Korean Operators Believe In Owning The Content
By Mike Masnick, Mon Jun 13 21:30:00 GMT 2005

As South Korean mobile operators continue to push for more innovative uses of mobile data services, it seems they're increasingly getting into the content business. Can this work in the long term?

In the last year of so, it seems like various mobile operators are becoming more and more obsessed with becoming media moguls as well, trying to build up a sort of AOL-Time Warner combination for the mobile world. Of course, we all know how the AOL Time Warner marriage worked out, so it's not entirely clear why the mobile operators believe they'll do much better.

However, one place where such efforts have worked in the past is South Korea -- where helping to seed networks with new desirable content helped jumpstart some of the 3G efforts. However, that initial success raises more questions than it answers. Does it make sense for mobile operators to be in the content business long term -- or is it just a short-term strategy to jumpstart the market, and then let the real content creators keep it going?

It appears that the Korean operators believe the former, rather than the latter, is the strategy to take. Just after SK Telecom announced plans to buy a record label, competitor KT Freetel is actively looking to buy up content companies.

It seems like the Korean operators may have learned the lesson from earlier launches a little too well, and are bit too focused on owning the content now. The problems come from a few different directions. First, the content business is notoriously tricky, and it's tough to be consistently successful. Stepping back and letting everyone else make the big bets on content while you're poised as the platform to benefit seems like a much better strategy. Owning one producer of content could make other content producers shy away from offering their (perhaps better) content on your platform. Second, content is a tricky business because of the ease with which people share and exchange content -- often illegally -- meaning that there's always pressure on the business model. Unless the operators want to produce content with the idea of giving it away for free (a promotional business model that isn't out of the question, but seems unlikely in these cases) there can be a race to the bottom in actually being able to make money off of the content.

Still, the Korean operators have done well in the past with a similar strategy, so it will pay to watch how well this attempt goes. From an initial standpoint, though, it seems that they may be putting too much weight on the importance of broadcast style content, rather than simply encouraging everyone (not just broadcasters) to create their own content and build the overall platform up for everyone. There's nothing wrong with seeding a new market to show people how things are done -- but owning the market scares off others from creating content on your platform and may doom it to being a closed system without everything people are looking for.