The rise of mobile communities, social networks and user-generated content represent a seismic shift to a participatory culture in which each individual can co-create the content they consume and choose the mobile space in which they wish to share it. Users syndicate, blog, tag, and distribute on-the-fly – and they will join mobile communities that can keep up the pace.

Caught off guard by the explosive growth of online social networking sites like MySpace and Flickr, many mobile companies are in a race to replicate this success in the mobile space. However, building mobile social networks to meet the needs of diverse user communities is no small task and many companies lack the DNA within their organizations to encourage widespread user acceptance let alone active participation.

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Mark Donovan, senior vice president and senior analyst at M:Metrics, a company specialized in measuring consumer consumption of mobile content and applications, expects many of the current highflyers to “crash and burn as it becomes obvious communication, not technology, is the killer app.”
In his view, too many companies are focused on monetizing their eyeballs when they should be thinking of new ways to capture them. “Building communities around games or music is all very merchandising-oriented; it’s not what creates sticky and robust communities.”
Likewise, companies should not seek to limit the user’s choice of mobile community or communications channel. “Social networks, by nature, have to be cross-operator,” Donovan explains. They must therefore support a broad range of interaction, ranging from IM between friends to publishing content on a blog for everyone to see.
Strong communities are built by companies that provide users platforms, tools and a hands-off approach to the social networks they create, Donovan says. “A company that assumes users are passive consumers or ignores their need to create, share and socialize, is leaving money on the table.”
The stakes are high, according to new research from Informa Telecoms & Media. The report, Mobile Communities and End-User Generated Content, produced by Informa and the Mobile Entertainment Forum, the global trade association for the mobile entertainment industry, estimates the market for mobile communities and user-generated content will be worth $13.1 billion by 2011, with photo and chat-based services being the top revenue generators. It calculates digital community services on mobile phones were worth $3.45 billion globally last year.
Indeed, chat services currently represent the largest segment of the market. This is because the interaction is based on SMS, a form of communication which is both intuitive and handset agnostic. However, as increasing numbers of photo- and video-enabled devices enter the market, the volume of users uploading images or clips is expected to grow significantly. In 2006, 46 million users are forecast to have submitted videoclips to social networks and mobile communities from their mobile phone, rising to 198 million by 2011.
But there are pitfalls that must be avoided if services are to achieve success, the report says. Moderation is vital to protect users and to adhere to industry guidelines, and pricing is another key consideration. More importantly, mobile community services need to offer value to the target demographic.
Predictably, youth are the most committed members of mobile communities. According to the M:Metrics October 2006 survey, 70 percent of 13 to 17-year-olds engage in social networking or otherwise create content. The survey examined the usage of photo messaging, video messaging, IM, chat, dating and user-created content, including video content and ringtones, among mobile subscribers age 13-17 and 18-24 in France, Germany, Italy, Spain, the U.K. and the U.S.
Mobile operator and media company 3 in the U.K. caters to its youth demographic by providing services to encouraging user interaction and user-generated content creation. “Providing social networking services are no longer an option; customers expect to have them on their mobiles,” observes Peter Northing, 3’s Director of Products and Services.
The operator also recognizes that wall-garden approaches and social networks don’t mix. “People don’t select their social networks based on the mobile networks their friends are on, so we’re looking at how we can work more closely with other networks to prevent customers from being blocked,” Northing says. Top of the agenda is making sure “users can access 3’s two social networking offers from any network.”
SeeMeTV – which allows users to share videos and earn money from viewings – and Kink Kommunity – which offers members a forum to contribute and rate photos and videos, as well as chat – are seeing a “boom” in user interest and user-generated content, Northing says. SeeMeTV counts over one million downloads a month, and 3 has recently extended the service beyond videos to include user-generated wallpaper and ringtones. In comparison, 3’s Kink Kommunity counted over 60,000 members, “who are swapping hundreds of thousands of messages between them every month.”
Moving forward, social networking and content-sharing are services that will see “significant development” this year, Northing says. In line with this product roadmap 3 will extend its own services, introduce pricing to reflect the user demographic and “work more closely with social communities that wish to mobilize their offering.” In addition, 3, which has recently run successful campaigns with brands, including Coca-Cola, Canon and Adidas, will aggressively develop an advertising model to lower costs and encourage usage.

