Cellphones' Coming Attraction: You!

(c) WSJ

On See Me TV, a service offered by European cellphone provider 3, users can watch goofy homemade video clips of a man crashing off his backyard trampoline, a dirt biker jumping over a deep ditch or a blond girl belting out a creepy pop song.

But it may offer something else more serious: a glimpse into how the user-generated content that has transformed the Internet -- blogs, videos and photos -- could also change the mobile-phone business, perhaps at the expense of some of the Web's biggest players.

See Me TV allows users to shoot video on their mobile phones, bypass Web giants like Google Inc.'s YouTube or Yahoo Inc. and post it to a gallery where it can be watched by others on their phones. Users downloaded 12 million video clips for between 20 cents to $1.35 a pop in the first 12 months after 3, a United Kingdom-based subsidiary of Hong Kong's Hutchison Whampoa Ltd., launched See Me TV in 2005. To spur usage, people who contribute video clips actually get paid for it: 3 says it shelled out about half a million dollars to users over the same period. Contributors get paid 10% of the revenue generated when people download their clip, and are paid in cash via PayPal accounts.

See Me TV and several services like it in the U.K. and in Asia are among the first to offer cellphone users the same kind of interactive, self-generated content that they are lapping up on their home or laptop computers. These services are seen as the latest weapons in a broader turf war between Internet companies and telecom operators: As more people go online via their mobile phones, a new market for ads will be created. Beyond just selling services, phone companies want to grab a piece of that nascent ad market, while companies like Yahoo and Google want to extend their Web advertising dominance to cellphones. In this evolving landscape, the Web companies and the telecoms are sometimes going it alone and sometimes joining forces.

News Corp.'s MySpace signed a deal with Vodafone Group PLC in early February that will allow users in Europe to easily post comments, photos, and eventually videos, to the social-networking site while on the go. MySpace has a similar deal with AT&T Inc. in the U.S. for which users pay $2.99 a month. YouTube and Verizon Communications Inc. have joined forces in the U.S. to bring some of the Web site's videos to Verizon mobile customers as part of the carrier's $15-a-month V Cast service.

So far, however, some of these upstart services in the U.K. have been beating the bigger U.S. Internet players to market with user-generated content by offering more interactivity, and easier and faster uploading of videos from mobile phones. For example, people using the YouTube service with Verizon must first post their videos to YouTube's Web site and hope to be among the 50 clips selected for V Cast each week.

Mobile services like 3's See Me TV feature homemade videos.

Mobile content and services such as browsing the Internet on a cellphone generate a large and growing piece of mobile operators' revenues, and is forecast to rise to $150.2 billion world-wide in 2011, up from $89.3 billion in 2006, according to Informa Telecoms & Media. In Europe, content and services already account for 17.7% of operators' revenues, compared with 16.3% in Asia and 8.8% in North America.

The hope is that making user-generated content easier to use will help attract customers as the mobile Web market explodes.

"For mobile-phone operators, the advantage is that this kind of stuff drives traffic around the network, and that's revenue for them," said Eden Zoller, analyst at Ovum.

Last July, 02, the U.K. subsidiary of Spain's Telefónica SA, launched Look at Me, which also allows mobile-phone users to shoot, upload and exchange videos. Some of the most watched clips on Look at Me recently included an obese woman dancing in an undershirt while singing the pop song "I'm Too Sexy," and a man doing odd contortions with his tongue. The company hasn't released data on usage yet.

Graeme Oxby, marketing director at 3 UK, says such services make customers more loyal to 3, which has 3.75 million subscribers in the U.K. and networks in Italy, the Netherlands, Austria, Sweden and Ireland. "If customers are engaging and interacting, the chances are they will stay with us and not switch to one of our competitors," said Mr. Oxby. "That has an enormous economic benefit to our business."

There are hurdles: Blogging and uploading content from mobile phones is still in its infancy and has been difficult for consumers to figure out, leaving it the domain of cellphone aficionados. Also, viewing Internet pages from a phone can be tricky because formatting isn't the same and the screens are tiny. And, of course, companies are still working out the business model.

But Sanjiv Ahuja, chief executive of Orange, the subsidiary and brand of France Télécom, says customer demand is the real reason the operators have to create these services, even if the business case is still taking shape. "Customers want this stuff. We have to serve the customers," says Mr. Ahuja. "It's up to us to figure out the appropriate business model and prices that work."

02's Look at Me features homemade videos.

Orange is developing its own services and hasn't struck a deal with a big Internet player to date. It recently launched Pikeo, a photo-sharing site to which people can upload photos taken on their mobile phones directly to the Internet without going through their computer. It plans to add a service to upload video taken on phones to the site soon.

The early experience with See Me TV provides insight into the difficulties of turning user-generated cellphone content into a service people will pay for. 3 worked with a U.K. start-up called YoSpace to design the service and launched it only 12 weeks after coming up with the concept.

One challenge 3 had to overcome was making sure the service could be used by all of its customers, even if they had a phone that was several years old. Assuring compatibility took more work upfront when designing the software but was key to a successful launch, said 3's Mr. Oxby.

The company also decided to let all customers access See Me TV from their phones without paying any extra subscription fees or charges for downloading big data files. "Consumers are extremely price-sensitive and don't want to be surprised when they get their bill at the end of the month," said David Springall, the chief technology officer for YoSpace. "This stuff is considered throw-away content. You have to rely on volume, not price to make the business model fly." (YoSpace also developed and runs 02's Look at Me, and is seeking contracts with others in Europe and the U.S.)

Because See Me TV's content is user-generated, it requires a lot of adult supervision to ensure it doesn't cross lines of good taste or legality. A dozen people at YoSpace's offices in London watch every video that is submitted and screen out those deemed too raunchy, too boring or in violation of copyright. Some 80% of videos submitted never make it onto See Me TV.

"The moderation is a key part of the service," said Mr. Springall, adding that while users might spend 20 minutes surfing on YouTube to find a funny video, they had a shorter attention span on a mobile phone. "If the user can't find, download and watch a clip in less than five minutes, they'll be disappointed and won't come back."

More videos from SeeMeTV:

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