I was quoted recently in a WSJ article on SMS-based social networking platform SMSGupShup. The article delved into the business model for SMS based social networking platforms in India and focused on the need to limit usage to control outgoing SMS costs –
Analysts say restricting the number of user exchanges is the only option SMS GupShup has to hold down costs. “If 1,000 people in a group can keep sending messages to everyone else, that cost quickly becomes unmanageable,” said Gaurav Mishra, CEO of 2020 Social, a social-networking media consultancy based in New Delhi.
SMSGupShup is often compared to Twitter, especially in US media, but the comparison is problematic because SMSGupShup is essentially a group SMS service. It doesn’t have a searchable public timeline, a robust API and application ecosystem, or the highly engaged user behavior we see on Twitter that is driven by public one-to-one conversations.
Most importantly, the default user behavior on Twitter is to “create” a status update, but the default user behavior on SMSGupShup is to “consume” updates created by others. I’ll not be surprised if less than 5% of SMSGupShup’s 26 million users have ever created an update, or created a profile.
SMSGupShup is hesitant to change the user behavior from “consume” to “create” because sending text messages on behalf of users costs serious money. So, it has limited the number of messages group creators can send daily and restricted many-to-many messaging to small groups. It’s focusing on creating new revenue streams by creating custom channels for brands, opening up its API to application developers and creating an online marketplace for subscription plans, premium groups, and merchandise.
However, SMSGupShup will find it difficult to become an attractive platform for brands to engage with consumers, unless the default user behavior on the platform changes from “consume” to “create”. Brands use Twitter for market research, lead generation, viral marketing and customer support: use cases that are made possible by users talking to each other and to the brands themselves.
Given the compulsion to control outgoing SMS costs, it won’t be an easy change. Perhaps, the solution is to segment the users into those who have access to the mobile web and those don’t. For users with web access, SMSGupShup can become a “social platform” driven by compulsively updated status messages. For users without web access, SMSGupShup can remain an “alerts platform” where they subscribe to groups and receive SMS updates. The two sets of users will have an overlap, though, and the success of this web-SMS hybrid model will depend on how SMSGupShup manages this overlap.
Cross-posted at 2020 Social: Because Business is Social.
