Opinion: There's a new buzzword in mobile, and it's not good for phone network operators hoping to make a buck off of downloads.
"Billing on expectations" is the new buzzword.
Heres how it works. Youre a phone network operator, and you want your customers to spend more on wireless data, so you get a bunch of songs, tunes, pop videos, wallpaper and teleshopping portals. Thats easy ... isnt it?
Well, it involves going to companies in Hollywood and Tin Pan Alley and signing deals. "For every ring tone based on your hit, well pay you so much; for every download of the hit itself, well pay a bit more, and if someone orders the full CD for delivery by post, you get so much and we get so much."
There, I told you it was easy.
OK, its the 31st, and the Hollywood guys want payment.
Ive just got back from Billing Systems
, a pathetic attempt to persuade my family that the life of a wireless correspondent is all glamour. And sure enough they was talk about Hollywood. And the music biz, too. And this is The Place to find out how easy it is to pay.
"We had 11 completely disparate payment software packages," said one phone network operator. "There was no way of getting information out of one, into the other, without human intervention."
Another: "Were here to see if we can find a way of reconciling all the disparate payment engines we have." How many? "Around 131 disparate systems."
Do GSM operators threaten mobile music? Click here to read Guy Kewneys view.
It was at this point that it started to dawn on me that there might be issues involved in paying for downloads.
Historically, the issues involved just getting people to do downloads. These days, the ring tone business has surprised everybody by the sheer volume of money changing hands, and the focus has shifted to: "How on earth do we get to keep some of that cash?" as networks discover that the margins are all negative, once youve accounted for the royalties, infrastructure overhead, administrative overload and sheer greed of the copyright holders.
Of course, the networks have to do it because the customers leave the networks that dont and go to networks that do. Or, at least, thats the fear. Really, it has more to do with presenting a shiny stainless steel façade to the investors: "Were leaders in mobile data!" and hope they dont look behind the shine to see the color of the ink.
Margin isnt measurable.