptive to this type of product. When offered within the context of something else, these products should be less perceived as a hard sale. Another benefit could be that the cost of user acquisition will be reduced as these Web publishers already have a captive audience.

However, in order for this model to work well these content providers must ensure that the end user experience is preserved. Systems and processes for completing the transaction, splitting the revenue, reconciling, and reporting must be well implemented and supported.

If this model works it could mean a turn of tides for the troubled Premium SMS space.

The WAP Fenced Garden

In the U.S. the concept of off-portal premium content and applications provided over WAP is almost nonexistent as most carriers maintain a fairly closed WAP walled garden.

But do off-portal content and application providers sit idle while waiting for the walled garden to come down? No.

When there is a will, and a loophole, there is a way.

Most carriers do allow end users to navigate to sites outside of the carrier-branded portal. The problem is that as end users navigate outside of the walled garden, off- portal sites will not benefit from automatically knowing their identities (i.e. the phone number). In a way this is similar to a Web experience – the only difference is the limited UI of the device. Many content providers thus take advantage of this by continuing to sell their content in a variety of different and creative ways.

One way is through the use of a third party payment method, such as Paypal or credit cards. On Verizon Wireless I can easily navigate to a content provider’s WAP page (the name of the content provider will go unmentioned), select a ring-tone, enter my credit card number, confirm my purchase. The two problems with this are 1) the cumbersome user-experience, and 2) most phones do not allow content downloading over HTTP (in my case, I got charged for the purchase but never received my content).

There are also other ways to marginally improve the end user experience:

Enter Off-Portal SMS. Through Premium Short Messaging Services (PSMS), off-portal content providers have been able to circumvent the WAP walled gardens. PSMS provides a way for content providers to bill consumers via the operator’s phone bill, either directly or through an operator-trusted aggregator.

The user experience might look something like this:

• User navigates to the content provider’s WAP site and selects the service

• User needs to provide the content provider with his/her phone number (manual input)

• To ensure the end user is truly the owner of the phone number an SMS containing an SMS message is sent to the phone number. Since the end user may have to exit the WAP session to receive the text message, the content provider sends a URL in the device (WAP Push). By selecting the URL the end user is taken back to the WAP page where he/she can continue with the transaction (and which serves as a means to authenticate the user)

• The content provider may deliver the content through a WAP download or through SMS, depending on the operator/device limitations

A less desirable user experience is one which is the last alternative for operators/devices that do not support WAP Push:

• User navigates to the content provider’s WAP site and selects the service

• User needs to provide the content provider with his/her phone number

• To ensure the end user is truly the owner of the phone number an SMS containing a PIN is sent to the device

• After the end user receives the PIN he/she may return to the WAP page, assuming the device’s browser is able to cache the page

• The end user enters the PIN

• The purchase is completed

• The content provider may deliver the content through a WAP download or through SMS, depending on the operator/device limitations

The big disadvantage is that the end user experience still leaves much to be desired.

The other disadvantage of PSMS is that the operators takes a cut of each purchase. The cut can range anywhere between 25% to 40%. The irony is that by trying to protect their walled gardens carriers are also keeping dollars outside of their precious garden, and out of content providers’ wallets.