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Vodafone Takes MySpace Mobile

Vodafone Group plc (NYSE: VOD) will be the first mobile operator to offer social networking services from MySpace to European customers, following the signing today of an exclusive revenue-sharing partnership. (See Vodafone, MySpace Partner.)

Cingular Wireless inked a similar partnership with MySpace in the U.S. in December. (See Cingular, MySpace Team).

But MySpace users, not used to paying to use the online service, might be put off the mobile version by Vodafone's tariff plans.

The operator's MySpace Mobile service will be available in the second half of this year in the U.K. only, at first. The application will be loaded onto some Vodafone handsets, but also available for download from the Vodafone Live! portal. Users will have to be registered on the MySpace Website. MySpace Mobile will have the look and feel of the MySpace.com experience with the exception of video uploads. Users will able to upload and see photos, send emails, manage contacts and post blogs. It will launch first in the U.K., then other European markets will follow.

A Vodafone spokesman says the operator will charge a subscription fee for MySpace Mobile, and charge users the regular tariffs for the data uploads -- for example, when users add photos to their MySpace pages.

Analysts say such services are just what mobile operators need, but question the charging structure.

Unstrung Insider chief analyst Gabriel Brown says this is just the sort of popular Internet content that mobile operators need to drive data and Internet usage, because their own portals are not compelling enough. "Mobile operators really need this kind of application," he says.

And such well known Internet services will help drive data revenues. Vodafone reported £14.5 billion (US$29 billion) in service revenues in its half-year results to September 2006, of which just £650 million ($1.3 billion) came from non-SMS data services.

But charging for the service could hinder its uptake, says John Delaney, principle analyst at Ovum. "People don't want the meter running when they're using the service," he says.

While social networking applications fit well with the messaging and personalization capabilities on mobile phones, the business models from the different worlds don't currently match: MySpace.com is an advertising-based service, while mobile operators charge for usage.

That will change over time, though. Carriers and vendors are working on mobile advertising models, while Google (Nasdaq: GOOG), eager to enter the mobile market, is also trying to come to grips with the complex charging structures for mobile services. (See Google's Mobile Challenge.)

"Everyone is desperately trying to get the advertising model onto mobile phones," says Unstrung's Brown. "It's top priority."

MySpace has 150 million registered users and in December last year had 90 million unique users on its site.

— Michelle Donegan, European Editor, Light Reading

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