The Trials and Tribulations of a WAP Content Company
By Bob Fine, Wed Feb 28 00:00:00 GMT 2001
WAP content providers try to stay afloat as their struggle for revenues continues.
Having just finished a roundup of Peru and Ecuador, I'm on my last leg of the journey sitting poolside at the Tower Hotel in Georgetown, Guyana. Yes, you read correctly. Guyana. You see, running a WAP content company also requires a second job in order to pay the mortgage and keep the kids in school. So, during the day I work for an international environmental non-profit, installing fast Internet access in the most remote regions of the world. With every other available moment, I am trying to build a fledgling wireless content company.
You might ask: Isn't it extremely difficult running a WAP content company and having a full-time day job at the same time? The answer is a resounding: Yes! Which brings us to the nature of this article. Why do we need to keep day jobs in this burgeoning field of wireless data?
Well, the reality is in today's market, it's very hard to get the support from an investment standpoint, and it's doubly hard if you're working in the content arena. Even during the past heady days of Internet investment jubilation, content has always been the last market people want to touch. Why? It seems most venture capitalists are more interested in funding the next big technological breakthrough, even though the odds of hitting it big are just as grand, if not grander than a good old fashioned business plan based on building a profitable company from the get go. Content has just as many risks though. You first need to build a loyal reading audience, and as most people have realized, consumers are not willing to pay for content on the web. And on the surface, that appears to translate to WAP as well.
But, here's the example that is thrown out over and over again. If consumers aren't willing to pay for content on their wireless phones, why then is i-mode such a success in Japan?
From the beginning, NTT DoCoMo realized and understood that in order for i-mode to be a successful and compelling medium, it needed to create long lasting successful partnerships with content companies that resulted in a profit sharing agreement It's less important at this moment how much money is being transacted, the fact that money is being transacted at all between the carrier and the content company should be substantial enough. And as a result of DoCoMo's understanding for the need to create a win-win scenario for both itself and its content suppliers, i-mode is a roaring success in Japan, and is anticipated to make its debut in Europe later this year. American shores can't be far behind with its recent investment in AT&T Wireless.
So, why haven't the European and North American carriers followed the DoCoMo business model? Honestly, I've been trying to answer that question myself for the last nine months.
Just a couple of months ago, I had the opportunity to chair a panel discussion at the M2000 show in Stockholm. On the panel was the former CTO of Citikey, one of the earliest and premier WAP content providers on the market, itself based out of Stockholm. The holding company just days before declared bankruptcy, and thus Citikey had just closed its doors. Many European carriers had been carrying Citikey's content, but this was not resulting in any revenue generation for Citikey. So, how then is a content company supposed to stay in business if it doesn't receive any revenue for its content? Well, it doesn't, and thus ends the life and story of Citikey. Once hailed as a leading content WAP company. Today, a sad memory in the developing life of WAP.
Here's another example of the carrier's feelings and viewpoints towards content companies. During the 2000 WAP Congress in Seville this past November, a business development representative from the Spanish carrier Telefonica addressed the audience. Many members of the audience asked him how they as content developers were supposed to stay in business when the carriers are unwilling to create any type of profit sharing agreement. He proceeded to tell everyone that that was not his concern. Now granted, it is not the carrier's responsibility to build a business plan for a content company, but it was more the attitude that the carrier was exemplifying that ticked the audience off.
Yes, the carriers have made and continue to make huge capital investments within their networks to allow for wireless data. But, the fact of the matter is that the way the carriers are doing business is not working, either for themselves, the content companies or the consumers. Today's reality is resulting in small content WAP companies quietly going bankrupt left and right.
I personally do not believe that consumers are only interested in the least common denominator of content: the AOL and Yahoo portals of the world. Granted, there are many poor content plays out there, but there are just as many unique and diverse WAP content sites that get little or no attention. In the end, all a consumer, and carrier for that matter, will have to choose from is AOL and Yahoo and Amazon.
Our own personal experience has been varied. One American carrier had us go through a forty-page contract before doing business with us. Now, I understand that liability and indemnity issues need to be taken into account, but after forty pages, the value for the content company is so diluted that it makes it hardly worthwhile. Other carriers, normally smaller, have been much easier and more open to deal with, one gave us a simple one page contract, which both helped to ease the bureaucracy, but also gave a feeling of trust and partnership between us and the carrier.
The point is a confidence and relationship needs to be built between a carrier and the content company. It would be helpful for the carriers to sit back and say to themselves: "Okay, what do we need to do to help make this content company successful in the long run?" The carrier will ultimately succeed along with the content players if this approach is taken. It must be "We" and not "Us and Them".
I believe most carriers are coming to this conclusion slowly, but it is coming at the cost of struggling content companies. As carriers are only now realizing their business models are not working, they are not changing quickly enough, and they are not proactively engaging content players. And so goes the story of Citikey and others like them. We ourselves have had to diversify and create alternate revenue streams with our content in order to stay alive waiting for the large carriers to wake-up. Win-Win is the key and should be the mantra. Minutes for the carrier. Revenue sharing for the content players.
Cheers from Guyana.
Bob Fine is a co-founder and President of The Cool Blue Company, a media company covering the wireless Internet for consumers which includes Cool WAP Site of the Day.com.