Blog Post

@ CTIA: Qpass On Ringtone Piracy And Revenue Leakage

Qpass was cruising CTIA preaching about ringtone piracy and a “code of best practice” against it…during my chat with Qpass I found out the ringtone piracy spiel is just a handy example. I spoke with Claudia Poepperl, Director of Marketing for Qpass and board director of the Mobile Entertainment Forum, and Steve Shivers, SVP, Corporate Strategy and Development, Qpass.
They say everyone’s worried about protecting the content once it’s on the handset but not many companies are paying much attention to protecting the content before it gets on there…which is a good point. Copy-protection on handsets only works if the files on the device are tagged for it.
Qpass also claim a lot of money is lost through leakage (delivering content and not billing for it) — which is unsurprising given the products it sells — and points out that as mobile content developers go public the accounting requirements become a lot more stringent, and they’ll want accurate and comprehensive information from the carriers to comply with that. Qpass outlined a number of ways consumers could get content without paying for it (which I won’t go into here, sorry)…I asked some carriers about these methods but they didn’t see them as a problem — I don’t know whether that’s because it isn’t a problem or because carriers haven’t noticed yet. Qpass estimated 18% of revenue from premium services around the world is leaking out of the system.
As to the study, their final figure of “shoplifting” equated to 20-35% of sales. A third of the online stores they tested were insecure and two-thirds of the samples were the right length for a ringtone, but that can’t really be extrapolated to actual losses…but Qpass tried.
They took the part of the revenue that was sold off-portal (based on Jupiter Research figures) and then took the proportion of off-portal sales that were bought online. Then one third of the sites is insecure, and Qpass estimate the percentage of people actually taking the ringtones without paying them was 15% in 2004 (which will rise to 25% in 2007).
Qpass also point out that they didn’t take into account superdistribution, so the figure could be higher…The figures for 2004 was $50 million for Europe and $5 million for the US, and for 2005-2007 going up to to $336 million for Europe and $139 million for the US.
The point of all this is to get content sellers to secure their wares — and the really important point is that it is very, very easy. For ringtones, for example, all the sellers have to do to make it secure is to use flash, streaming or overlay technology (or DRM, but I don’t think that’s a very good choice for samples).
Whether the problem is a serious as Qpass claims or not I have no idea…but companies in the industry should think about what they say, at least to prevent it becoming a problem in the future.
A PDF of the Qpass study is available here.