Will They Pay For Wireless Content?

By: Steve Outing The Web, as we all know painfully well, is a difficult medium on
which to charge money for content. The vast majority of content is
given away free to Web users, in hopes of attracting enough of them to
"monetize" the content via advertising revenues and e-commerce royalties, by

collecting syndication fees from other online publishers, and
assorted lesser means.



But the "next Internet" - wireless - is not so well
defined. News and content purveyors may not have to settle for a
predominantly free model when it comes to delivering content to wireless
devices (like mobile phones, wireless PDAs, and wireless-enabled e-book readers
or digital "tablets").



Perhaps, just perhaps, the model will evolve such that many
wireless content services will carry a monetary fee. While some wireless
content certainly will be free (and ad-supported), the wireless space
will not necessarily develop to be mostly free.



Why wireless is different



Why should we expect content business models for the wireless
Internet to evolve any differently from the wired Internet?



1) Wireless devices are more personal. If you think
about your mobile phone, or if you carry a Palm Pilot or Handspring
Visor, these small gadgets are highly personalized. You carry them
around with you like you do your car and house keys. If you lost your mobile
phone, it might be as traumatic as losing your keys.



Such personal devices, which you hold close to your body much of
the time, require personalized content. Sitting at your computer, you
might access stock information in a broad way - looking not only
at the prices of your own stocks, but browsing for related articles
about an industry that interests you, or browsing stock tables to look at
other companies' performance.



On a wireless device, browsing is not something done as easily or

quickly - mostly due to the small screen sizes of the
devices. With your mobile phone, you're likely to restrict your stock content
to changes in the price of your portfolio holdings, alerts when a
threshold price has been reached, and perhaps headline alerts when
significant news breaks that involves a company in your portfolio.



This is content that is worth a cash price. Consumers will pay if
the content is of high value to them individually, delivered
to their personal wireless devices in a timely manner.



2) Wireless content can (and should be) cheaper. The
trouble with the Web is that it's difficult to price content cheaply. If
you have content that's worth 25 cents to a consumer, you can't
charge that little and make money, because credit card companies (still the

principal payment processors for purchases on the Web) charge

transaction fees that are higher than 25 cents. There are work-

around solutions, such as using systems that aggregate small purchase
amounts over the course of a month, then charge the consumer's credit
card one time, but even publishers using those systems don't tend to
charge very low prices.



Wireless content is a different matter, partly because the

infrastructure typically exists to charge low per-item fees
- which are tacked onto a mobile device user's monthly wireless

telecommunications bill (and the money shared between mobile
phone company and content provider). Wireless content services ideally
should be priced on the order of a few cents per item. This is a pricing
model that can work on wireless devices, because a billing
infrastructure for low-price purchases is already in place, but is generally not

sustainable on the Web.



Current examples already exist. FT.com,

the Web service of the Financial Times, operates a
wireless headline service that sends SMS (short text-messaging service)
messages to subscribers' mobile phones. Users of this service select the
category of headline alerts they wish to receive, then pay 20 pence per
message received - typically several per business day. A typical
user of this service might spend 1 pound a day, or more than 20 pounds a

month.



FT.com Managing Editor Paul Maidment told me in a recent

conversation that he's bullish on this idea of charging for
wireless content. His audience of global business users is not
particularly price-sensitive for content priced at these levels, and they find
value in getting these personalized instant headline alerts. A service
like this has to deliver the right amount of content, of course. If it

delivered too many headlines, each one costing the subscriber
something, then users would bail out.



3) Wireless content can be sold without registration.
Some online content purchase solutions for the Web, such as Qpass and MicroCreditCard.com,
require a one-time registration by the consumer. Then, whenever a purchase
is made subsequently on a Qpass- or MicroCreditCard-enabled publisher
site, the user is remembered. Even though registration is a one-time event,
this can be an impediment to sales.



With wireless content, the billing is already in place between
consumer and wireless service provider (the mobile phone company,
typically). There's no need to register for payment, so there's no friction
for the consumer to make a purchase. With the Web content payment
systems, the user often has to remember and type in a pass code or "PIN"; not
so with wireless content purchases.


