The Friday Interview: Cathal Fay, Red Circle
This week's interviewee is Cathal Fay (pictured), chief operations officer of Red Circle, a Dun Laoghaire firm that is dominating the UK consumer mobile content market
We started off pretty small with four people in Dublin. We began with a monthly budget of £20k sterling to target the UK market.
Today we spend on average of £1m a month with various lads' magazines such as Nuts, FHM, Loaded and Maxim and we work on interactive mobile projects with Saatchi & Saatchi's Urban Media Division.
How would you describe Red Circle's business model?
Our business model is to offer mobile content direct to consumers.
If they see an ad in a publication like FHM and want a particular item of content, whether it's a ringtone or video for their phone, they can order via interactive voice response (IVR) or by premium SMS.
How do you manage the collection of revenue in such a large consumer market as the UK?
Because it's a messaging system we don't have to deal with credit cards as the mobile operator just facilitates the collection of revenue. It takes the headache of revenue collection away and allows us to focus on winning market share.
How big a market is the UK direct-to-consumer market?
The premium messaging and premium phone line business in the UK is a dynamic business and is worth £1.6bn a year.
People expected that the lion's share of revenues from the premium SMS business would be kept by the mobile operators but the reality is that players like Red Circle and its competitors would actually own 70pc of most mature European markets.
How do the operators feel about this?
They are standing back and thinking that rather than control the content provided through their own portals or walled gardens [they can] encourage independent providers like Red Circle to develop content for this emerging scene.
Operators are looking at basing themselves on the iMode model of taking a fixed percentage on content.
By John Kennedy