Offsetting the costs of free SMS?

I just read this cautionary tale on the Mippin blog where they explain why they've removed the ability to share a page via SMS:

In our first iteration we provided the ability for someone to add a message to their friend to give the incoming text some context e.g. "take a look at this.....". [However] a segment of the users began using Mippin as a free P2P messaging service despite the inconveniences of doing so. This actually generated over 95% of messages through Mippin.

Read the whole post to see examples - they also tried to reduce the text a user could enter to just a name, but users ended up cutting up their messages into really short ones and just sent *more* of them. (I'm not sure though if the users are sending the messages from their phones or from a PC - if its from their phones, they obviously have some sort of data plan.)

It seems to me that this is a massive opportunity for a company that can figure out how to offset the cost of bulk SMS messages with some other revenue stream. In the U.S. we have various services like TextMarks, 3Jam or Joopz that will let you send SMS from a PC or group messages, and they're free to the sender because (presumably) they get some sort of revenue stream from the operators, but this seems impossible in other parts of the world for whatever reason.

Bulk rates from Clickatel and others are like $0.015 $0.06 per message if you buy in the thousands, and probably somewhat much cheaper if you buy in the millions. But users obviously have a capacity to send thousands of messages a month by themselves, so it could cost serious bucks per user. The demand is huge though and so is the opportunity. Just like Mowser provides adaption services to mobile sites, I'd love to find a way of providing free SMS messages in the way that Mippin tried but removed. We're not anywhere near doing this, so I thought I'd just throw the idea out there.

My first thought is for intelligent limits, throttling and/or registration. For example, phone numbers can only be sent a few messages a day, or just 1 an hour or something so as to limit the ability to use the service as messaging. Also, requiring users to register before sending messages, and then limiting them to a certain number of messages to send as well. (This has the advantage of being able to upsell those registered users to paid packages of more messages).

Monetizing the messages seems to be a challenge - something that everyone from Twitter to companies like Mippin seem to have. Putting ads at the bottom of SMS messages doesn't work. I honestly don't know why, actually, but it's true. It seems like an obvious business model, but I've seen examples of it before - a company called Vazu for example used to have a Send To Phone PC app, but has since disappeared. If it did work, we'd have dozens of "hotmail" like SMS startups out there, and we don't. Instead, messaging is monetizing through custom clients or deals with carriers.

Adding to all this is the spam problem as well... open up free SMS and you'll get all sorts of slimeballs coming out of the woodwork to abuse the system. Trying to force users to a URL won't work, as you'll need to have a spot for the sender to include their name, and you get right back to Mippin's problems again.

There's got to be a way though, it seems like it's a "social" problem to be solved rather than a technical one: Figuring out a way to get users to use the messages in a way that provides a good service, in a cheap way, that gives a good investment for advertisers, yet isn't able to be abused by users or spammers.

Is there anything out there like this already?


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