Monetizing User Generated Content

I had several conversations at CTIA with friends, analysts, mobile operators around the topic of monetizing User Generated Content (UGC), especially as UGC moves from pictures and text which are less data intensive to video (which is far more data intensive).

The ability to share video (live or recorded) from the mobile phone is technically feasible and seems to be available readily (at least on smartphones) now. Question is: what is the business model for a company operating "direct to consumer", or "over the top" (OTT) offering for such services?

Imagine that a smartphone user would like the ability to stream content from my mobile instantly to my facebook followers, my friends and family etc. Further assume that this user has an unlimited data plan (say $30-$40/month) from her favorite mobile operator. Most such OTT service providers recommend that she go get one. (It would actually be suicidal not having an unlimited plan given the high quantity of data usage a single minute of video generates, at 128Kbps). Given the above, I have two questions: How many such users are there that (a) have smartphones, (b) have unlimited data plans, and (c) will pay additional $3-$5 a month for the ability to "share" video content? Besides my concern with the intersection of (a) and (b) being small today (a temporary problem, from all market indicators), my real problem is with (c). It would be hard to find willing users who'll pay additional monthly fee - so I am at a loss for a hook here..

That leaves advertizing as a possible revenue model for such OTT providers - and I am yet to see a good monetization model that works with user generated mobile video. Even the powers that be at Google seem to have trouble with it despite the scale of youtube.

My view has been that if we have to monetize UGC, at least until the mobile operators have all relinquished interest in being anything but a bit-pipe provider, the over the top model is fraught with issues. On the other hand, the case can easily be made if the operator decides to offer this service as a way of selling new lines with unlimited data plan, or acquire subscribers from competing operators. Typical subscriber acquisition cost (SAC) numbers range around $250-$300 for US based operators, and can even be more. If the raw cost/MB of data usage for the operator is in the $2-$3 range monthly (google Hank Kafka's recent presentation on cost of data for various technologies), I'd say the operator has a good case for offering this service bundled 'within' the unlimited data plan if it helps with net subscriber acquisition.

In sum, monetizing UGC is a hard problem, and going against the operator in a Vonage like model is harder still, at least today. It will be interesting to see how this plays out in the years to come..

RCS - really considered harmful?

I found this article really interesting:

http://www.telco2.net/blog/2009/02/rcs_really_considered_harmful.html

I have posted some of my comments along with other readers who are passionate about RCS - the service and the use cases are great, and appeal to most people - I just hope that the collection of telcos/telco suppliers/standardization bodies don't get mired into specifying it to death, but rather try out some use cases in real world trials and keep fine tuning the experiences..

Nothing is better than putting the 'human in the loop' when coming up with new experiences -- especially if the human in question is the one that'll eventually be asked to pay for these services..