Auto Apps Might Blend M2M, Ad Revenue Models

Generally speaking, you can assume that Internet application providers are going to resist sharing their revenue with ISPs, even if ISPs want to create “two-sided” revenue models where some significant percentage of revenue is earned from business partners, not direct payments by end users.

But there are some scenarios where advertising, machine-to-machine apps and payments by app providers to ISPs will make sense. If you think about the way Amazon Kindle content is delivered by a mobile operator, with that usage paid for by Amazon, you get the idea.

How many more such logical examples of sponsored consumption might exist, is the issue. Automobile applications seem likely to emerge, sometime relatively soon, as a venue for such sponsored consumption.

What isn’t yet clear is which models will become most popular. Conceptually, one can imagine a Kindle content model where communications are “free to the end user” in the context of a transaction of some type. In other cases a service provider will bill the end user and the ISP will be paid by the service provider.

In other cases a specific merchant might subsidize communications cost in exchange for the right to deliver a message (the difference between “buying an ad” and “sharing revenue with an ISP” sometimes will be a fuzzy matter).

There are of course many consumer privacy and consent issues, but an automobile is among the best location-aware devices other than the mobile phone, if it is outfitted with Internet communications and GPS.

And some amount of transaction activity can be predicted, in some cases, as when a user programs driving directions from Washington, D.C. to New York, using I-95.

In the past, entrepreneurs have experimented, largely unsuccessfully, with subsidized communications that involve taking surveys or listening to ads in exchange for communications usage. Usage in exchange for referrals or sharing a connection are some of the other ways subsidies are possible.

As a rule, the cost of running such programs, compared with the perceived value to a sponsor or end user, are important. As always, the value of a particular completed action, at some volume, is weighed by the sponsor against the cost of campaigns to induce such actions.