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Updated: Airtel Reworking Content & Service Revenue Shares; Not Quite 70-30

Bharti Airtel is reworking revenue shares for mobile content and services in India, MediaNama has learned from multiple industry sources, although it isn’t quite the simple 70-30 split that Vodafone has. Two alternatives that sources have informed us about include:
– A 70:30 split if you earn more than Rs 5 Crore a month. This is probably a case that is applicable to large VAS companies and application stores.
– Revenue for the last three months is averaged out, and the revenue share for that remains the same as it was. Above and beyond this revenue share, Airtel takes 30%, while the VAS company takes 30% revenue. Update: We’ve received an anonymous note that suggests that this is only for selected partners and not all: “On 75% of the average revenues of previous 3 months, you get as per existing revenue shares. On the amount above that, the CP gets 70% (net, i.e. post wpc taxes & the employee deduction)”

So we’re putting this out there – in case you know of other alternative revenue share splits being considered, let us know.

*

Airtel has declined to comment on plans to rework its revenue shares. We were given a boilerplate response: “As a company policy we do not comment on market speculation”, attributable to an “Airtel Spokesperson”.

Last year, we’d asked Airtel’s then President (B2C) K Srinivas quite a few questions on the revenue share issue. Read it here.

Vodafone has set the benchmark in India in terms of trying to foster an open and competitive ecosystem with two key changes: the 70-30 revenue share in favor of developers, and the opening up of its API. The API plan appears to be delayed, and we’ve had developers who have created applications write in to us asking if it is still on track after Jonathan Bill resigned. From what we gather from Vodafone, there is no rollback on the plan to open up API. Read more about their plans here.

Our Take

In our opinion, it’s unfortunate that Airtel isn’t implementing the straight-forward 70-30 revenue share plan that Vodafone has, because high revenue share brings with it the incentive for a company to spend on marketing its service or product, and a straightforward approach to revenue share reduces the ambiguity and bureaucratic power that a VAS department has.

It allows developers to play with pricing with a lot more freedom, and try and address consumer demand as they see fit, rather than as per the dictat of someone looking to meet a monthly or quarterly target. Corruption thrives because of this ambiguity, across telecom operators.

Even if Airtel isn’t deploying a straightforward 70-30 revenue share, we hope that the levels are standardised and not ambiguous, and applicable to everyone. Onboarding of new services will be easier.

The opening up its API will allow developers to target their services better, and offer personalization as well as location targeting.

These steps will incentivise more developers to develop apps for the mobile user, hence improving competition.

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