It was 2005-06, and the mobile value added services market that I had single-handedly curated in India was collapsing, leading to bullying and pushing. That was my moment of ‘maximum pain’ and made me realise what I had to do. Before India, we had created a mobile SMS platform, Mobile2Win, in China. In order to engage customers using TV as a medium, we created SMS-based campaigns around branded content. Coca-Cola became one of our biggest customers using the simple concept of “SMS ‘Coke’ to 1234 to win a prize”. We became leaders in that before bringing the technology to India in 2003-04.
As we started to engage with TV channels, I ran into Sony Entertainment Television. We explained to them the power of mobile-meets-television like this: “People watch TV with [sic] their mobile phones, and if you can provoke and excite them, they will SMS you back. There’s money in that and you will get a revenue share.”
To convince the then head of Sony, Sunil Lulla, of our concept, I recorded the title song of their hit show Jassi Jaisi Koi Nahin on my Nokia. My team then converted it into a ringtone, which two of my colleagues and I stored on our phones before we met Sunil. I asked my office to call us in succession during the meeting. So Sunil was confronted with his show’s music ringing on all three of our phones at the same time.
“What is the meaning of this? What are you guys up to?” he asked. We told him we could provide all his viewers with such ringtones through a simple SMS to a short code, and he could keep 50 percent of all the resulting revenues. He immediately agreed.
Then I went to Vodafone and Airtel to sell the idea to them. They agreed, in return for a 50 percent share of revenue. So, of every Rs 10 I got from a customer, Airtel or Vodafone kept Rs 5, and of the remaining Rs 5, I gave Rs 2.5 to Sony. That left me with Rs 2.5.
That ringtone alone earned us Rs 40 lakh, of which Rs 10 lakh came in less than three months. People were shocked that money could be made on something as silly as a ringtone. Sony understood the power of the idea and gave us the contract for their upcoming mega show Indian Idol.
Sadly, by 2006-07, we were being arm-twisted and bullied by the operators and TV channels. Operators told us, “We’re not going to give you more than 20-30 percent of SMS revenues; take it or leave it!” On the other hand, Sony and other channels told us, “We own the content, so you don’t deserve more than 10-15 percent of revenues!”
As a result, my share fell from 25 percent to 3 percent in just a few years. I was being called a “mere broker and dalal” when, instead, I was an innovator and pioneer. That was a flashpoint for me, which made me realise some powerful emotions bordering on revulsion.
There was no faith in what people stood for. Operators don’t have any morals or faith in anyone who helps them build their business. While this was going on in India, Japan’s NTT DoCoMo was sharing 90 percent of their VAS revenues with content producers in China; but no one in India was willing to listen.
I realised unless you create proprietary content nobody gives a shit and you’re just a dalal with a Rexine pouch under your armpit!
In contrast, in China if you deal with any company, the default operating code is co-operation, which in their language means collaboration. We didn’t have a mindset of collaboration in India’s mobile industry.
The problem was that in India, mobile operators were merely mobile tower operators used to billing consumers for telephony. They never thought their revenue would include something not created or generated by them. And though they were run by very capable professionals in their earlier stages, as they got larger the quality of talent went down. They were taken over by the Indian culture of ‘purchasing mentality’. The executives dealing with partners like us were merely purchase managers rather than partner managers, and their focus was purchase efficiency. Their attitude towards smaller partners is, “Nichodh lo jitna tel nikalta hai! [Squeeze out as much as you can.]”
Even today that mindset persists because it is not accidental. It didn’t happen because companies were growing rapidly or maturing fast. It is systemic.
In the last five to 10 years, a lot of entrepreneurs who didn’t get out in time like we did got mauled, because for operators it was all about the short-term. Indian business owners and key decision makers operate almost universally on a quarter-on-quarter plan.
I haven’t come across anybody who has said that their objective is to make the ecosystem bigger in, say, three to five years, or that they should be aiming to build a bigger pond than merely eating up all the fish. Even with Sony TV, supposedly an international corporation, why were they impatient to extract more pounds of flesh? Because they were focusing merely on the current or the next quarter.
As Indians we think someone else’s profit always comes at our expense. We don’t think partners have a ‘right to a profit’, so if I can control it, I will demand 90 percent of someone’s revenue without caring for a moment what was the source of that revenue. We are very uncomfortable in making others comfortable. And ‘minimum guarantee’ or MG [content owners demand a certain ‘minimum guaranteed fee’ from their downstream licensees, instead of a share of profit] is the greatest expression of that insecurity. It originates neither from the operator nor the distributor, but from the content owner. It’s again a short-term outlook of earning ‘at least’ something. There’s a reason George Lucas never did an MG on his Star Wars franchise, because he wasn’t Indian. MG essentially means you don’t have belief in your content, so you want to make as much money on it as quickly as possible.
(This article is excerpted from the latest Forbes India 14 June, 2013 issue which is now available at news stands and book stores. You can buy our tablet version from Magzter.com)