the goose

I am i n blood, steeped so far that should I wade no more, returning were as tedious as go o’er

It has been just over a month since I started offering a way for people to pay for @replies on agtweet.  I went for a 3 tiered pricing plan of €3, €9 and €16.  Within a couple of days I had 3 €3 subscription and a week later there was my first €16 subscription.  Things were looking reasonable.  Full sure of its passive rise to stardom I pretty much headed off into the wilds of Argentina for month.

When I came back, there was some good news and some bad news.

The good News

Everything was still working.  The inbound SMS modems were holding up and the replies were being delivered correctly.  This is actually better news that it may at first sound.  I know from my experience running SmartNote that SMS services don’t always run smoothly.  There were no customer complaints waiting for me.   This might be partly due to the fact that agtweet isn’t a line of business service.  If a tweet doesn’t get delivered, its not the end of the world.  Having a service which people are reliant on dramatically ups your support cost which pretty soon can mean having full time support which would kill this little project straight away.  I’m interested in an automated income, not one I have to nurse maid.

The number of tweets sent through agtweet also seemed to be going the right direction. It is not quiet a hockey stick but there is at least healthy growth in the number of tweets sent via agtweet.

The number of tweets sent in via agtweet

So – agtweet is cheap to run.

The Bad News

I had kinda hoped for the mythical viral marketing effect that would skyrocket the number of new users.  As it turns out, with my decreased tweeting (as I was away) there seems to be a consumat decrease in traffic.

New subscriptions declined in October.

In total there has been €43 in sales made up for 3, €3 a month subs and one €16.  Unfortunatly the €16 sub failed on the second month which is the problem with subscription services – you are forever trying to keep up with cards that fail or expire etc.  More worryingly, there weren’t really any new sales.

Much easier than experimenting is sending out a poll and asking people why they weren’t coughing up.  It turns out that at least part of the answer is that many don’t have a credit or laser card and wanted to pay by ‘credit’ or ‘premium rate text’ as it has been rebranded.

Previous surveys have told me that people do what they do rather than do what they say so I wanted a cheap way to test this a little more before taking it at face value.  Onebip.com integration took me about 3 hours and about 12 hours later I had racked up another 5 subscribers.  Not bad going.  I don’t really like the onebip.com solution however as while the tool itself is lovely, it requires a login an people can only pay from in front of their computers.  Much nicer would be able to activate your account when you were out in about.  I did some phoning around and after getting no small amount of condescending feedback from a few premium rate service providers, Zamano eventually came up trumps in helping me get off the ground.

Now the trick with premium rate services is that the operators and service providers take a fair old whack of the revenue.  Out of €2.50 premium rate text, I’d be left with between 95c and €1.41 depending on the network operator.  I’d still have to pay for actually sending out replies which are now costing me 2.5 cent per message.  The table below goes through the differences in billing 30c a message for each reply and charging €2.50 for 10 messages.

The only other approach would be to bill each @reply using the 30c tariff.  The problem here is that the split gets less favorable, the smaller the amount, and its actually cheaper to sell 10 replies for €2.50 (25cent per reply) for the consumer and marginally more profitable for me to bill €2.50 once and pay for 10 outgoing text messages.

So why bother with the premium rate texts at all if the revenue shares are so harsh.

The answer is reach. The basic theory goes that more people will be able to pay by mobile phone than will be arsed to take out a credit card and enter details online.  This is because paying by credit card is difficult but also, in  theory, users can sign up from anywhere.  More importantly, they are more likely to be out and about and want to start receiving replies rather than stuck in from of their computer.  Using a premium rate text they can do this.  So far, I have 4 subscribers paying by credit card.  On the meteor customers the margin on this is about 95% after credit card processing fees are taken into account.  This compares with a 60% processing fee for paying by mobile.  However, so long as twice as many people sign up by phone as by credit card, its still worth while.  The trick will be in not canabalising the credit card sales.   To try and achieve this the credit card deal is considerably more attractive (5c a message) compared to the mobile rate (25c a message).

To subscribe, or not to subscribe

Frankly, there has been a lot less resistance to subscriptions than I had expected.  Polls seem to indicate that not that many people are put off by it.  One nice feature of charging by premium rate text is that you rebill whenever you like.  This means you can have a semi-subscription.  This means you only rebill people when their existing credit runs out.  For the consumer that means that they don’t pay unless they use the service.  At the same time, they don’t have to make a whole new buying decision every time they run out of text.  The regulator requires that you notify people if they have spent more than €20 as a reminder but this is a lot less onerous then requiring them to re-sign up every 10 messages.