ALA CARTE OVERTURNS THE BUFFET. Usage based billing isn’t
only about volume but will increasingly be about quality, speed
and privacy. Voice telephony has historically been incredibly consistent
in terms of quality. We’ve not really had the need to think
of what level of quality we desired when making a voice call—they
were all essentially the same. The future will offer many new
choices for voice and data quality as systems will be increasingly
varied, each with it’s own particular application and price points.
Users needs are very diverse and willingness to pay is widely
varied. Similar versions of content are already billed differently
in media other than the Internet: One might pay $75 to
attend a concert in person, $40 for a pay-per-view showing on
TV, $30 for a recorded videotape, $20 for the CD, or choose to
listen to the same songs on the radio for free.
Although no one would argue that the concert is likely the
best quality, not all users are able or willing to attend. They can
still find value in alternative methods of accessing an artist’s
content. The same will be true in the Wireless Internet world.
Some will be willing to pay for multimedia news clips that show
full-motion video highlights of the news, sports, and weather.
Others may opt for a less expensive voice and still-image version
or a free simple text version. 185
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FREE
FREE. Someone else pays for what the users get. Maybe its
the content owners who forego payment in hopes of some
other future value, or sponsors might help defray costs via
advertising. This method is great for encouraging trials, but it
is difficult to sell that which had been free yesterday. We’ve all
encountered free stuff—remember those home cooked meals
as a kid? What do you think would have happened if mom
decided to start charging you after all these years? Can you
imagine your dad charging companies to advertise to you during
dinner in an attempt to defray household expenses?
the content owners who forego payment in hopes of some
other future value, or sponsors might help defray costs via
advertising. This method is great for encouraging trials, but it
is difficult to sell that which had been free yesterday. We’ve all
encountered free stuff—remember those home cooked meals
as a kid? What do you think would have happened if mom
decided to start charging you after all these years? Can you
imagine your dad charging companies to advertise to you during
dinner in an attempt to defray household expenses?
FLAT RATE ACCESS, ALL YOU CAN EAT OR BUCKET PLANS
FLAT RATE ACCESS, ALL YOU CAN EAT OR BUCKET PLANS. These
plans offer either unlimited access or at least more access than
the service provider thinks you are likely to consume. The
advent of the “bucket” plan rocked the cellular industry by giving
users a large enough “bucket” of voice minutes so that they
became less sensitive to the time spent on wireless calls.
Price is not dependent on how much is consumed. Light
users subsidize heavy users and everyone pays the same entry
fee. These plans are great for heavy users who worry about
going over budget and want predictable expenses. These pricing
plans are bad for light or infrequent users who don’t want
a periodic fee for less frequent usage.
These plans have worked well for voice in large part
because everyone understands how much they might use—not
everyone is sure of how much they will use new data services.
For this reason, flat rate plans can be bad for encouraging
a trial of new services when end users expect usage to be low.
It’s hard to assess how often you’ll use new content or services
until you have tried them for a while. But who wants to pay for
the month upfront before you know? Difficulty in canceling
subscriptions adds to the barrier for new services. Flat rate or
bucket plans are great for encouraging the trial of new services
when end users expect usage to be high or for frequent users
after they become familiar with typical usage and want to control
costs.
plans offer either unlimited access or at least more access than
the service provider thinks you are likely to consume. The
advent of the “bucket” plan rocked the cellular industry by giving
users a large enough “bucket” of voice minutes so that they
became less sensitive to the time spent on wireless calls.
Price is not dependent on how much is consumed. Light
users subsidize heavy users and everyone pays the same entry
fee. These plans are great for heavy users who worry about
going over budget and want predictable expenses. These pricing
plans are bad for light or infrequent users who don’t want
a periodic fee for less frequent usage.
These plans have worked well for voice in large part
because everyone understands how much they might use—not
everyone is sure of how much they will use new data services.
For this reason, flat rate plans can be bad for encouraging
a trial of new services when end users expect usage to be low.
It’s hard to assess how often you’ll use new content or services
until you have tried them for a while. But who wants to pay for
the month upfront before you know? Difficulty in canceling
subscriptions adds to the barrier for new services. Flat rate or
bucket plans are great for encouraging the trial of new services
when end users expect usage to be high or for frequent users
after they become familiar with typical usage and want to control
costs.
