I am delighted to launch AIME’s new blog – well the Chairman has to do something to earn his crust! This blog will be updated regularly by industry members operating in the interactive media sector using micropayments, predominantly premium rate, as their business model.
Over the past three years, AIME’s membership has grown impressively and we have a broad representation of companies operating at all levels of our industry ecosystem including content providers, service providers and payment enablers. Millions of consumers use our services every day.
Last week, industry regulatory agency PhonepayPlus presented a topline view of its soon to be published industry research, Current and Future Market UK Premium Services 2011.
We look forward to the full copy of the report, but there are some interesting points from the initial presentation, which highlight some of the challenges and opportunities facing our industry.
The key trends are:
- Continued growth of digitalisation with an ever increasing variety of platforms which consumers interact through. In the 1990’s, I remember managing voting for Song For Europe whereby viewers could vote via a landline only. Nowadays, viewers can vote not only using their landline but also via SMS, red button, mobile applications, on-line Facebook, soon to launch Voice Short Codes and more recently in the US via Twitter
- Greater availability of free information and content from areas such as user generated content and ad-subsidised models. This, combined with ever-increasing internet access from mobile and mobile apps which are growing rapidly in theUK but not (yet) really embracing traditional premium rate at the same pace
- Proliferation of social networks, creating new addressable markets for social games and applications. The importance of social networks as a discovery mechanism for premium rate has increased fivefold in just 12 months
- Rapid growth of new payment mechanisms including credit card, itunes, PayPal, Payforit etc. together with a broadening spectrum of payouts from these mechanisms and providers. One of the things holding back premium rate is the level of pay outs which are not generous enough from some players – no guesses who! Others such as PayPal who have offered reduced rates for micropayments have become increasingly competitive. This is highlighted in the report by 64% of consumers having used PayPal to pay for services under £15, contrasted by an average of 15% for premium rate
- An increasingly global marketplace. Premium rate as a pure payment mechanic is low friction and ubiquitous, however the complexity of local market regulation and operator rules means it is often at a disadvantage to single platform global payment solutions
It’s not only the trends identified above which need to be addressed but also ensuring that the consumer experience of new interactive services and channels is straight forward with simplicity being the key. All too often, the consumer interface is not designed by people who act and think as consumers and wonder why response rates remain low. I believe that the consumer experience needs to be addressed before a monetisation strategy can be implemented.
As an industry, we are making real progress in providing a higher standard of offering to our customers (perhaps a better word than the generic consumer these days!). AIME is an advocate of self-regulation with members working collectively to promote responsible services. It is encouraging to note from the report that only 3% of users cited ‘lack of trust’ as a reason not to use interactive services (down from 20% 3 years ago).
However, we can’t hide from the fact that despite all of this opportunity, industry revenues were over 6% down year-on-year in 2011 from £816m to £764m. This is mainly due to Directory Enquiries (DQ) showing a 10% decline, perhaps not surprising due to Google! However, more relevant is the fact that premium rate as part of the mainstream micropayments environment has lost share. This is why we are seeking to broaden AIME’s representation and to encourage members to engage in new payment models.
AIME has also shifted its strategy with the formation of the Future Media Group – this is designed to address the opportunities within this converging media landscape and to seek to rebuild revenues.
So here are some selected, key takeaways from the report for the industry:
- For Content Providers there is a requirement to work with an increasing variety of payment enablers to ensure that consumer preferences are catered for, striking the right balance between broadening payment options and providing clarity for consumers who are often suspicious of new payment mechanisms
- For Service Providers, it is vital to adopt an open pricing policy ensuring the highest degree of price transparency to users of services. Lack of adequate pricing information is still cited as the biggest source of frustration amongst users of interactive services. Not to forget the requirement for adequate consumer redress and care
- For Payment Enablers, the priority is to build platforms which can operate free of fraud
- For Regulators, the challenge is to regulate effectively but to be flexible and to ensure a consultative approach with industry. I believe that AIME has made great strides forward in this area with its relationship with PhonepayPlus
So, I hope that this has been an informative launch of our industry blog and apologies if it’s not! With convergence, our industry has never faced so many exciting opportunities and challenges, customers of our industry have never had so much choice and we’re lucky to have so many pioneers and innovators amongst our midst to build on this….