Value-“ad”
Despite the variety of communities flourishing on the mobile Web, the range of business models and strategies is limited by a lack of imagination and vision. Most are based on a calculation of the future value of aggregating eyeballs for advertisers. Not that the approach won’t drive its share of revenues. The market research firm eMarketer reckons ad spending on online social network sites will reach $865 million this year, with MySpace.com capturing 60% of the spending. Total ad spending is set to top $1.8 billion by 2010, and account for 8.5% of the projected $25.5 billion in online ad spending.
While no figures exist for spending on mobile social networks, it’s likely to be a significant portion of the $11.35 billion Informa forecasts will be the worldwide spend on mobile advertising by 2011. “Communities are viral by nature and advertising are eager to tap into that,” observes Russell Buckley, Managing Director, Europe, for Admob, a mobile advertising marketplace that brings advertisers together with independent mobile content publishers.
As of January 2007 AdMob has served a whopping one billion mobile web advertisements in the past six months. Admob figures also reveal the most sought-after content. Publishers of community content generate the lion’s share of traffic (45 percent). This category is followed by Downloads (44 percent), Portals (8 percent), Entertainment (2 percent) and News & Information (1 percent). “To make mobile communities work the services they offer must be free, open and ad-supported,” Buckley says.
Social media companies are getting the message. Peperoni, Germany’s made-for-mobile answer to MySpace, counts more than 350,000 registered users and another 6 million unique visitors per month who frequent the community to check out new sites and fresh content. In fact, Marcus Ladwig, COO of Peperoni, estimates the actual figures could be higher. This is because Peperoni only requires active participants to register and allows all visitors to browse for free.
Access to so many eyeballs has also excited content companies – who want to advertise to Peperoni’s tight-knit Peperonity mobile community. To date Peperoni has run campaigns with several major brands, including Adidas and Disney. More recently, the company has launched a campaign with 4th Screen Media, a U.K.-based mobile advertising company with “some major brands in the pipeline,” Ladwig says. Member survey shows users don’t mind the advertising, provided it is useful and unobtrusive. “In the right context ads even benefit the community,” Ladwig explains. The current campaign with mobile operator O2 in the U.K. – which revolves around giving away free SIM cards, is a pitch that “provides real value for users.”
To keep the momentum Peperoni plans a slew of new functions and features. These include tools to upload mobile videoclips, moderation (to keep in touch with members and give them a feeling that “someone is looking after their home space”) and a “send-to-a-friend feature (to allow users to update friends on community happenings and even recruit new members). The company is also developing a “recommend-this-site” service that will allow users to share cool content they find on Peperonity with their friends via SMS. “Peperoni will pick up the costs of this service because we believe in the potential of this to promote viral marketing,” Ladwig says. 
Monetization models at the site go in both directions. Peperoni sells ads to deliver services to its members – but it also offers its members an eBay-like marketplace where they can sell their user-generated content. To this end Peperoni has teamed up with Bango, a company that has developed a global infrastructure platform that enables content providers to market, sell and deliver their products and services directly to mobile phone users on all mobile networks. The collaboration allows members to commercialize their content, enabled by Bango’s global access and payment technology.
However, advertising is not the only game in town. Just as search has become the de facto interface to content on the Web, so have social networks become the entry-point to a much greater and richer Internet experience, suggests research from Hitwise. A recent study revealed the impact that social sites have had in driving traffic to other destinations on the Web. Shopping and classified sites, for instance, received 2.4% of their visits directly from MySpace in September 2006 –an 83% increase since March.

Targeting the Long Tail
Against this backdrop, social networking has what it takes to become a significant force on the Web and a part of users’ daily lives, observes Ken Doctor, an analyst at Outsell, Inc., a market research company specialized in the global information industry. “The sites are replacing search as the interface to content.” He imagines dozens of business models that could spring up around this new level of interaction, and the opportunity for companies that can monetize the Long Tail of social communities.
Sensing a business opportunity, Pitch, a U.K. advertising-funded mobile content provider, is set on transforming its Pitch.mobi community of some 25,000 members into subcommunities and chat group subsets based on their common interests, according to Lourens de Beer, Pitch CEO. He sees the strategy is a natural extension of human behavior and the desire to get away from the crowd at a party and split of in smaller groups.
“Niche communities encourage more interaction because everyone is on the same wavelength,” de Beer explains. What’s more, brands and advertisers – which effectively subsidize the service and the content in line with Pitch’s ad-funded strategy – “can get more intimate with niche communities.”
In his view, knowing a community’s passion allows a better fit between the message and the member. Pitch has run campaigns with several major brands including EasyJet, Gameloft and O2. Pitch also has encouraged skaters to create their own subcommunity, known as skate 365. Pitch will help create a community catering to the interests of fans of Red Dwarf, the British cult sci-fi comedy series.

