This morning, the Wall Street Journal ran a sunny profile of Loopt, the mobile social networking company (paywall, sorry). If you’ve seen the Boost mobile commercials, you’ve seen Loopt in action.
The new buddy-tracking tool is from Loopt Inc. and is available from wireless operator Boost Mobile, owned by Sprint Nextel Corp., Reston, Va. Loopt is one of a host of companies putting a fresh spin on social-networking services by adding in a new element: phones equipped with Global Positioning System receivers. GPS is used to determine an object’s location based on how long it takes for a signal to reach the object from satellites. Loopt alone has roughly 100,000 users since it kicked off last fall.
Many young people are obsessed with two things: social networking and their mobile phones. Companies have been trying to cash in on combining them, but up until now, nobody has found an approach that has really caught on. News Corp.’s MySpace and Facebook Inc. recently launched offerings that help people connect to their Web sites from their phones but the services don’t allow users to do much more than they could do online.
While I’m rather negative on walled-garden approaches to Mobile SNS, Loopt’s business model actually makes sense. Rather than being carrier-controlled, Loopt licenses its technology to mobile carriers, theoretically enabling cross-service networking.
Of course, there are a significant number of barriers that stand in Loopt’s way. First, the cell phones Loopt runs on must be GPS-enabled. Second, the service must be of significant value that the users will pay the $3/month Boost will begin charging in March.
Here’s what’s solid about Loopt’s approach: they are attempting to answer a situationally relevant question. For Mobile SNS to work, we must change our conceptualization of SNS. In the browser and in the mobile, SNS is significantly different. Mobile SNS developers must ask what relevant questions they can answer with the tools at hand; simply fitting a browser-based model to the mobile will not work (as the Facebook has seen with their not-new mobile apps). “Where are you” is a relevant social question that can be answered by the mobile, requiring little work on the individual’s end, that is of high social value. Mobile SNS developers must begin developing applications that answer this simple, valuable social questions that require little input or updating from users.
However, Loopt and Boost face significant challenges. Handset turnover is required before this application hits mass market, and it requires buy-in by the major carriers. Boost should waive fees on this service until January 2008, taking it as a loss-leader as it builds network effect. This will increase Loopt’s bargaining position with the major carriers, and it will give people a reasonable amount of time to realize they do actually want to pay for the service. By going pay in a month, I believe Boost may coincidentally damage Loopt’s potential. As Boost is a subsidiary of Sprint, they can certainly afford the write down (as it stands, Boost has 100,000 users on Loopt, $3.6M in pre-cost revenue a year).
It is critical the Boost let network-effect take its course. Mobile SNS is in its hyper-infancy, and to start choking it with fees at this point could be a disaster. If people turn the service off once it goes pay, network effects will be curtailed, and all of the people who bought Boost phones for Loopt will find significantly less value in their handset. They will be more likely to switch carriers in the future, which will be trivial as Boost is built on a pre-paid model.
Carriers like Boost (and Sprint) should realize that applications like Loopt could be the centerpiece of a brand, rather than simply a $3/month add-on. If Boost gets this message, they will delay fees and let network effects work for them.
Tags: loopt, mobile, social networks
Fred Stutzman is a doctoral student, researcher and teaching fellow at the University of North Carolina at Chapel Hill's School of Information and Library Science. He studies how people use social media.
Interesting and insightful. However, you need to keep in mind that there’s one thing that Loopt cannot control: the price of the application. When it comes down to it, that decision is entirely in the hands of the carriers. So, whether or not Loopt wants the application to be free is only important if the carrier chooses to listen. From experience, I would peg the situation at Loopt wanting to keep the application free and the carriers wanting to make monthly recurring fees from the app.
I don’t disagree – that’s why my post was largely a call for Boost to keep Loopt free for the next year. Doing so is good for both parties, but the argument needs to be made more persuasively to Boost, of course.
Of course, with all the time I said Boost and Loopt in that post I may have reversed them from time to time. I will go back and see if anything needs clarification ;)