Mobile Code Scanning: Business Models that work for Operators and Vendors

Allow me to open by thanking everyone for the positive response on the previous post that dealt with the technology selection criteria for mobile code scanning.

To recap, in the series of 'Mobile Code Scanning' posts I've looked at:

• What Code Scanning is all about
• Potential operator revenue streams (with an extra note on the B2B vertical)
  
• What might be subscribers expectations from this kind of service
• Technology selection

Figuring out the technology has significant implication on which are the vendors who should be considered. For example, if you decide to go for proprietary code format then those vendors who have the open standard codes on their flag might not be high on the list. Further, if you go for proprietary code format you may want to make sure that you have a fall back to open standard codes, so you may want to add another criteria that the vendor can provide that technology.

The discussion about business models and vendor selection should in no way suggest that this is the full list of vendor qualification, as we all know is a long list and every operator has it..

The starting point is identifying the sources for the potential revenue streams that an operator can enable, and these would be:

• 3rd party campaigns: Brands, ad agencies, advertisers etc.
• Operator offerings: Content (wallpapers, ringtones,...) and services (ex.: mobile payments)
• B2B applications: Couriers, Anti-Counterfeiting, Medical applications etc.
• Premium code scanning services for subscribers

You will note that I had not mentioned any sort of charging the subscriber for the standard code scanning service. To me, that is against the spirit of the service: you want to encourage adoption and remove any barriers in the way. charging the subscribers upfront is shortsighted and would cripple adoption and future revenues.

Given the maturity of this space, although very feasible by vendors, it is difficult for me to see in the near future operators leaning towards higher upfront non-recurring payment in a possible code scanning licensing deal with a vendor. I personally think that pushing for a higher setup fee is somewhat shortsighted by vendors.

Instead, I think that early adopter operators would like to see more of the upside that is associated with their win, and that can be attached to the following streams:

• 3rd party campaigns: Those campaigns would typically be associated with web access and/or SMS campaigns. the ideal business model there would be a mix of flat-fee rev share, a per click google-like click-thru model, or per SMS transaction. Keep in mind 3rd party campaigns would not launch on day one of the service launch. The first campaigns to be launched would be operator campaigns to test the water. The ideal scenario is that both the operator (who typically has geographical advantage and legacy deals with local brands) and the vendor would strive to bring in 3rd parties. The important lesson here, is even if the vendor or operator do not have a clear precise idea how to price 3rd party campaigns, they should put something on paper so that it doesn't break the deal. an imperfect deal is better than a no-deal.
  
• Operator campaigns: Operators would typically want to see an initial period where the service is launched. Call it a trial or initial launch, on that period it might be that only the operator would have running campaigns. That period might be an exception to the longer-term pricing model for the operator. Like the brands, operator campaigns would be typically web or SMS based, hence they can be charged per click, per campaign, per period (monthly?) or as flat fee (the latter unlikely).
• B2B: Those kind of deals would typically require intense customization that the vendor may want to pick up anyway. The reasonable model would be per license and period as it is very easy to measure and is attached to the success of the business, in most cases.
• Premium subscriber services: This is an interesting point. In my view, premium code scanning personal services would go into two categories: Personal productivity (adding a meeting to your calendar, adding a task to your to-do list, changing profile to 'meeting') and mobile social services (launch a PoC session, initiate a video call). In this particular case I think it would be difficult to track the transactions as they might take place locally on the phone, and also subscribers could create their own codes (meaning that it is not necessarily brands that would create the codes). hence a combination of charging per download and possibly per code creation seems to me the best way to go.

I think that the key to a healthy ecosystem is winning operator deals initially, and that requires identifying those operators who are early technology adopters and live of innovation. One might find those in geographies where the subscriber base is very receptive to new technologies (sometimes there's some correlation with pre-paid subscribers).

In the next post I'll try to look at preparing the initial launch. What features a product manager for an operator should consider to make this initial launch sizzly enough, but not overwhelming.

I hope this was useful, thanks for reading, and I would appreciate your comments!