I have been thinking about the idea of companies co-opting customer communities as an extended salesforce in the wireless area. I think it is only a matter of time before someone monetises the notion of using informed consumers as salespeople for mobile media. This is an extension of Amazon's idea of telling me "other people like you bought xyz item". Instead of merely giving me an automated recommendation, I think there is an opportunity for a company to set up a platform that will allow consumers to both buy and sell content, and earn commissions/credits on each piece of content they sell. Obviously, trusted referrals have a higher sales success rate than blind sales or software-assisted (Amazon-type) sales.
This is not a new idea. Two of the most obvious (and oldest?) examples of companies that have profited from this idea are Tupperware and Avon, which have assembled armies of women who sell these companies' products to other women. Network marketing/multi-level marketing are extensions of the same idea.
It seems like an obvious next step for someone to do this in wireless media:
- Information products have a near-zero cost of storage/distribution. Creating a commission-based salesforce only has upside potential. All incremental sales flow directly to the bottomline (less commissions & royalties).
- For people selling to their friends, the long tail effect can kick in very well: a traditional media company would only try to sell me hits, or at best, give me automated recommendations on more niche content. On the other hand, my friend the salesman knows my tastes very well and will be able to sell me niche content that would otherwise remain unsold. Is anyone using the long tail effect in mobile media? I can't think of any companies offhand.
- Electronic media, by definition, allow consumers to have a reach well beyond physically proximate locations, which again points to a large market opportunity.
- An electronic platform has the advantage of allowing the use of Amazon-like tools for mining product info, sales data etc to boost sales.
- Those are all obvious reasons that apply just as well to Internet businesses. Why wireless? Because I think the world (or many parts of it) is now ready for mainstream adoption of wireless media! Both in terms of consumer awareness and in terms of infrastructure availability. Also, unlike Internet downloads, I think wireless media downloads are far more suited to the referral model because wireless downloads cost money (Internet downloads are essentially free): as a consumer, I don't want to waste time and money trying out something that I may or may not like. This is going to be important at least in the initial stages when comfort levels with wireless data plans are yet to be established.
Now if you accept my idea, some questions to think about are: what will it take to get such a platform going? How will such a platform be monetised? Who will be the first to recognise and realise this opportunity? Will it be:
- An operator? I think not. Although operators will love the idea of all the data revenues such a platform would generate, this would almost necessarily involve transactions of a global nature which operators may or may not be best placed to understand: after all, most operators are local or at best multi-local businesses. But it would be great to be proven wrong!
- A content aggregator? Again, I think not. As I understand it, aggregators' core competencies lie in sourcing for content, aggregating it and promoting it. Transaction volume is key. This is a very operationally driven business model, rather than a business model built around consumers. On the other hand, such a business would certainly allow content companies to scale up quickly.
- A handset maker? Possibly. Would a handset maker be farsighted and risk-tolerant enough to jump into a business that is not directly related to their core area? If one of them were to jump in, how would they deal with basic issues such as access by devices made by other manufacturers? What about operators getting antsy about a manufacturer getting direct access to "their" customers? On the other hand, a platform such as this one could well help boost handset sales in the manner that iTunes has helped iPod sales. It would also boost operator revenues, of course.
- An Internet business? I think these guys have the best chance of getting this right, were they to try it. They have the right mindset, they are aware of the technology issues and they have experience dealing with customers in very similar businesses.
- A big player from a related field, such as Microsoft/MSN or Apple or Sony? Again a question mark and easy generalisations don't exist.
- A blue-sky start-up or spinoff from one of the above?
Reader views appreciated.