Iknowwhatyoudidtoday: Making Money Easy

Pinger’s disruptive Textfree service is heading to Europe, and it’s doing it with the help of hottest buzzword around: gamification.

Pinger has managed to build a huge userbase in the United States by offering free text messaging without any major catches: users are given their own, real phone numbers, and they can send and receive text messages with any phone. And, most important — the app works on the iPod touch, which doesn’t otherwise have SMS functionality built-in. Pinger also launched a free voice calling service in December but lets users make free phone calls and earn minutes by completing basic offers. Pinger makes money off of these offers and by running ads in its mobile apps— to the tune of billions of impressions a month.

But the SMS situation in Europe makes international expansion a difficult affair. Cofounder Greg Woock explains that in the US, when a text message is exchanged both the sender and recipient ‘burn’ one of their texts — in other words, they’re both paying for it. Things are different in Europe, where only the sender pays for the text. The recipient pays nothing, but the carrier of the recipient does pay the sender’s carrier a few Euro cents. Yes, it’s a little confusing.

Woock says that this model doesn’t normally lend itself well to a free texting model, because Pinger could wind up owing carriers boatloads of cash if its users are receiving more texts than they’re sending. We’re talking many many millions of dollars owed if it could build a userbase as sizable as the one they have in the US.

But Pinger came up with as solution: it’s going to use game mechanics to ensure that users are sending and receiving the same number of text messages. That way Pinger will be paying European carriers the same amount the carriers are paying Pinger. The net result: Pinger can run a texting service that’s free of charge, and it can place ads on top of it through its mobile applications, the same way it has in the US. In theory Pinger could actually use the game mechanics to ensure users are sending more texts then they’re receiving, which would wind up with Pinger actually making money from the carriers.

The game mechanics themselves sound pretty straightforward: users are presented with a meter that’s at 100% when you’ve sent and received an equal number of text messages. If you send a message, that percentage drops a bit. Receive one, and it goes up. Pretty easy.

But what happens when you’ve dropped to 40% and are worried about being able to send more texts? The trick, Woock explains, is to tap into your social graph (he says the company consulted with Zygna for advice on this front). Textfree will prompt users to post updates to their Facebook News Feed inviting their friends to send them text messages, which in turn will boost their meter. I’d imagine this would be a little weird to see initially (“hey guys, please send me text messages!”) but no more so than a Zynga game that prompts you to ask your friend for helping watering some virtual plants.

I asked Woock how the European carriers felt about the model. He says that all of the carriers they’ve spoken too have been very supportive and see an opportunity for incremental revenue. And he adds that Pinger has applied for patents on the meter system that drives the equal flow of texting.

Pinger’s mobile app will be launching in a small test in Germany in the coming weeks (they want to make sure the model works). Assuming that goes well, it will be expanding throughout Europe in the near future.

Iknowwhatyoudidtoday

Monday, August 1, 2011

Making Money Easy

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