A Ringing Headache? - Forbes.com
A Ringing Headache? - Forbes.comSMS.AC
Business In The Beltway
A Ringing Headache?
Matthew Swibel, 06.22.05, 9:55 AM ET
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WASHINGTON, D.C. - Text messaging friends is soooo yesterday, why even old folks do it. The Pew Internet and American Life Project estimates more than a quarter of adults now regularly participate in text messaging through cell phones and personal digital assistants. Nearly 5 billion text messages get sent and received via mobile phones each month in the U.S., according to the Cellular Telecommunications and Internet Association.
What's hot and new now--just ask your kids--is sending and receiving ringtones, music and video clips from your friends via your mobile phone. Or joining a mobile phone community variant of the Yahoo! (nasdaq: YHOO - news - people ) groups you've been a member of for years and then swapping clips and more with a whole group of new friends. Thanks to cell phone messaging, a few ringtones have become as widely distributed as pop music albums.
That means the next battle over copyright protection for music and video could be fought on cellular turf.
Fearing a similar fate to Napster (nasdaq: NAPS - news - people ), one wireless communications company is taking the initiative, sending its executives to Capitol Hill to start briefing legislators on the looming copyright conflict. SMS.ac develops technology to allow text and multimedia messages to be sent to wireless devices. It claims to have 40 million users of its technology in more than 180 countries, people who belong to 400,000 different groups communicating via short messaging.
Ringtones and sound and video excerpts distributed by cell phone users could face scrutiny by those who have similarly sought to control and legislate the distribution of content over the Internet. In 1998, Congress passed the Digital Millennium Copyright Act to protect copyrighted material in an environment--such as the Internet--that poses special concerns for copyright owners.
"If fair use [of digital media] continues to be a gray area," says Greg Wilfahrt, co-founder and executive vice president of SMS.ac, "then the mobile phone content space will become wholly litigious."
So Wilfahrt and co-founder Michael Pousti expect to be spending more time on Capitol Hill as their closely held San Diego-based company, SMS.ac, grows. Its users can opt-in for content according to interests: dating, travel, fashion, faith, music, entertainment, news, health, sports, games, shopping. Users post pictures with online profiles on the Web site and search the SMS.ac database for friends. Just how wide is the selection? A Romanian-based club for fans of rapper Vanilla Ice, who recently performed on NBC's television show Hit Me Baby One More Time, counts 18,000 members.
SMS.ac says it is adding 750,000 club members per month--each of whom must agree to watching one daily advertisement sent to their phone, plus pay for message units. Cell customers around the globe see their monthly SMS.ac bills on their wireless carrier's statements, thanks to partnerships between SMS.ac and 115 carriers, including Verizon Wireless, the joint venture of Verizon Communication (nyse: VZ - news - people ) and Vodaphone (nyse: VOD - news - people ); T-Mobile, a unit of Deutsche Telekom; Sprint (nyse: FON - news - people ); Nextel (nasdaq: NXTL - news - people ); South Africa's MTN Group and Globe Telecommunications of the Philippines. Members living in the U.K., currently the largest revenue pool of SMS.ac users, spend an average $20 a month on short messaging. No matter the locale, wireless carrier partners of SMS.ac get 50% of revenue in exchange for the billing arrangement.
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