SMS Power beats Hollywood, Radio, Videogames & the Music Industry.

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Or – The Havenots become the
Haves.

 

Preamble

It’s a well known fact that when
placed under restricting circumstances, all animals will look for an escape or
release from the restriction.

 

“The Internet treats
censorship as a malfunction and routes around it.” – John Perry Barlow.

——————————————————————————————————————————–

 

The Article

IRC stands for Internet Relay
Chat. It’s been around since I was a little boy. OK – It’s been around since
1988.

 

For those that are not familiar
with IRC, it’s the same (in principle) as MSN chat, Yahoo chat, Skype chat – in
fact all of those programs allow you to type messages to each other – via the
internet – FOR FREE.

 

In fact in the early nineties, I, with a number of BBS
sysops in Australia
set-up a chat link called Ozlink and we connected our BBS’es  to other BBS’es all over Australia.

I was connected to the Internet so we found like minded
Sysops in other countries like like Florida Frankfurt and Colorado
to which we connected the Australian Ozlink chat.

 

It was fun, chatting to people on the other side of the
country or world. (This was BEFORE MSN/YAHOO etc.)

 

I fell in love with the technology because I saw it as a way
for people to communicate with lots of other people, cheaply and as an
economist, I just knew that had to be good for the economy.

 

Fast forward to 1996 and Telstra attempting to defend their
voice traffic by attempting to implement a ”B” party charging regime for
incoming VOIP calls via the internet.

Well we stopped that one with concerted activism which I
believe for the first time in Australia
had thousands of consumers sending faxes to their MP’s. (The power of the Net…)

 

Telecommunications companies in the early days of the
Internet were moaning and groaning about losing revenue. Every one of those
groaning, complaining Telco’s, are still with us today, stronger and more
profitable than before the internet.

They observed, they learnt, they entered the ring and
started boxing… and it rather looks like they have won the game. In most
countries, it is the large Telco’s that control access to most of the internet
infrastructure.

 

That accounts for approximately one fifth of the worlds
population, mainly what we like to call the industrialized world.

 

The other 4.8 billion (the emerging economies) are still
hunting with bows and arrows.

Or so I thought until I received an email from Tomi Ahonen
today. It contained the summary of his 2010 Mobile Phone Almanac.

 

We started talking about messaging programs on the Internet.

 

Here are some bullet points from Tomi’s Almanac Cheat Sheet.

 

  • The
    mobile telecoms industry grew subscribers, services and revenues even in
    economic downturn 
  • The
    'mobile internet' browser service use (including WAP) now has more users
    than legacy PC based internet 
  • The
    mobile phone is the only device that 30% of the world's population carries
  • Digital
    content revenues on mobile are four times as large as those on the legacy
    PC based internet 
  • Mobile
    is considered the 'first media' in the emerging world, only medium able to
    reach half of the population 
  • Mobile
    messaging revenues $153B are bigger than radio, Hollywood,
    videogaming & music industries combined 

 

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Source: TomiAhonen Almanac 2010

Sorry folks, I just have to say it again. WOW.

 

The phone companies – in a recession, increased their
revenues to 153 Billion which combined is larger than all the revenues form Hollywood,
Videogaming, the Music business and Radio combined.

 

And here is the interesting bit…

 

They didn’t need to sue their customers for using MSN/Yahoo
or IRC.

They didn’t need to turn our courts into their personal
employees.

They didn’t need to lobby our politicians for unworkable
legislation.

 

The Telephone companies achieved their 12% revenue increase
in the middle of a recession, the old fashion way.

 

By providing a service and billing for it.

 

Let me spell that out in large letters for the folk that don’t
quite understand how this works.

 

If you are a mobile phone consumer and wish to send a
message – first you have to be located within a service area, and you need a
mobile phone.

 

If there is no Cellphone tower within range, the Telephone Company
don’t get your business.

So of course, Telephone companies build infrastructure to
make sure that there's a cellphone tower close by, in case you want to send an
SMS.

