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]
Carriers’ take of approximately 40% of premium content, even in the case of fundraising, is quite disturbing. We’ve had non-profits talk with us about text message based fundraising, but so far it’s difficult to get them on board. It’s not so much they mind the carriers’ take, it’s the public outcry of almost half of their donation going to a profit company that they probably feel they are already giving too much money to.
You’re right, PayPal Mobile, or similar services in the works may be able to make mobile fundraising more attractive and put pressure on the carriers to reduce their take. It would benfit for the carriers because of good PR and it would increase the use of text messaging by their customers who would likely then use text messaging for other purposes that justifiably profit the carriers.
In the UK the operator cut is less - about 25% on a GBP 1.50 text. But after that the aggregator needs to take their cut, then whoever’s fronting the deal, until finally the customer gets their slice.
For charities, the deal’s not attractive to the public because so much of their donation disappears en route, but I’ve worked on one event in the UK where the carriers agreed to donate their share at the end of the event, and I believe this is common for big charity events (ie events on TV). This does take some setting up, obviously, and the more obscure the charity, or the less mainstream the cause, the less likely the operators are to play along.
And, of course, it’s easier if you only have five networks to talk to!
The other thing to remember is that VAT is payed on the £1.50, so after VAT the value is only about £1.27. VAT isn’t payed on donations to charities through other routes, which is why SMS looks expensive as a way of doing donations.