This was one the front of the business section in the Denver Post
Firms give texting a thumbs-up
Want info on real estate, news or the local scene? Companies are gobbling up text-message codes to cash in on the craze.
By Andy Vuong
Denver Post Staff Writer
Article Last Updated:11/25/2006 12:27:36 PM MST
Clarion Ventures is working on a service to let cellphone users receive information by text message about a house for sale. (US Capital)
Cellphone users are going text crazy, and companies are rushing to secure short codes that underlie the text-messaging industry.
The trend is drawing comparisons to the Internet domain-name blitz during the dot-com boom.
Here's how it works: Companies register five- or six-digit codes - which often form a word using the letters on each number - with the Common Short Code Administration, an organization run by the wireless industry's trade group.
For example, to receive sports alerts from ESPN, cellphone users send a text message to the code 4ESPN (43776).
The cost to register a code ranges from $500 to $1,000 a month, which makes it cost-prohibitive for speculators to tie up a bunch of codes with hopes of reselling them for a profit - a tactic that was widely used during the scramble for domain names.
Early adopters have tied the short codes to a commercial or television show, allowing viewers to send a text message to a code to cast a vote, buy a ringtone or receive news alerts.
"It's kind of the ultimate in direct- response marketing," said local entrepreneur Brian Levin, who helped kick-start the trend through his work with the TV show "American Idol."
Levin's previous company, Mobliss, which he sold in 2004 for $15 million, enabled "American Idol" to receive votes from viewers via text messages.
Text messaging has surged since 2003, when messages were first able to travel between the various wireless carriers, such as T-Mobile and Cingular. Before the change, messages sent from a carrier like T-Mobile were restricted to T-Mobile customers. Boulder-based Mobile Marketing Association led the "cross-carrier" push.
In June, cellphone users sent 12.5 billion text messages, up 71 percent from 7.3 billion in June 2005, according to industry trade group Cellular Telecommunications Industry Association, or CTIA.
Text messaging generates billions of dollars in revenue annually for wireless carriers, which typically charge users a flat monthly fee or 10 cents per message.
Some third-party companies - such as ringtone provider Jamster - make money by charging users a premium fee on top of the carrier's fee.
Text HOUSE for info
Locally, several companies are joining the fray.
Denver-based Clarion Ventures has registered the short codes HOUSE (46873), 4SALE (47253) and TICKET (842538).
The company hopes to launch its first service in January with the HOUSE code targeted at homebuyers.
People who send a text to HOUSE with the address of a home that is for sale in the body of the text message will receive a response that includes information about the house.
The information will include an estimated value, square footage, the number of bedrooms and bathrooms and the year it was built.
"We're going to provide the ability for individuals to get the key information on a house anywhere in the United States," said Craig Harrison, a partner with Denver-based US Capital, the lead investor in Clarion.
The service will be free for users. But they'll have to opt-in, thereby allowing Clarion and its real-estate partners to contact them after they've made an inquiry.
"We're going to be deriving our revenue primarily through lead generation and advertising," Harrison said.
The company also hopes to allow users to buy tickets to events with its TICKET code.
Denver-based Connectme360 is targeting the hotel industry with its code 5STRZ (57879).
Essentially, the company's service will allow hotel customers to receive information about the city they are visiting, such as the nearest sushi restaurant, by sending a message to 5STRZ. The company hopes to launch the service in the coming weeks, said chief executive Brian Hayashi.
Levin, the founder of Mobliss, has launched a new company called Useful Networks that is developing a service that would allow companies to send news, coupons and other information to users based on their location. Users would also have to opt-in for that service.
James Eberhard, who founded Denver-based ringtone company 9 Squared, said short codes will eventually be paired with Internet Web addresses on billboards and other marketing materials.
"The next generation is you'll see 'Go to this website or text this to this,' said Eberhard, now chairman of Denver-based Mobile Accord, which provides the back-end services for companies like Clarion.
Newspapers join fray
Mobile Accord is working with the United Way to allow users to send a text message to make a donation, which will be charged to their cellphone bill.
Mobile Accord is also working on a text-messaging initiative with the Denver Newspaper Agency, which handles the business operations for The Denver Post and Rocky Mountain News.
The DNA has secured the code DENVER (336837) and plans to launch a mobile-coupon service in January, said Sara Pacheco, senior interactive producer with the DNA. The company also has plans to use the code for voting polls and breaking- news alerts from The Post and News.
While the text-messaging boom is generating plenty of revenue for the carriers, some analysts question whether third- party companies will be able to get a bigger piece of the pie in the future.
"How much elasticity is there among consumers to spend for these kinds of things?" said Charles Golvin, an analyst with Forrester Research. "There are lots of instances where consumers definitely will pay. But there are not going to be that many players who hit the jackpot with a big service that has really wide adoption across consumers."
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong32@yahoo.com.
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