It'll be easier outside the U.S.



Even if the wireless Internet makes purchasing content easier,
there's still the cultural factor to deal with. U.S. consumers, in
particular, have been weaned on the notion that content on the Web is free
- and Internet entrepreneurs who seek to sell content for a cash
price have faced an uphill battle. This will have an impact on attempts
to charge for wireless content.



But elsewhere in the world, it probably will be an easier sell.
That's one reason that wireless content entrepreneurs are targeting
markets like Europe and Asia before the U.S. (The other reason is that
wireless services are further advanced in those parts of the globe than in
the U.S.)



Such is the case with TrivNet, a

digital content transactions company that has put its focus on
wireless content instead of the Web. Headquartered in Israel, TrivNet's
president nevertheless is based in New York City. But the focus of the
company is on cracking markets in Japan and southeast Asia, and Western
Europe.



TrivNet's core service facilitates the distribution of wireless
content and the cash transaction between wireless device user and content

provider, via the mobile phone networks. The company is currently

partnering with various global wireless operators, and will soon
begin a pilot project for paid wireless content in Asia, according to
Moti Dogin, TrivNet's top executive.



Dogin explains that his solution bills for content purchases
directly via the consumer's wireless bill each month, and buying content
requires no registration or action on the wireless consumer's part -
other than pushing a key to confirm the purchase - since the
wireless provider already knows the identity of the consumer.



Pricing for wireless content must be thought of in "cents, not
dollars," Dogin says - in amounts low enough that consumers won't
think twice about hitting the "Purchase" key. At low rates - say, 10
cents to listen to a song or pick up a current stock quote on a wireless
phone or PDA - the potential is for millions of small transactions to
make for a huge business in digital content delivered over wireless

networks.



Prices higher than this are what's held back paid Web content,
Dogin suggests. On the Web, prices are either free or too high. That
won't be the case with the wireless Internet.



Watch the pioneers



As Dogin admits, it's very early in the wireless content game, so

pricing is at best a guessing game and one of watching consumer
reaction to early experiments.



It's a good guess, though, that if wireless operators and content

providers get greedy and try to charge high prices for wireless
content services, their efforts will flop. As publishers and content
providers get more deeply into the wireless content game, they must not
repeat the mistakes of Web content. Cheap will be the name of the game,
whether the charging model is per item of wireless content or monthly

subscriptions.



An early indicator is the success of NTT DoCoMo's iMode mobile phone
content services being offered in Japan. A subscription service, iMode
charges 300 yen (just under US $2) for a basic monthly subscription that
includes access to basic content. Premium content services are added for an
additional 100 to 200 yen per month (the average iMode subscriber pays
about 1,500 yen a month, and there are more than 7 million subscribers),
with the content provider pocketing the bulk of the money for these extra
wireless content services. iMode is being held up as a model for paid
wireless content. It passes the cheap test.





Next up will be testing the per-item model for wireless content.
Stay tuned.



Other recent columns



In case you missed recent Stop The Presses!, here are
links to the last few columns:



Reprints Leap From Print To Web, Wednesday, Nov. 15
You're Probably Charging Too Much Online, Wednesday, Nov. 8
OK, It's Time to Get Serious About Audio, Wednesday, Nov. 1
Archive of columns



Get Stop The Presses! by e-mail



If you would like to get e-mail delivery of the Stop The Presses!

column, there are two options:



1) Text e-mail. I send out a text e-mail message containing a

brief description of the current column, along with a URL link to the

actual column on the E&P Web site. To receive these regular

reminders, sign up here.



2) HTML e-mail. If you prefer to receive the entire column, you

can have it delivered to you as an HTML e-mail message whenever a new

column is published. Sign up here.



Steve





Got a tip? Let me know about it If you have a newsworthy item

about the online news/interactive news media business, please send me a

note.



---



This column is written by Steve

Outing for Editor & Publisher Online. Tips, letters and feedback

can be sent to Steve at steve@planetarynews.com





Copyright 2000, Editor & Publisher.