Saturday, August 9, 2008

TMO USA Gets it

T-Mobile US reverses mobile content business modelI've been lucky to witness a change in operator's state of mind regarding how they handle content on their portals. One could see the continuum between full control over what's happening on-deck (Orange is a great example with their brand-awareness driven complete portal) and the opposite. The opposite approach is that the operator will choose a handful operator agnostic players in each category, and feature those on their deck.
What's the difference in business models?
In the former, the operator is the customer. They buy/license the content, the technology, and they make the relationship with the vendor work forever, if possible. They are responsible when their revenues drop because people would rather go P2P+Sideload. The operator has an upfront cost (which they would clearly like to avoid) and higher share of the recurring revenues. The vendor may get something upfront, but (specifically in the music busienss) very little in the long run on recurring revenues share.
That business model is not aligned with the win-win strategy which motivates both the operator and vendor to create a healthy long-term service to the fan that would create a solid recurring revenue channel.
The latter, the vendor has the responsibility to create a successful product (they claim they know what they're doing right?) and launch it to their audience. The operator offers access to their subs and exposure on marketing slots, in return to a no-upfront fees and lower share on the recurring revenues.
That works.
No upfront fees, a universal (perhaps white-labeled) product that allows the vendor to launch in multiple context in an economic fashion, and high motivation to create a long term sticky service.
Vodafone UK got it a while back, and now TMO US is announcing something similar.
The real open network.

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