ENTER THE CASH REGISTER
Billing is not only a challenge in terms of method of payment
but it is an important part of the adoption process. Billing and
the pricing model used for selling content and services need to
adapt to the evolving product lifecycle. The degree of experience
and acceptance level of the target market calls for a varied
approach when pricing new content and services. There are
three basic billing/pricing philosophies:
• Free
• Flat rate (all you can eat)
• Usage based (ala carte) 184
but it is an important part of the adoption process. Billing and
the pricing model used for selling content and services need to
adapt to the evolving product lifecycle. The degree of experience
and acceptance level of the target market calls for a varied
approach when pricing new content and services. There are
three basic billing/pricing philosophies:
• Free
• Flat rate (all you can eat)
• Usage based (ala carte) 184
OK, NOW WHO’S GOING TO PAY FOR ALL THIS?
Billing is one of the more important variables that will impact
the success of a Wireless Internet. It will be increasingly
important to have multiple billing models to suit a wide range
of users. Users will vary demographically, geographically, by
access type, and by media and content type as well as by the
need to have billing information filtered or summarized. Billing
not only provides access and content providers with a source of
revenue but it will increasingly provide detail that helps to
determine which type of content is offered and promoted.
The early days of Internet revealed its inherent difficulty for
billing. The Internet was (and still is, to some degree) synonymous
with “free.” Users only pay for access; most content is free. It is difficult
to assess value of content because users of content do not
always agree about what is valuable and what is not. We can
assume that those who visit a particular site receive value from it,
but it is still hard to quantify that value in terms of dollar amounts.
The concept of value is—anything is worth what the market
will bear. The early Internet was more like an open warehouse
than a store—you found what you wanted and took as much of
it as you liked. Because the content was in digital format, you
could take as much as you wanted and still leave the same
amount for another guy. The supply was virtually endless: A digital
content “inventory” doesn’t get depleted except in terms of
availability via an access channel. If too many people try to take
out—or download—content at once, you have the equivalent of
waiting in a checkout lane. Bandwidth limitations place the only
restriction on what can be downloaded from the free Internet.
Because there was no system in place to request money in
exchange for content, it was difficult to determine if the content
was worth one cent or one million dollars. After all, it’s amazing
what people will take when it’s for free! Originally, this didn’t
bother the content-creation guys; they all thought that they
would make money later, after everyone was hooked on the idea
of getting content from their particular “shop.” Branding was the
byword, and the great World Wide Web was an open shopping
mall of opportunities. Unfortunately, this didn’t work too well.
Giving content away cost an amazing amount of real money. 183
the success of a Wireless Internet. It will be increasingly
important to have multiple billing models to suit a wide range
of users. Users will vary demographically, geographically, by
access type, and by media and content type as well as by the
need to have billing information filtered or summarized. Billing
not only provides access and content providers with a source of
revenue but it will increasingly provide detail that helps to
determine which type of content is offered and promoted.
The early days of Internet revealed its inherent difficulty for
billing. The Internet was (and still is, to some degree) synonymous
with “free.” Users only pay for access; most content is free. It is difficult
to assess value of content because users of content do not
always agree about what is valuable and what is not. We can
assume that those who visit a particular site receive value from it,
but it is still hard to quantify that value in terms of dollar amounts.
The concept of value is—anything is worth what the market
will bear. The early Internet was more like an open warehouse
than a store—you found what you wanted and took as much of
it as you liked. Because the content was in digital format, you
could take as much as you wanted and still leave the same
amount for another guy. The supply was virtually endless: A digital
content “inventory” doesn’t get depleted except in terms of
availability via an access channel. If too many people try to take
out—or download—content at once, you have the equivalent of
waiting in a checkout lane. Bandwidth limitations place the only
restriction on what can be downloaded from the free Internet.
Because there was no system in place to request money in
exchange for content, it was difficult to determine if the content
was worth one cent or one million dollars. After all, it’s amazing
what people will take when it’s for free! Originally, this didn’t
bother the content-creation guys; they all thought that they
would make money later, after everyone was hooked on the idea
of getting content from their particular “shop.” Branding was the
byword, and the great World Wide Web was an open shopping
mall of opportunities. Unfortunately, this didn’t work too well.
Giving content away cost an amazing amount of real money. 183
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