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Making Money from Messages

Making Money from Messages

Short Message Service (SMS) has been the unpredicted golden goose of mobile telephone networks, with more than a billion messages flying through the airwaves every month over the GSM network alone. Even at a few cents a message it's not difficult to see how SMS might be the solution to the growing debt problem faced by companies that massively overbid for 3G licenses... at least until 3G starts to make some money.

MS messages don't tend to overload the network. Being non-time critical means that delays during peak times can be tolerated. While a network may regret a campaign to get users to make more voice calls, more SMS messages generally mean just more revenue, something most mobile operators are in desperate need of. But in addition to the general "I'm on my way home" and "I'll be in the pub in half an hour" type messages, a new generation of services is about to proliferate, offering everything from music to theater tickets, all encapsulated within 160 alphanumeric characters (the limit of SMS).

Users send messages on their handsets, originally entering each character by pressing a key repeatedly (so pressing button 2 once gets you an "a" while pressing it twice gets you a "b"). Predictive text entry, now the norm, allows you to press each button once while the phone tries to guess the word you want from its internal dictionary. Thus, pressing 4 twice gets you "hi" as that is the only two-letter word made up from the letters on the 4 key (g, h, and i).

This produces some interesting bias in the words included in the phones (Spock is there, as is Klingon, but Sulu and Uhura are strangely absent), but has massively increased both the number of messages and their complexity. So obsessive is the act of texting (the very existence of the word shows just how ubiquitous the medium has become) that a recent UK quiz show had users texting the questions to friends, with the winner being the fastest to get a correct response!

The latest handset from Nokia (model 5510) has a QWERTY keyboard squeezed onto the front, while British Telecom now offers SMS to nonmobile users in the form of their latest home telephone. But sending messages to friends is the tip of the iceberg, with new services popping up almost daily and real money to be made by those who can see what's possible.

Ringtones Hit the Jackpot
Probably the best-known extension to SMS is the ability to send and receive ringtones. With mobile phones able to play a variety of notes, SMS was the logical way to send new ringtones to mobiles; after all, SMS was originally created to send settings to phones. But having different tones for different callers was only the beginning. It didn't take long for people to work out the format of those SMS messages, and for hackers to start putting together their own tones based on their favorite tunes. Now every UK tabloid paper has pages of advertisements in the back offering ringtones based on just about every tune you've heard of (interestingly, all without paying a penny in royalties to the tune owners), and almost recognizable.

These tunes are either purchased by phoning a premium-rate number (generally not from your mobile) and entering the tune code along with your mobile number, or by sending a formatted SMS message to a specific number (for this you're charged a couple of dollars). So now when a phone goes off on the train it's as likely to be playing the theme from "Buffy" as making the plain old bleeping noise.

New Services Try to Gain Ground
A natural follow-on from ringtones is logos, the tiny pictures displayed on Nokia (and some other) phones when they aren't being used, or when calls are received from particular numbers. It's been years since so much effort has been put into monographics (just black and white; grays and color are still on their way), and the designers of WAP sites could do well to take a look at what's being sold as logos for phones. These tiny graphics are also easily sent over SMS, and are available from the same companies offering ringtones at similar prices (and with similar disregard for copyright). While ringtones have been a bonanza, logos just aren't as popular, mostly because the user has to draw their friends' attention to them, which is less impressive than them noticing a cool ringtone.

SMS-based games have not enjoyed the success hoped for; SMS gets cheaper with volume, and few games can generate the kind of numbers that make sense in a commercial environment. For example, in the UK, Vodafone will pass on 4 pence of the 10 pence charge for an SMS if you handle over 500,000 messages a month, cutting it to 1.5 pence if you are handling only 25,000 messages, and offering nothing at all for lower volumes. Revenues can be increased by charging users more. The ringtone operators described above can rely on 73 pence of each pound with only 5,000 messages a month. But even 5,000 messages a month is going to require a very popular game, so SMS services aren't really open to the hobbyist/ enthusiast in the way WAP is.

However, where scale is possible, companies are even using SMS as an additional promotional channel, with SMS numbers appearing on posters beside Web sites promoting films or games; just send an SMS for more information to be sent back to you. Of course, with SMS you also get added to their mailing list, something most Web-site operators would cheerfully kill for. While sending messages is expensive, certainly when compared to e-mail, network operators are very flexible in their pricing, and some services can even be offered free on the assumption of gaining additional revenue from other sources.

A good example of this is networks that allow users to send SMS messages from Web sites without charge, on the assumption that most messages will require a response from the mobile handset, which will be charged for as usual. Several attempts to integrate SMS with Internet e-mail have fallen down on charging, though some limited services are available. Being charged 5 pence to receive spam isn't something consumers are prepared to do.

Taking services one stage further is the possibility of SMS tickets to events, with a unique number advertised on posters promoting the event. Users could send an SMS to the number and receive an electronic ticket to be displayed on arrival at the event. Charges could be made for the SMS message, or via prior arrangement with a booking agency. Such services aren't in operation yet, but the infrastructure is there and waiting to be used.

Extending SMS isn't going to be easy. While most handsets will support longer messages (by the simple process of cutting them up and sending them as multiple messages), there is not yet any agreed standard for enhanced messaging services (actually, there are two standards, but that's the problem!), so we are still left with 160 characters of text.

Searching for "the next ringtones" is occupying a lot of minds at the moment. Last week I even saw an advertisement for adult text services: "Our girls are standing by," read the advert, though I couldn't establish whether these were real girls, computer geeks, or even a simple expert system, and the company declined to comment on the amount of use the service was getting. But true innovation comes from taking a working system and applying it in a different way, and I'm looking forward to finding out who (or what) I'll be sending my next text message to.

More Stories By Bill Ray

Bill Ray, former editor-in-chief (and continuing distinguished contributor to) Wireless Business & Technology magazine, has been developing wireless applications for over 20 ears on just about every platform available. Heavily involved in Java since its release, he developed some of the first cryptography applications for Java and was a founder of JCP Computer Services, a company later sold to Sun Microsystems. At Swisscom he was responsible for the first Java-capable DTV set-top box, and currently holds the position of head of Enabling Software at 02, a UK network operator.

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