Premium SMS Fundraising and Operator Revenue Share

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During SXSW, I ran into Scott Dudelson, who’s putting on premium SMS-based fundraiser for the Sweet Relief Musicians Fund. Justin over at MoPocket has a thorough rundown on Scott and the project, so check that out for more info on what he’s doing, but the basic idea is that people text “HEAL” to the shortcode 50555, and get a message back confirming they want to donate the $4.99 via their phone bill, and they’re then entered in the “Sweepstakes of Swag”, a drawing for some music memorabilia. Nothing revolutionary to our global readers, but it’s one of the first initiatives of its kind here in the US.

What struck me about Scott’s plan — apart from how widely it could be used — is the cost element. With content providers always complaining about how much of their revenues they have to give up to operators for reverse billing, a percentage-based system could hit charitable programs like this especially hard. What makes the problem more glaring is that the operators’ costs don’t scale in line with the consumer cost of the SMS. While one might argue the risk involved in fronting a consumer the $1.99 for a ringtone until their bill is due at the end of the month is less than the $4.99 from the Sweet Relief fundraiser, I’m not sure how much I’d agree.

This is where new mobile payment systems like PayPal come into the frame, exploiting the need for a more equitable revenue-sharing system. As I’ve said before, the impact will either come from PayPal making headway in the space, or by forcing operators to lower their cut. It seems especially egregious in this case since it’s a charitable offering — is there anybody out there than can speak to how non-US operators deal with this sort of thing?

[tags]paypal, sweet relief, shortcodes[/tag]

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