Latest Big Content Plays Use Subscription Model, Not Ad Support

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NEW YORK (AdAge.com) -- Despite the glowing predictions of the wireless industry, advertising and cellphone-based content distribution do not appear to be jelling well yet. The latest big wireless content plays are exclusively subscription based and fear of consumer backlash is one of the reasons for that.
One analyst suggested that subscription models would dominate the emerging cellphone content distribution business until a critical mass of consumers begins to feel the 'digital sticker shock' of their ongoing purchases.

Ad resistance
“The day they put an ad on my cellphone I’m going to hand it back,” said Shelly Palmer, author of Television Disrupted -- The Transition From Network to Networked TV. Mr. Palmer, who is the chairman of the Advanced Media Committee of National Academy of Television Arts and Sciences, illustrates the problem facing media companies looking to capitalize on their archives via wireless platforms.

Mr. Palmer needn’t worry. Despite marketers’ obvious interest in mobile ad options, and a host of smaller players in the space making bold pronouncements for the future of cellphone marketing, the advertisers are nowhere in sight. At least not yet, and certainly not on new services from Fox Corp. and CBS Corp. Fox Mobile Entertainment is launching global phone-content company Mobizzo, offering premium content at $5.99 a month, while CBS is rolling out two news products, “CBS News to Go” and Entertainment Tonight branded “ET to Go,” priced respectively at 99¢ cents and $3.99 a month.

Only 4 million video-equipped
While there are about 200 million cellphone users in the U.S., only around 4 million are video-equipped, and marketers have yet to strike out and do for mobile what BMW Films did for the online in 2001.

Cyriac Roeding, VP-wireless at CBS, said advertisers aren’t involved in the subscription-video products yet because “we’re creating a lot of things on the sly and advertisers need a lot longer lead time. It’s about getting the two development cycles aligned.”

Besides the news alerts, the Eye Network has other projects in development, including a mobile soap opera and an online shop where subscribers can buy wallpaper and ringtones. Both offer the potential for ad involvement, according to Mr. Roeding.

Mr. Palmer, who is a new-media consultant to the likes of ABC network, explained why U.S. advertisers have been largely absent from the mobile landscape. “If I want to buy 18-to-49s there’s a language for buying it; regions, spot buy vs. national buy,” he said. “None of that packaging exists [in the wireless universe]. Every single deal would have to be negotiated on every aspect and that’s too much grief.”

Marketer interest in cellphone audience
Nevertheless, a survey by Airwide Solutions, a mobile software company, suggests that there’s a huge appetite among marketers to get connected to cellphones, given their very personal nature. The survey, published Feb. 27, claims that 89% of major brands are planning to market via mobile phones by 2008, and more than half of brands plan to spend between 5% and 25% of their marketing budget in the medium in the next five years.

Tim Hanlon, senior VP-ventures at Denuo, the media-futures practice at Publicis Groupe, agrees that eventually advertisers will play a bigger role in the wireless universe once consumers start feeling “digital sticker shock,” as they add up all the seemingly small charges for new content. When that point arrives, he said, “judicious ad messaging could and should have a role.”

A number of commentators feel that wireless carriers are standing in the way of progress and suggest that carriers want to protect a pricing model that favors subscriptions over a wide array of free ad-supported content that cuts them out of the revenue picture.

“Carriers are in danger of replicating the arrogance and ignorance of cable operators when it comes to video on demand,” said Mr. Hanlon.

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