 

If you cant afford to buy an expensive handset, they
offer you whichever handset you want on a pay by the month plan; just to ensure
that they have your business.

 

SMS messaging in Australia
started in 1995. Billing for the messages commenced in 1996 at $0.25 per
message.

Now the cost of SMS varies between three cents and eight
cents (at the wholesale level) and twelve cents to twenty cents at the retail
level.

 

According to Tomi’s data, 3.6 billion people used messaging
services of whom 2 billion were from emerging nations. )(OK so bows and arrows
and cellphones….)

 

So now persons in emerging nations are able to afford to
send a message to others for a few pennies/cents.

Obviously low cost messaging with availability of service equals
windfall revenues for the carriers.

 

Can those emerging nations afford to buy a Blu-Ray copy of
this years movie? – Nope.

Can they buy it from Amazon if they don’t live in the USA?
– Nope.

Is there any legal affordable manner for them to obtain the
content legally ? – Nope.

 

What choice do they have?

 

They can download it from the Net or not watch it.

 

That’s not a choice, it’s a Technical Meme waiting for some
software to make it happen.

Oh the software for mobile phone P2P downloads already
exists?

Sure has done since 2004.

 

But only for people from the industrial countries surely.

 

Nope, its available to anyone with a data connection.

 

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 Source: TomiAhonen Almanac 2010

And as can be seen from Tomi’s connectivity data, the
communication crossover between industrialized and emerging has occurred.



 

DIGITAL
DIVIDE per capita
 

Industrialized World

 

Emerging World

 

 Total  

 Banking account unique holders  

950,000,000

 (79%)  

1,250,000,000

 (22%)  

 2.2 B  

 Internet users incl PC, shared & mobile  

775,000,000

 (63%)  

925,000,000

 (17%)  

 1.7 B  

 Mobile phone subscriptions  

1,600,000,000

 

3,000,000,000

 

 4.6 B  

 

 

There are now more people connected from the emerging
nations than the industrialized nations.

 

The moral of the story is that the industry that provides the ability for it's customers to :

a) Acquire the content (get connected)

b) Use the content (send/receive a billable message)

c) Economically (cheaply)

Appears to be leaping ahead of the industry that makes the content

a) hard to get – if you happen to live in the wrong country.

b) too expensive

c) encrypted and too hard to use

d) self destroying DRM rental overnight digital copies

e) sues their customers

f)  wastes money lobbying Government to enact prehistoric legislation.

g) When it does make the content available – it is usually not in a timely manner.

    In other words what would happen if when you wanted to send an SMS, the Telephone company operator came on the line and said – I'm sorry

    sir, but SMS service to your destination party will be delayed for three to six months from the time you send the message.

When you ask why…..

The operatior replies….

Well our boss is on the board of Warner Bros Studios and it's a new thing they're trialling. Three month Delayed SMS. Do you think it will catch on?

 

The Telcos with their agressive and suportive marketing plans have made a success of harvesting increasing revenues from countries who it seems only last decade were on our foreign aid recipient list.

We wonder if the content industry can learn to do the same.

After all, look at the money they made out of a lousy billion people. How much could they make our of selling that catalogue to five billion more?

Hint – A Bluray video that sells for $25.00 on Amazon is not going to sell too well in Burundi where the average income is $120.00 per annum.

(Of course I'm assuming that unlike Australians, Burundians will be able to purchase Video content from Amazon and not be told – I'm sorry the country of your IP address is not yet authorized to purchase that content…..) AAaaaaargh!

Disclosure:

I have purchased Tomi Ahonens 2009 Almanac. I have no other
connection with Tomi or his products. I do however happen to like the way he
presents his data and findings.

 

References:

 

Tomi Ahonen “Tomi Ahonen Almanac 2010″

 

[Tomi
Ahonen presentation and slides on The Next 4 Billion
]

http://fora.tv/2009/09/24/Mobile_Phones_The_Next_4_Billion_with_Tomi_Ahonen

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