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February 27, 2007

Comments

robert

Hello
Thanks for the insightful piece. Kindly send me yor thought piece at the above address i.e. [email protected]
Thanks in advance for your help.
Robert

Robert

Hello
Thanks for your thoughtful information. I wounder if you could shed any light on the following. How do vendors of condec get compensated in the future. Firms such as ont -if their product is embeded in a device can they get a preclick payment from the device producer-I don't think so. Which suggests that if they are to make real money, then they have to get compensated by the content provider.I'm not experienced in this area thogh and would value your judgement.If mobles are going to be ubiquitous and smart, then how are the providers of this technology to get compensated.
Thanks in advance for your thoughts.
Robert

Tomi Ahonen

Hi Francois, robert and Robert

Thank you for visiting and posting comments.

Francois - good point (about using value statements like superior). I think I did provide considerable explanation why mobile is superior, ie mobile has five distinct advantages that cannot be currently replicated by the older 6 mass media. For example compare recordings and radio. Both could play recorded music. But as radio could deliver the newest music faster than us buying the albums and playing them on our record players (in the 1940s, 50s, 60s) - radio became the dominant form to deliver music. And all recording artists became "slaves" of what the radio DJ's would prefer to play. Record labels went so far as to pay DJ's (bribe them) to play their songs just to get better record sales. The term for this was "payola" - the payments to get radio DJs to play your record.

Similar happened with cinema and TV. Both can show movies. Today all cinema (Hollywood, Bollywood, Hong Kong etc) movies are soon shown on TV (or at least cable TV if not suited for broadcast for local decency laws). But because TV is vastly more widely spread, the actual movie viewing of any new release will be many times greater on TV than it ever reached on the cinema box office. But the revenues that Hollywood makes out of TV viewing are smaller (funded by advertising and cable TV movie channel subscriptions) per movie - but then again, strangely, recordings (DVD's) - bring in MORE revenues than box office revenues at the cinema.

I am not claiming that mobile is superior on all attributes, I did say that all seven mass media will co-exist into the fore-seeable future. But mobile has several unique features, and very dangerously for the six legacy media - mobile can replicate all of them - while not all perfectly. This makes mobile a very potent mass media channel. Consider revenues - since I wrote that blog, Informa has come out with the measure of mobile content revenues for 2006 - 31 Billion dollars. Several times larger than all content revenues on the internet ! And most internet content are of questionable ethical value - adult entertainment, gambling etc. But while mobile of course has those as well, the vast majority of mobile content is already more mainstream - such as music, gaming, social networking etc. So mobile as a media channel has already evolved past the level of where the internet is - all media start first generating revenues from adult entertainment - and one measure of how evolved a media is, is what proportion of its total revenues are driven by adult. The internet is still very immature, strongly dependent on adult revenues. Mobile is well past that already.

Oh, Francois, I'll send you the pdf of course.

robert - you too, I'll send you the pdf.

Robert - Your posting seems to be a bit incomplete, perhaps you had a problem posting it. But I think the main point of your question is how does the value chain work - who makes money, and perhaps more specifically, how do content owners make money out of this.

Good question, definitely. The industry is dramatically in flux. In Japan at one of the world's first mobile content systems, the i-Mode service of NTT DoCoMo (launched in 1999) the revenue-sharing system from day 1 was 91% of every content dollar goes to the content owner. NTT DoCoMo only took 9% as its cut. Its Japanese rivals soon copied this, and similar deals - around 85% - 90% returned to content owners - were launched in many Asian countries from South Korea and Taiwan to Singapore and Malaysia.

Contrast that with European operators of the time, who suggested sharing deals around a 50:50 proposition, with some of the most favourable for the content provider in Scandinavia at 60%, and some of the least favourable returning only 40%. These have shifted a lot, today in Europe the standard deal is near 75% returned to the content owner. Again the lead tends to be in Scandinavia where I hear the deals are at 80% returned to content owner, perhaps even better than that.

So we are evolving. America is again behind on this as well. But Informa the big industry analyst for the telecoms sector said that in 2005 worldwide 76.3% of the total content revenues on mobile were kept by the operators, and only 23.7% were returned to the content owners. This number does have a bias in it, that all "pure mobile operator content" counts as 100% operator content - such as accessing your operator portal page, reading their weather and news reports, etc. But it illustrates the ratio, today operators take significantly more than half of the total pie.

