Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
I have a good vantage point of the mobile social networking opportunity: The largest social networking providers, wireless carriers, content providers and OEMs are using my company’s Anthem platform as the backbone of their mobile social networking strategies and roadmaps. I more or less know what everyone is planning in this space up to about 18 months out. Everyone is doing something similar, yet everyone is approaching it very differently, (if that makes sense) and the end result is going to be a very rich user experience.
Mobile social networking is one of the highest priorities among carriers, OEMs, social networking providers, and content providers because it essentially redefines the personal communication experience. It may be a bit difficult to envision, but as simply as you click on a friend in your address book or shoot off an SMS, the word “social” is being wrapped around the consumer experience in exciting ways. You will soon find that there is no “WAP site” or “application” per se in the mix. Rather, you will find access to your favorite social sites baked into the very UI of your device.
It makes perfect sense, of course, that wireless carriers would embrace what is essentially an evolution of their core business model, which is providing communication services. (And social networking is simply a communication service, on the same continuum as voice, SMS, email, IM and so forth.) It also makes sense that social networking providers would embrace the mobile consumer: Social networking was established and flourishes on the Web, which is limited to a 500-million-strong consumer base (roughly the number of PCs that are connected to the Internet). Compare this to the roughly 3 BILLION mobile consumers worldwide, and it’s no wonder the largest social networking providers in the world are rushing to the mobile space to grow their numbers.
But here arises the question of business model, which is the intended subject of this article. There is a natural tension between wireless carriers and social networking providers because the former has built a business around getting paid for providing communication services while the latter has built a business around providing communication services for free while advertisers subsidize the experience. That they are both basically in the same business of providing communication services, and are therefore on some level competitive, would only seem to add to the issue as the opportunity grows. However, the very size of the opportunity is the thing that is encouraging cooperation among all parties, and I am glad to see it. All that is left is the question of business model.
And here is where I am truly amazed at how differently everyone is viewing the future. The basic consumer-facing models being discussed are:
– Subscription.
– Day pass. (Typically for pre-paid carriers).
– Bundled with data package or tier.
– Paid via defined rate plan.
– Free and ad-supported.
– “Free” and indirectly monetized. (Such as through SMS and MMS).
– “Free” as part of an all-you-can-eat data plan.
There is no one consumer offering that will work across the board, because carriers worldwide operate under very different economic realities.
The presentation paradigms are:
– WAP.
– Downloadable application.
– Preloaded application.
– On-device portal (to the category).
– Integrated into the native UI.
On presentation, we are seeing a resurgence of focus on applications and on-device portal (ODP) supplanting the recent reliance on WAP. Ultimately, I expect for the paradigm to shift entirely to a device-integrated view of communication services, including social networking.
The dimensions that drive adoption are, in order of impact:
– Discoverability overall.
– Search marketing and slotting.
– Placement.
– Brand.
– Promotion (across the board, but cross-promotion in the store is most effective).
– Friction (lowering of).
– Functionality (more and more useful).
– Virality.
– Price.
In various combinations, the three lists above equal success or failure of the category. I would like to point out that contrary to popular belief, something that is free and ad-supported on the Web does not necessarily have to be free and ad-supported in the mobile space (IM is a good example of this). Remember that we are dealing with different consumers, (and 2.5 billion of them) many of whom have never seen MySpace on a PC because they don’t own a PC. For all they know, everything on the Internet costs a dollar. Be careful about your business model, because we have some carriers charging for the category but with superior discoverability that are outperforming others which provide it for free though it is impossible to find.
In the future, there will be one best presentation of social functionality, and it will pervade and extend the usefulness of the device. In many cases today, the carriers are essentially competing with themselves by offering two versions of a social networking site – a “free” WAP version and a paid-application version. For the moment, this is fine since the functionality differs significantly and appeals differently to various consumer segments. As active user interfaces evolve, we expect to see WAP fade in popularity because A) the interface will be transparent, and B) will offer far greater functionality than WAP ever will be able to. I can further predict that this pervasive functionality will drive the business model as well. All but the most cost-constrained MVNO will make social networking “feel” as “free” as SMS or even voice feels today – sure you know it is costing you something, but the thought of that cost does not stop you from sending the next SMS or making a call.
Lastly, let me say that while the advertising model in the mobile space certainly faces its challenges today, the basic dynamics of monetizing an audience have held true for centuries: Where there is a gathering crowd, there is a marketplace to sell them something. Carriers, OEMs, content providers and social networking providers are keenly aware of this fact, and with some hard work and cooperation, this space is going to flourish in a way that will satisfy all interested parties.
You may contact Shawn at shawn@intercastingcorp.com. You may contact RCR Wireless News at rcrwebhelp@crain.com.
