“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.”
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.
Next Page: Margin isnt measurable.
What I hadnt suspected, until visiting Billing Systems, was that the margin isnt measurable.
“We calculate that out of 500 music SKUs we get from our providers in the media business, we can be pretty sure of 300,” said one network insider. “But another 100 may have been downloaded and then failed before completing. We simply dont know which. And another 100 may well just not have reached the edge of the network …”
And the accounting system just doesnt show it. “We can see exactly where the point of failures are for each service event,” commented founder Oren Glanz, president and CEO of Israeli company Olista, “You have a pile of all these usage attempts, and we look into it to find problems. Patterns.”
The amazing thing isnt that Olista can find these problems; its that the networks today cant.
But even more amazing is that they dont know how many problems they have.
I asked the question: “If things are this approximate, how do you know how big a check to send to Hollywood?”
And this is where the answer came, which gave me the new buzzword: “We bill them according to expectations.”
Which means: We judge how many downloads actually completed from a number of factors including the number of complaints we get, and then we send a check to the copyright holder. And if they dont complain, we know weve overpaid.”
If this business grew to the point where it was even a small fraction of the business involved in voice call billing, the whole façade would collapse.
The moral: If you use a mobile network and you get bills, complain. The people on the other end wont be in a position to challenge you and will almost certainly offer a discount. And my bet is that this will still be true in another six months—because the job of introducing these new systems will simply terrify the people in the accounting department, and they wont do it until it becomes a much bigger problem than a few ring tones not paid for.
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