Informa did suggest that the trend is more in favour of the content providers. And my empirical evidence with my customers and hearing various discussions and presentations in the public domain, suggest that this is the direction.

I hope that helped

Thanks for visiting and posting comments. Alan and I will soon release more of our thinking around Mobile as 7th Mass Media, so stop by at our blogsite from time to time..

Tomi Ahonen :-)

Robert

Hello Tomi
Thank you for creating this oppertunity for exchange. My appologies if I was not clear. I accept that the moble phone will become much much more powerful than it is now. I live mostly in Asia and I see it everyday there.SMS is a way of life.
My question actually did not related to the content provider and the network owner. Raher it related to the firms providing the codex. How does a Codex provider make money in this chaging world.If they get only a one off fee for licencing the technology, then it is not that interesting.If they get some small share per click from the content provider for using their codex it could be much more interesting.

Right now it is an evolving market so that there are probably not any definate rules.But any insights you may have would be valued.
Thanks again
Robert

Tomi Ahonen

Hi Robert

Thanks for coming back. Yes, ok, so you were specific about the codec providers? I don't see an obvious place where the codec providers would have a different role in a handset (or the network) from other components like the CPU, camera, radio units etc. I would see the codec providers living in the ecosystem of device shipments - and obviously keep refining the codecs to meet the growing needs of more multimedia, HiFi stereo sound, high capacity data compressions, and soon 3D displays etc.

I don't see an obvious place where they could get into the content side of the play? Seems more like a standard hardware component.

Tomi Ahonen :-)

robert

Dear Tomi
You can have a cell phone without a camera but you can not download vedeo or other streaming matterial without a codex. For this reason, I think you may be undervaluing the importance of good codex.
I would have thought that content providers would pay well for supperior condex. One way to pay well is to provide part of their revenue.Is this happening now and do you think it is likely to happen in the future?

Your last post suggests that you do not think this possible because you don't think content providers would consider choice of codex important. That said, if they use adobe flash then they will be using ont's codec.
The commercial issue for investors is, afre firms like ont or dvix good investments. If they are makinjg razors without razor blades their interest is limited. 0nt for example is a relatively small firm now.If it can not share to some extent in the mible device genrated income, then I have trouble seeing how this firm can grow into a major company.That is why I ask these questions.I'm trying to establish if firms like dvix or ont have a shot to emerge as major earners. Selling embeded technology or getting payed a fee on units sold,does not really do this. I want to make money when I sleep and this means per click income i.e. razor blades not razors.
Thanks again for your willingness to share idea.s

very best
Robert

Francesca

dear tomi, as a student getting passionated anout new media concepts i found your blog really great and stimulating. congrats on iti would like to receive your thought piece, thanks a lot, ciao, francesca.

Francois Nel

Tomi,

Thanks for the response. I'm certainly with you on the potential of mobile & keen to hear your take on trends and developments in Asia. As you no doubt know (especially after chatting to Mark Shuttleworth), there's some intriguing stuff happening in Africa, where the uptake of mobile is phenomenal - including amongst users for whom mobile phones are the first ICT device they have operated.

Francois

PS. Haven't received the pdf report. Would you mind sending it along again? Many thanks.

Razieh

hi

It was great reading that, very informative and inspiring. I'de be very happy to recieve your Thought piece. Thanx a bunch Tomie!

Razy

Tomi Ahonen

Hi Robert, Francesca, Francois and Razieh

Thanks for commenting. I'll send the Thought Pieces.

About Asia and Africa. Yes, parts of the most advanced Asia are at the 130% per-capita penetration levels (Hong Kong, Taiwan) and still growing. I am now honestly expecting the growth to eventually stop and am very curious to see what level it finally tapers off.

Africa, at about 10% per-capita penetration is of course only starting to experience the full impact of mobile, but also, both coming to the game late - thus cheaper and better phones as the first phones to their markets - and with very little in fixed landline phone lines and extremely low PC and internet penetrations, yes, mobiles will radically change the communication space in Africa.

The first connection is by far the most relevant. For those African villages who have no phones, the first mobile phone connection to arrive will cause huge changes to all. The effect is much greater than in the West where the home already had the fixed phone, another at the office, several along the way in payphones; plus the internet etc. And various beeper/pager services etc. In those markets the addition of the mobile phone - while important yes, was only a marginal improvement in communcications.

Africa will gain the most of mobile and they are only at the start of their journey.

Thanks for writing. I'll send the pdfs.

