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By John Delaney from Ovum

"I feel pressure, you feel pressure."

This declaration by 'Bus Uncle', an irate senior citizen caught on camera in Hong Kong and posted on YouTube, could also apply to media owners. They have been largely caught unawares by the growth of such sites as Flickr, YouTube, OhMyNews and MySpace. Their growth stems from both better broadband availability and the increased scope for tribalism, identity expression and personalisation that user-generated content provides. Paul Saffo of the marvellously titled Institute of the Future notes that this could herald a 'Cambrian explosion' of creativity: a flowering of expressive diversity on the scale of the eponymous proliferation of biological species 530 million years ago. So what does this trend mean for wireless carriers? John Delaney looks at the implications.


Messages for operators

Mobile operators are well-placed to benefit from the explosion of interest in user-generated content (UGC). It fits well as an extension of the trend to personalize that is already so successful in the mobile environment, and offers a way to monetize the wealth of 'user-generated content' currently residing (unsent) on mobile terminals worldwide.

The news is less positive for media originators and (particularly) aggregators, which will feel pressure as a result of the trend towards user-generated content. Operators are likely to develop their UGC offerings, and will devote staff and financial resources to establishing these services (as opposed to the 'big name' content that has until now been the focus for many operators).

Mobile 'stock exchanges', where users can post, exchange and sell self-generated material, will grow in popularity. The recent announcement of TheContentMarket.com by Qpass is a good example of this trend. Key to success here will be successful navigation structures, enabling users to find content they want with a minimum number of page-loads.

Operators will see some success with branded offerings for their subscribers only. This model, successfully demonstrated by 3 UK with its See Me TV service, will work best amongst users with a relatively homogenous subscriber base (for example, 3 UK focuses on a younger demographic, with many shared interests served by the See Me TV model).

Operator reluctance to both lower the price of carriage and facilitate access to off-portal content will restrict the growth of mobile user-generated content. This has proven so successful on the web because users have been free to browse a variety of material quickly and easily.


User-generated content - so what's new?

• Plenty of user-generated content already exists in the mobile world
  
  There is nothing new in the concept of user-generated content. Users have long been generating 'content' (that is, material that they or others place a value on) as opposed to mere communication that can be discarded. However, such has been the growth of storage and tracker services that almost anything can be considered 'content'. Other trends facilitating the growth in content include:
  
  The growth in storage capacity, coupled with ever cheaper prices. The growth of standardized, non-proprietary capacity in mobile phones encourages both sharing across other devices and upgrading.
  
  The sense that something is not truly experienced until recorded (digitally). A walk in any city will see any number of camera-phone snaps recording events for the next few days (as opposed to posterity). Recent research conducted by Nokia indicated that in emerging markets a very high percentage of users consider their phone as their primary camera (68% in India).
  
  However, most of this 'content' is destined to languish in the depths of our camera phone, and never see the light of day or, crucially for the mobile operator, be transmitted across the mobile network. At the moment, around 10% of heavy users generate 40% of all MMS traffic. Even in the most advanced markets, the capability to be able to take pictures with the mobile phone has not translated into revenues for operators. This is partly for legacy technological reasons: initially interoperability was poor, and users needed to complete a complex configuration of their phones in order to send a message that was (all too often) expensive and abortive. However, as these hitches and glitches are increasingly resolved, it has become clear that this content is either too ephemeral to share or too personal. All of us keep special photos and text messages in our mobile phones. These have become intensely personal devices in a way that desktop and even laptop computers never will.
  
  
• User-generated content has found a new lease of life online
  
  During the last two years we have seen a considerable growth in online social networking sites and (often by extension) those that feature user-generated content, among the most successful of which are YouTube, MySpace and Second Life.
  
  Much of the value of this user-generated content stems from the extent to which like-minded souls can access material and form communities. YouTube has the critical mass to do this, and users have 'self-segmented' to incredible degrees. To take one example, an early band of foot fetishists has split into those who prefer tickling, different types of toe, or simply the pure aesthetics of the shape of the foot. Such a diversification in the 'long tail' of consumer demand would seem only possible amongst the vast audiences made possible by the increasing prevalence and speed of Internet access. However, there is an opportunity for mobile operators.
  
  
• The growth of UGC is an excellent opportunity for mobile operators
  
  We believe UGC presents two significant opportunities for mobile operators. Firstly, consumers will increasingly maintain connectivity with their web community or blog readership using their mobile phone. This is happening now: CyWorld customers in Korea control the settings and appearance of their avatar via their mobile phones, and bloggers post 'facerolls' to their blog using camera phones. We are also seeing social networking services developed specifically for mobile phones, such as Kink Community on 3 Australia.
  
  Yet there is also scope for the operator to manage, host and police user-generated content, providing the community and search structure required to make it appealing. The most successful example so far has been developed by 3 UK, with its 'See Me TV' service.
  
  Launched in October 2005, See Me TV has been very popular, in part because it appeals to a user base in which Big Brother and other reality TV type content is already popular. Users pay £0.50 to post a video via MMS to the See Me TV site. The most popular clips appear at the top of the browser menu, and 3 also adds categories so that customers can navigate to different types of clips. Viewer downloads are charged at a minimum of £0.10 each, of which 10% is returned to the originator of the content, with 3 pocketing the remainder. By September 2006, 3 had received more than 100,000 video clips from customers willing to share their recordings, with an average of over 1 million downloads per month. It had paid out a total of £250,000 to creators of the content, and recorded a tidy gross margin of 90%. 3 polices the content to ensure that no pornographic or violent material is posted - however, there is some flexibility here, as the most popular categories are pin-up type material and slapstick humor (people falling over seems perennially popular).
  