Come together
While some companies focus on monetizing the variety of content, others have built a profitable business on bringing together the variety of social networking applications, empowering users to interact on their own terms
One company that benefits from being a mobile impresario, connecting members with a breadth of mobile messaging and social networking services directly on their mobile phones, is OZ. To date the company’s OZ mobile IM and mobile email solutions have shipped on 85 million mobile devices. The solution, which allows mobile operators to offer their subscribers access to mobile communities and if desired, immediately leverage their own mobile communities with presence, has been deployed operators and providers including 3 Scandinavia, Alltel, AOL, Boost Mobile, Bouygues Telecom, Cingular, Telefónica Móviles, T-Mobile USA, Virgin Mobile USA and Yahoo! In December OZ added social networking to the mix in the form of a client that gives users access to multiple social networking sites.
Hilmar Gunnarsson, OZ Executive VP Sales and Marketing, believes there will likely be a community to match every interest. In fact, he argues, there is no reason why there shouldn’t be as many communities as there are users. “For operators it’s no longer about connectivity to two or three IM services; it’s about instant access to dozens of communities directly on the device.”
In Gunnarsson’s view, improved usability will catapult these communities from the fringe into the mainstream. “Users should have a social networking button or icon on the top level menu on your phone. They could simply click it, select Facebook and be in their Facebook account,” he explains. “Making users download all sorts of clients and go through all kinds of hoops won’t deliver a good experience or high usage.”
Put simply, users require a dashboard of social networks and a single access to their buddies and their activities across multiple communities. “Delivering this service will put carriers in a great spot,” Gunnarsson says.
And, if mobile opportunities are too shortsighted to see the business advantage of providing easy access to all the communities flourishing outside their walled-gardens, a growing number of IM services providers are happy to oblige. One company to watch is eBuddy, a Dutch provider of ad-funded IM services that gives users free access to all IM services (MSN, AIM and Yahoo) – without need of a software download. The company, which recently welcomes its 5 millionth member, is growing at a rate of 33 percent, according to Jan-Joost Kraal, eBuddy director of mobile.
With a strong position in plan-vanilla IM assured eBuddy is set to explore new advertising models and features that will transform its users into a tight-knit community. “It’s important to create stickiness,” Kraal explains. Moving forward, content – ad-funded or user-generated could be part of the mix. ~
In Germany Nico Lumma, who founded Mabber.com, a provider of universal messaging combining mobile, Web and desktop IM from all the usual suspects, has similar ambitions. His service, which includes functionality to deliver alerts and bursts of content at prices lower than SMS text, has already attracted interest from content companies eager to connect with Mabber.com members one-on-one. It may be that mobile messaging is the feature that gets users attention, but content – both user-generated and commercial – may be the lure that keeps them coming back for more.

In amongst all the 3GSM feeding frenzy on mobile IM and social networking, you may be wondering what had happened to dear old SMS. After all, it’s still the biggest profit earning service for most operators.

Yet with the furrowed brows over IM cannibalisation of SMS revenues, you’d be forgiven for thinking that SMS’ days were in some way numbered. Not so, say analysts at Portio Research who, despite predicting an “exciting future” for other messaging technologies, think that SMS revenues will continue to grow, despite declining prices, reaching $67 billlion by 2012. That said, the quality of mercy is strained at Portio, because they also think that by 2011, IM will be the dominant messaging technology in the USA, and mobile operators are going to have to cut their cloth to suit.

The message then, is that there is still plenty of scope for SMS in developing markets but in others, where IM has a deep hold in the PC world, mobile IM will be more of a threat. Well, up to a point.

This is relevant to a messaging giant such as LogicaCMG, say, that tries to sell its SMSCs and MMSCs in on the back of its systems integrator contacts in developed markets, such as Europe. Perhaps eyeing that breaking free of this successful but increasingly limited business model was going to be more trouble than it was worth, LogicaCMG made the decision to offload its messaging and telecom business, into the waiting arms of private equity.

Headed up by former LogicaCMG man Larry Quinn, Atlantic Bridge Venture’s angle is to get into emerging markets, and into the US where LogicaCMG is weak, through an expanded set of channel relationships. It also hinted that it would consider acquiring other companies to exploit the opportunities for next gen IP based messaging.

It seems that this is a clear sign that the established order messaging is breaking down. The old SMS dominant players are far from confident about their relevance as the industry moves forward, despite the convincing talk. There is an element of “back to the future” about Acision, as if the ex-Logica people involved felt there was unfinished business still in SMS, in the markets LogicaCMG left untouched because of its business model. That is fair enough, but it is the other part of the strategy – the next gen messagin, IP convergence piece in its existing markets that is of most interest. Here there are genuinely disruptive players and models emerging. Does Acision want to be part of that, or do its best to ignore it?

Russia’s oldest theatre is jamming mobile phone signals during performances. The Alexandrinsky Theatre in St Petersburg became the first theatre company in the world to instal jamming equipment, after previous attempts to get patrons to switch off their phones failed, reported the UK’s Guardian newspaper.

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The theatre said it was forced to introduce the measure after a ringing mobile phone wrecked a recent performance of Leo Tolstoy’s The Living Corpse. The central character, Fedor Protasov, decides to kill himself after his wife accidentally marries someone else.

“It was towards the end. Just as the hero was about to shoot himself someone’s mobile phone started to ring,” Yekaterina Slepishkova, a spokeswoman for the theatre – founded in 1756 – told the Guardian. “It was awful. We ask people to turn their phones off before every performance. But they simply don’t listen.

“We turn the system on just before the performance. We switch it off during the interval and on again for the second half. So far it’s been a resounding success.”