Sunday, February 22, 2009

Notes from Day 3 of MWC-Finding the right (monetisation) strategy for LBS

Barcelona-Day 3 of Mobile World Congress: The 'Finding the Right Strategies for Location Based Services' seminar was all about answering the one key question: 'How does the mobile ecosystem monetise location?' year on from this question having been posed at the very same venue, and still no global truth has emerged.

The fact that at this year's seminar, Kurt Lyall from Tom Tom was present is significant. Tom Tom have been one of the few consistent players in the field to successfully monetise location, though not through mobile handsets. Tom Tom's lesson is that customers are willing to pay for (turn-by-turn) navigation and seem willing in the future to pay for search and other location services.

Olivier Laury from Bouygues Telecom was in a difficult spot on the panel: as an operator, he had to defend the punitive charges from roaming when using LBS, a clear brake on further market development. His defence of 'I'll lower my tariffs if my operator counterparty lowers his' is clearly unacceptable, with EU policy likely to continue rigorously attacking operators profit skimming on subscriber roaming.

Charles Morse from Garmin discussed the case of a company they own, Digital Cyclone, that delivers weather reports on their devices in a compelling way and has been very successful. Similiar successful examples of Location-related content whose intrinsic value justfies premium charging included ViaMichelin and Lonely Planet travel content.

The overall lesson? Ultimately the customer must be allowed to choose. Great content will attract customers more than anything else and a revenue model that is likely to work will offer a free basic service supported by ads or a premium ad-free service. The two models can also be combined:in Bouygues Telecom's experience, cross-over rates from basic subscribers to premium are as high as 15%.