  3 pays cash to the providers of the content 45 days in arrears via PayPal's MassPay service, but only when the content provider has accumulated £10 worth of value. A side benefit for 3 is that it gains marketing information about its subscriber base - contributors have to register a valid email address and PayPal account in order to contribute to See Me TV.
  
  One of the main benefits of the See Me TV model is that there are very few other parties in the value chain to take a cut. Compare this with the model for music downloads, where the online store, the artist, the record label and the copyright royalty holder can all legitimately claim a slice, as illustrated in the music download example in Figure 1.
  
  
  
  Fig. 1 Revenue split for music downloads delivered over mobile (Source: Ovum)
  
  This has eroded operator margins - paradoxically, these were higher in the days of monochrome screens and simple ringtones, compared to the complexity and richness of multimedia content that is possible now.

Drivers for user-generated content over mobile

• Handset penetration
  
  The majority of consumers in developed markets own terminals with both colour screens and camera capabilities. We forecast that 967 million 'feature' phones (defined as 'voice-centric devices with multimedia or other enhanced data capability') will be shipped in 2007. Further, more customers are able to use these facilities: MMS interoperability between operators is now standard rather than the exception, and most users (while they may not be regular users) have sent picture messages and even video messages at least once.
  
  The problem, until now, has been that photo and video messaging has been an occasional function, a special adjunct to text-based messaging rather than a replacement. However, posting user-generated content to social networking sites and/or content sites such as 3's See Me TV creates the possibility of additional data traffic on the network.
  
  
• Familiarity with user-generated content
  
  This is growing, with customers being made aware of the possibilities of their mobile terminal for creating user-generated content in two ways:
  
  Much of the popular content on YouTube and other popular sites is recorded using the video function on camera phones. This in turn provides a trigger to other viewers to generate similar content
  
  User-generated content recorded on the mobile phone is increasingly featured on major news sites, such as BBC Online, and Yahoo! News. This was apparent in the aftermath of the London bombings in July 2005, when both websites posted material captured on the mobile phones of the public before their reporters could get to the scene.

Operator opportunities in user-generated content

• Implications for the operator portal
  
  UGC does have implications for the shape and feel of the operator's portal. We expect it to become more of a 'stock exchange' as opposed to a shopping mall. UGC will primarily be organized (as online) by tag and by viewing popularity, and the role of the operator will be minimal. Potentially, media owners and aggregators are sidelined, and the operator is reduced to a 'bit-pipe' provider. However, such services are a useful adjunct to a high-profile licensed media model that is taking both time and money to build.
  
  This said, YouTube was created by its two founders after they noticed how difficult it was to share videos on mobile phones at a dinner party! Much of the opportunity with user-generated content depends on making it as easy as possible to share and view the content that users increasingly want to view.
  
  No mobile operator has the user base to promote this level of self-selection in the 'long tail' of consumer preference. However, it is easier for some operators than others: 3 UK has a strong appeal to the 16-30 segments, and thus a wider base of users to whom See Me TV would appeal.
  
  In the second quarter of 2006 we saw a movement towards the 'stock exchange' model in the launch of TheContentMarket.com by digital commerce platform-provider Qpass. This encourages mobile subscribers to effectively create their own portal, receiving a URL, a WAP address and an optional customer ID. The Qpass system enables the creation of short codes with a WAP link to the 'store' and every piece of content the 'provider' uploads. Qpass also helps with pricing, with five defined pricing levels for users to choose from.
  
  
• Navigation and 'tagging' is crucial
  
  The extent to which the operator guides the user experience and organises the material is crucial. With a limited screen and navigational tools, the user must be more certain that he/she wants the clip (and therefore knows enough about it to make the judgement) before clicking on 'download'. Some operators have experienced issues managing this: the requirement for a mobile portal to be simple and uncluttered makes the navigation issue far more difficult than it is on the web.
  
  
• Capitalizing on user-generated content: operator and vendor initiatives
  
  Operators and vendors have already taken considerable steps to make the uploading of content to the network much easier.
  
  Handset vendors have worked to make the provisioning of MMS much easier: MMS is now typically configured 'out of the box', and picture file sizes are more easily customisable to facilitate uploading at a variety of different network speeds.
  
  Handset vendors have partnered with online content aggregators. For example, Nokia has partnered with online photo portal Flickr to enable users of its Nseries devices to post content to the web much more easily.
  
  Integrated network operators with an ISP offering are making it easier to post to a user's blog via either the mobile device or the fixed Internet. For example, Telstra's BigBlog service allows Telstra mobile subscribers to post to the blog directly from their mobile phone.
  
  These services are commendable, and allow for incremental growth in user-generated services. However, this is still being conducted within constraints defined by the operator.
  
  We believe that the key to the explosion of UGC online has been the open architecture created by sites such as YouTube and Flickr. Coupled with faster speeds (benefiting both browsing and uploading), this has enabled users to rapidly 'self-segment' and find and post content that is compelling to themselves and others.
  
  If we are to see a similar amount of activity in the mobile area, operators need to take heed of this requirement for openness.