Tomi :-)

George Peabody

Hello Tomi,

Likely you've seen it but there was an interesting article on the impact of mobile communications among fishermen in Kerala, India in the May 10 issue of the Economist. Handsets allow sardine fishermen to phone shore to find the best market for their catch. With a more perfect information economy, profits are up somewhat for all. Voice and SMS will do a great deal for south Asia and Africa, no doubt.

I'd appreciate receiving your PDFs and look forward to reading them.

Thank you for your insights on mobile. It's exciting to have another information/communication revolution in the offing.

George


Tomi T Ahonen

Hi George

Yes, good point, and yes I spotted the Economist story. Its similar to so many other amazing stories from the developing world such as the barber shop in Soweto where over half of customers pay by mobile phone, or the "phone ladies" of Bangla Desh who are in effect moving phone booths - they bicycle to nearby villages with mobile phones, and rent them out to allow locals without a phone to make calls. And do forth.

And yes, of course, will happily send you the Thought Piece

Thanks for writing

Tomi :-)

Sarah Lipman

Great piece, and great discussions! What I find missing in the discussion of a "superior" medium is that different media will always have differing strengths and weaknesses. The trick is to leverage and harness the strengths, instead of trying to duplicate the experience of another medium.

When I worked in graphic design, we hated it when a job had too many restrictive guidelines, eg, page length, number of colors for print, etc. HOWEVER, early in my appreticeship I learned that it was under the most severe limitations that we did our most creative and successful work. We couldn't just churn out design, we had to think hard about the needs, the goals, the vision, and that led to superlative results.

Right now, mobile internet experience is just plain bad, "even" on a big fat Blackberry with its wide screen. It will only be when we the operators back off enough to allow the UI people to work independently or with the manufacturers that we will start to see really innovative and creative environments that shine and exceed and take full advantage of the mobile platforms strengths. (By the way, when mobile internet is GOOD people will use MORE network download time, not LESS. Operators, are you listening?!)

Thanks for a stimulating forum!

... and yes, I'd like to get your 2-pager, too!

Thanks!

Tomi T Ahonen

Hi Sarah

Thanks for the encouraging words (I'll send the Thought Piece of course)

I agree with you that we need that creativity in this, the newest mass media. And also that each existing mass media will adjust to more its "natural" strengths.

Take for example radio. It once was the centrepiece of family entertainment. Before TV, in the 1930s, 1940s and 1950s families would gather around the radio in the evening to listen to their favourite comedians, actors, newscasters etc.

After TV came along many of those programming formats evolved and TV took the place of family shared entertainment.

Radio did not die. It started to specialize, so today there are the music stations which offer "background music" to the taxi drivers and hairdressers and all manner of places where people just want background "noise" that is music. Radio also learned to cater to the drive-time commuters in their cars, with plenty of real-time traffic update info (which is not worth showing on TV or printing in a newspaper) and giving drivers stimulating discussion (shock-jockeys like Howard Stern etc)

Same is true for cinema, print etc. While newer media take some parts of what they did, the older media will then focus more on their core strengths. Cinema for example in the 1920s and 1930s even 1940s was a source for filmed news. People would see what was happening around the world in the short "news reels" shown at the cinema before the main feature. But after TV came along, the nightly news replaced the weekly newsreel and this one format died on the cinema. But cinema itself did not die, they focused ever more on the main feature - where cinema has a massive advantage over TV or internet/PC or mobile phone displays to show a long-form Hollywood movie..

Good comments, Sarah, thanks

Tomi Ahonen :-)

Nik

Hi Tomi, very interesting discussion. Could you please send me your "Thought Piece" on this topic, too? Thanks a lot, Nik

Syaizul

Hi Tomi, very interesting discussion. I'm in the mobile content industry since 2001. Could you please send me your "Thought Piece".

Thanks,
Syaizul
www.metamobile.com.my

Tomi T Ahonen

Hi Nick and Syaizul

Thanks for writing

I will send you the Thought Piece.

Tomi :-)

Iris

Dear Tomi,

Your writing is very informative and insightful.
I would like to receive your "Thought Piece". Thank you in advance.

Iris

Ideali

Dear Tomi,

Please send me you "Thought Piece".

Thanks a lot for publishing so informative things.

ideali.

Chandra

Tomi,

Can you pleasew send me your white paper: "Thought Piece" ? Thanks for your very informative article.

Chandra

The comments to this entry are closed.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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